Good morning and welcome to Monmouth Real Estate Investment Corporation's Third Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. It is now my pleasure to introduce your host, Ms. Susan Jordan, Director of Investor Relations. Thank you, Ms. Jordan, you may begin.

Thank you very much, operator. I would like to remind everyone that certain statements made during this conference call which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's third quarter 2012 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. Having said that, I'd like to introduce management with us today. Eugene Landy, Chairman and Chief Executive Officer; Kevin Miller, Chief Financial Officer; and Michael Landy, Chief Operating Officer. It is now my pleasure to turn the call over to Monmouth's Chief Operating Officer, Michael Landy. Michael P. Landy: Thank you very much, Susan. Good morning, everyone, and thanks for joining us. Following last quarter's results, which marked one of our strongest quarters in recent years, our third quarter results were satisfactory. We have now completed 7 acquisitions this year, representing a total of 1 million square feet and an aggregate cost of $70 million. These acquisitions were all new built-to-suit constructions. This brings our gross leasable area to 8.5 million square feet, consisting of 71 industrial properties and 1 shopping center located across 26 states. As of quarter-end, FedEx remains our largest tenant, representing approximately 42% of our gross leasable area and 50% of our rental revenue. We are currently working with FedEx on the expansion of 4 of our existing facilities totaling approximately 180,000 square feet and anticipate additional expansion requests from them over the next few years. With regards to our most recent acquisitions, on June 8, we acquired a 120,000-square-foot industrial building in Oklahoma City, Oklahoma for $9.5 million. This new built-to-suit facility is leased to FedEx Ground for the next 10 years and is ideally located midway between that city's airport and downtown. Subsequent to quarter-end, on July 18, we acquired a 103,000-square-foot industrial building in Waco, Texas, for $8.7 million. This new built-to-suit facility is also leased to FedEx Ground for 10 years. Both of these new acquisitions also have future expansion capabilities. We ended the quarter with an occupancy rate of 94%. Following 2 consecutive years of 100% tenant retention, this year, we had 12 lease expirations representing approximately 1.3 million square feet or 16% of our gross leasable area. We were successful in renewing 10 of our 12 leases, representing an 86% tenant retention rate. The average term for these renewals was 3.6 years and the average rent was $4.66 per square foot, representing a reduction of approximately 3% from prior rents. Leasing spreads continue to improve compared to prior years. On the total property portfolio level, at quarter-end, we had a weighted average lease maturity of 5.3 years, with in-place leases going out as far as 2024. Subsequent to quarter-end, we were successful in leasing out 1 of the 2 buildings that did not renew this year by entering into a 5-year lease with hepdirect for 100% of our 107,000-square-foot facility in Winston-Salem, North Carolina. This lease commenced on August 1 and brings our current occupancy rate up to 95%. With regards to our capital markets activities, in June, we announced the closing of a preferred equity offering, which generated net proceeds of approximately $55.5 million. This offering positions us well to continue to execute our growth strategy going forward. In addition, subsequent to quarter-end, on August 2, we reinstated our dividend reinvestment and shareholder investment plans. Looking at the overall U.S. industrial market, we have now observed 7 consecutive quarters of positive net absorption, with approximately 26 million square feet of positive absorption over the most recent quarter. This marks the highest quarterly total in 4 years. The 10 billion-square-foot U.S. industrial market is currently 89% occupied. National average rents remained unchanged at approximately $4.50 per square foot. There is currently approximately 26 million square feet of industrial properties under construction. While this represents a low level relative to historic norms, it is the largest quarterly number since 2009. Although our nation's broad economy has recently slowed, looking at the industrial sector as a whole, a modest portfolio in particular, all indicators point to continued solid performance for our property type. Now, Kevin will provide you with greater detail on our results for the third quarter of fiscal 2012. Kevin S. Miller: Thank you, Mike. Funds from operations for the third quarter of fiscal 2012 were $4.4 million or $0.11 per diluted share. This compares to FFO for the same period 1 year ago of $6 million or $0.17 per diluted share. Excluding the $965,000 onetime severance expense, FFO was $5.4 million or $0.13 per diluted share. Funds available for distribution, which exclude securities, gains or losses, were $0.10 per diluted share for the quarter compared to $0.13 per diluted share a year ago. Excluding the onetime severance expense, FAD was $0.12 per diluted share for the most recent quarter. In addition, we did not record any rental revenue from our St. Joseph, Missouri property for the entire quarter. As you may recall, we previously recorded a $3.2 million onetime lease termination payment last quarter for this property, which represented 29 months of future rent. In May 2012, we re-leased approximately 65% of this facility effective July 1, 2012, at an annual rent of approximately $900,000. Consequently, we will benefit from the inclusion of this property for our full fourth quarter of this fiscal year. Rental revenues for the quarter were $10.7 million compared to $10.1 million, an increase of 6% from the previous year. Income from property operations, which we define as revenues less property taxes and operating expenses, was $10.3 million for the quarter, reflecting a 6% increase from the comparable period a year ago. Net income was $2.2 million for the third quarter compared to $4.1 million in the previous year's third quarter, representing a decrease of 45%. Prior to the onetime severance expense, results in net income of $3.2 million. This represents a decrease of 22% over the previous year's third quarter. With respect to our properties, end-of-period occupancy decreased approximately 300 basis points from 97% in the prior-year period to 94% at quarter-end, reflecting a combination of 1 lease termination and 2 nonrenewals, as previously mentioned. As Michael noted, as a result of leasing up our Winston-Salem property subsequent to quarter-end, occupancy rate is now back up to 95%. Our average lease maturity as of the end of the quarter was 5.3 years compared to 5.2 years in the prior-year period. Our average annual rent per square foot was $5.67 as of the quarter-end as compared to $5.59 a year ago, representing an increase of 1.4%. As of the quarter-end, our capital structure consisted of approximately $250 million in total debt, of which $236 million was property level mortgage debt, $9 million was convertible subordinated debt and $5 million were loans payable. 89% of our total debt is fixed, with a weighted average interest rate of 6.1%. We also had a total of $111 million in perpetual preferred equity at quarter-end. In line with an equity market capitalization of approximately $472 million, net of our cash position of $47 million, our total enterprise value was approximately $790 million at quarter-end. From a credit standpoint, our net debt to total market capitalization was 24% and our net debt plus preferred equity to total market capitalization was 38%. Fixed charge coverage was 1.7x and our total debt to EBITDA was 7x for the quarter. From a liquidity standpoint, we ended the quarter with $47.4 million in cash and cash equivalents. We also had nothing outstanding, and currently still have nothing outstanding on our $20 million credit facility. In addition, we have $46.3 million in marketable REIT securities, representing 8% of our total assets. At the end of the quarter, we had $4.9 million in unrealized gains on our securities investments, in addition to the $680,000 in gains realized during the third quarter and the $5.7 million in gains realized in 2012 fiscal year-to-date. Now let me turn it back to Michael before we open up the call for questions. Michael P. Landy: Thank you, Kevin. Thanks to our whole team. Monmouth is very well positioned and focused on continuing to execute our growth strategy. We'll now be happy to take your questions.

[Operator Instructions] And our first question will be from Paul Adornato of BMO Capital Markets. Paul E. Adornato: I was wondering if you could give us a little bit more information about the Winston-Salem lease. Did you spend anything to get the tenant in? And does the rent commence immediately? Michael P. Landy: Okay. So they have 5 months, Kevin, of abated rent on a 5-year lease. But it's a 5-year, 5 months, it's a 65-month lease. So effectively 5 full years of rental income. They spent some money on the building, and I think total cost that Monmouth's putting in the building are only about $50,000. So that's $0.50 a square foot. The company's hepdirect, they're headquartered in Thomasville, North Carolina. They are a furniture shipper, both business-to-business, business-to-consumer, consumer-to-consumer. A lot of guys from Microsoft retail distribution chain started this company in 2004. If a distribution facility is in 5 different locations spread out through the U.S. -- but this facility's right next to their headquarters. They're a small outfit but we're happy to lease up the building. Paul E. Adornato: Okay. And how does the rent compare to what was in place? Michael P. Landy: Much lower. That was a FedEx rent. That was 2.5x what the current rent is. FedEx rent was in the low 7s and this rent is in the high 2s. Paul E. Adornato: Okay. And would you consider that to be fair for the market? Is that the market rate? Michael P. Landy: Yes, it's the market rate. Vacant building costs roughly $1.50 a square foot. So we're happy to go from an expense of about $0.50 to income of close to $3. We're not tough negotiators in a market that has a high vacancy rate and market rents are not strong. Paul E. Adornato: Okay. And maybe you could also just walk through some of the other vacancies. How are the prospects looking on, on those spaces? Michael P. Landy: Okay, sure. So Liberty, Missouri has been our longest vacancy. That's a 100,000-square-foot facility in Liberty. It was leased to Lear Automotive. The Ford plant is on the Missouri side of the border and General Motors has a plant on the Kansas side of the border, and activity is heating up at those plants. And so occupancy in warehouse space is increasing, yet this building has been vacant since 2008. One of the prospects is building a new facility right next to ours. So I'm hopeful that we'll have some good news on that space because the market is improving but -- and it's a good building. It's a Class A building in a good park. Our other vacancy is a 70,000-square-foot, a little under 70,000 square feet in Tampa, Florida. That's a strong market. We're getting good prospects there. That building has been vacant for less than a year, and I'm optimistic with the Panama Canal coming online, that we'll be able to fill that vacancy. Other than that, we have a large facility in St. Joe, that Woodstream signed a lease for 65%, with a 388,000-square-foot facility. The other 35%, we're getting proposals on. So I'm optimistic that either we'll fill it with a new tenant or Woodstream will take the entire 100% of the facility.

And the next question comes from Jeff Lau of Sidoti & Company.

I guess just an ongoing view in terms of the dividend and I guess your opinion on the strength and the stability of it. Michael P. Landy: Do you want to take it, Gene? Eugene W. Landy: Yes, I'll take that. We're very optimistic and very confident of the strength of the dividend. As you know, our balance sheet is very strong and all the winds are blowing in our favor. So we anticipate, over the next 2, 3 years, paying down $60 million and $90 million of debt at 6.5% and refinancing it as low as 2%. We're looking forward to doing $60 million of deals, $88 million deals, maybe $100 million deals. All of them are as accretive as we've ever had in our history. The margins between the cap rate of the buildings we buy and the debt we've put on, there's a spread of as much as 3 points. In our history, we've done deals as low as 1.5. So the spreads are very good, so that as we deal with it, put additional properties into the portfolio, earnings should go up. As we pay down debt, our earnings should go up. And as you know, we are sitting with a huge amount of cash that we're going to put to work over the next 12 months. So all those things should result in increases in income, and we're confident that the dividend is well covered. And that doesn't even take into consideration the fact that Monmouth REIT is a total return vehicle and we feel that we have very substantial gains in our portfolio. And we're not looking forward to it, but we expect that there's going to be inflationary pressures in the economy, and that our portfolio, which is $650 million, $700 million, is going to have substantial increased values over the next 3 to 5 years. So to answer your question simply, I'm highly confident that the dividend is well covered and will be even better covered in the future.

Okay. And just going back to what you touched on in terms of refinancing. Do you think that we may be able to see some cost savings next year with the amount of mortgages, I guess, that look like are coming due or mature? Eugene W. Landy: Absolutely. We have been negotiating bank lines and Kevin is working on that. And some of it just takes time. Some of it takes time passing, so we pay off properties. So we have free and clear properties. And as we pay down these 6.5% mortgages and have properties that are free and clear, we can put them into a pool and we can -- our current bank line, I believe, is $20 million, we are projecting doing a $60 million line. And then -- I'll leave it to Kevin to say what the current rates are but I think they are sub-2%. And as I stated, as we pay down these mortgages, I think we have $30 million, $35 million coming due in the next 12 months at their average interest rate of 6.5%. So it's going to be substantial savings and we are going to negotiate the bank line over the next year.

Okay, great. And lastly, it looked like, in terms of I guess the real estate taxes and operating expenses, the numbers were a little off from I guess historical, I guess type figures. Shouldn't we be looking at something different going forward? Or was that -- what was going on there? Can you touch on that a bit? I don't know if that's an answer -- or question for Kevin or Mike or... Michael P. Landy: Well I'll take it first and if Kevin wants to add some color to it, fine. We're a little unique in being proactive in incurring expenses to reduce our tenant's occupancy, overall occupancy costs. So while it's a net lease and the tenant is obligated to pay taxes, we invest it over the quarter, I think it was $300,000 in administrative costs and we're able to reduce our tenant's occupancy costs by about $2 million, so it's an investment in the future to get back to the dividend aspect. One of the strengths of the business model is predictability of earnings. We've historically had 95% occupancy. We currently have 95% occupancy. A year ago, we had 5.2 years of lease visibility, it's up to 5.3 years of lease visibility. So it's very predictable. Nothing's certain but our performance over time tends to be pretty reliable. And by making that investment, we feel confident that we'll keep the high tenant retention rates in the future and also bode well for favorable negotiations in renewal rates. Kevin, do you want to add to that at all? Kevin S. Miller: Well basically, everything Michael said is correct. And this was just the professional fees that we incurred just to reduce our real estate taxes for our tenants going forward, like Michael had said. And the future benefit of that will carry on into the future, where we won't have to incur these professional fees again because the reduction on real estate taxes will carry on. And...

So we -- I guess we should be looking at a similar type figure going forward? Michael P. Landy: No. I wouldn't... Kevin S. Miller: No, I mean it as a run rate. Taxes got to the point -- on some buildings, they were substantially above what they should be, and a large degree, the tenant resolves that at their costs. We stepped in and took care of a couple of additional buildings, but I wouldn't look at that as a run rate.

[Operator Instructions] And the next question comes from Michael Boulegeris from Boulegeris Investments, Inc..

My first question is can you speak to some of the long-term FedEx plans for building out or expanding existing facilities? And when we model that, maybe you could give us some color as to how we should think about that in terms of, if you like, in Waco, that you just acquired? Michael P. Landy: Well FedEx Ground is a tremendous growth unit of FedEx. So we're seeing requests to expand. We have 4 proposals that are ongoing right now to expand about 180,000 square feet to our portfolio. Their Express division is contracting and a lot of output is flowing through Ground now. So they're shifting into going through air and putting it through the ground component. They have big contracts with Amazon and other online retailers that have them needing to increase capacity. So we have a high amount of leases with FedEx. We don't see it as a risk factor. We would just work that much harder to do non-FedEx deals and keep it at a 50% weighting. But we're very excited when a new good FedEx deal comes in because we've dealt with FedEx for many years and have a strong relationship with them and see it as a very beneficial relationship and a very solid strong company. So you can anticipate future FedEx deals in the pipeline, as well as larger non-FedEx deals to keep the weighting at 50% or less.

And you've mentioned the non-FedEx deals. You recently did one with, I guess, Watson or Anda Pharmaceuticals, how we specialize I guess in terms of the interior. Can you give any guidance as to these more unique type industrial warehouses, if your pipeline includes some of these, and what exposure to the pharmaceutical industry? Michael P. Landy: Well I can't say our pipeline has anything in the pharmaceutical industry currently. But I can say, on a similar theme to why we did Watson, Anda, where it was a good deal in and of itself. But as the secondary benefit of supporting FedEx, we moved to that area to be near one of our FedEx facilities. We are seeing the same synergy in some of our pipeline deals, where we like the outfit in and of itself, but we also like the aspect that is benefiting our largest tenant, even though it's a non-FedEx deal.

Appreciate that. Then lastly, I guess UMH is a large part of your securities portfolio. Would you, or Gene, like to comment on the outlook there? UMH, it seems like we're starting to see some traction in manufactured housing finally? Eugene W. Landy: Well we're beginning traction in housing, generally. Housing has been off for the last 4, 5 years. Housing companies have been decimated. So we're very proud of UMH that it went through the decimation of an industry and did very well in a very, very difficult period. And as you know, housing is beginning to pick up. It's up 15%, 20% in the manufactured housing area, but that's nothing, the base is so low. They've gone from 250,000 homes a year down to 50,000. So they go back up to 60,000. It's supposedly a 25% increase but it's nothing. So -- well we think it's going to turn around. With UMH, it's still a story. We think affordable housing is going to be in substantial demand and we think the housing industry has turned around. Of course, we run UMH the same way that we do Monmouth REIT. We have a very, very conservative balance sheet. We have a high liquid position and we are -- we have placed that company in a position to grow, should the housing market come back. And as Warren Buffett always says, "That's probably inevitable due to our increasing population." Michael P. Landy: Mike, just to add some color to that, we have about a $50 million securities portfolio, of which 25% is invested in UMH, roughly $8 million in common and $5 million in preferred. We have about a $1.2 million gain on our investment in UMH currently.

And the next question is a follow-up from Paul Adornato of BMO Capital Markets. Paul E. Adornato: Just a follow-up on FedEx, what's your renewal rate with FedEx versus non-FedEx? Do they have a higher propensity to renew? Michael P. Landy: Yes, they definitely do, Paul. It used to be 100% up until this retooling of the Express division. It's in the high 90s. The rents per square foot are above market but when they expand, it's just one of the best uses of capital to finance a FedEx expansion because you get a high return on your capital, you get a new 10-year lease. So FedEx is, for various reasons, not indicative of what market rents are and somewhat isolated from what you would be negotiating in a pure market deal. These locations -- the reason being the locations are integral to their supply chain and we buy the buildings and have the buildings developed with expansion capability. And with the U.S. Postal Service contracting and e-commerce growing, you'd see FedEx needing to expand these facilities. So you had a 4-year period, where expansions were slow and it's really heating up now. We're getting a lot of requests to expand our existing portfolio with FedEx. Paul E. Adornato: Okay. And how many Express locations do you have rolling over the next couple of years? Michael P. Landy: Several. In '13, I want to say about 5. Yes, we're talking Express. Let me count for you. 1, 2 -- I have 6 FedExes of my 11. So it's a big year with FedEx, 2013. So I have 11 expirations in '13, 6 are FedEx Expresses. Of those 6, 5 are going to renew and 1 is not going to renew. So we already know what's going on with most of those -- with all those FedExes. 5 are locking in, some for as long as 10 years and only 1 facility is not renewing next year, and that's a 59,000-square-foot facility.

[Operator Instructions] And this concludes our question-and-answer session. I would like to turn the conference back over to Michael Landy for any closing remarks. Michael P. Landy: Thanks, Laura. I'd like to thank everyone on this call for their continued support and interest in our company. We look forward to reporting back to you in the fourth quarter. Thank you.

The conference is now concluded. Thank you for attending today's presentation. The teleconference replay will be available in approximately 1 hour. To access the replay, please dial U.S. toll-free 1 (877) 344-7529 or internationally, 1 (412) 317-0088. Conference ID number is 10015019. Thank you and please disconnect your phone lines at this time.