Good morning and welcome to Monmouth Real Estate Investment Corporation's Fourth Quarter and Fiscal Year-end 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. It is now my pleasure to introduce your host, Ms. Susan Jordan, Vice President of Investor Relations. Thank you, Ms. Jordan, you may begin.

Thank you very much, operator. In addition to the 10-K that we filed with the SEC yesterday, we’ve filed an unaudited annual and fourth quarter supplemental information presentation. This supplemental information presentation, along with our 10-K are available on the Company's Web site at mreic.com. 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 annual 2015 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; Kevin Miller, Chief Financial Officer; and Michael Landy, President and Chief Executive Officer. It is now my pleasure to turn the call over to Monmouth's President and Chief Executive Officer, Michael Landy.

Thanks, Susan. Good morning, everyone, and thank you for joining us. We are pleased to report our results for the fiscal year ended September 30, 2015. Fiscal 2015 represented an excellent year for Monmouth with a record amount of acquisitions, the completion of several building expansions, 100% tenant retention rate, strong occupancy and rental rate growth, all contributing to the 6.7% dividend increase that we announced on October 1. In fiscal 2015, we acquired 10 brand new Class A built-to-suit industrial properties with approximately 2.7 million square feet for $192 million. This represents a 24% increase in our gross leasable area year-over-year. Moreover, if you go back four years, we’ve successfully grown our gross leasable area by approximately 85%. During that period, we observed a significant increase in prices for high quality industrial properties, which in turn has translated into a significant increase in the value of our overall portfolio. All of this growth was achieved without sacrificing our high quality standards. In keeping with our long-term business plan, this growth was achieved by purchasing well located new built-to-suit industrial properties leased to strong credit tenants. The weighted average age of our portfolio today is now approximately 10 years, which provides us with a very modern high-quality portfolio. This is in our view a very important factor, given the continued migration of retail spending from traditional brick-and-mortar stores to e-commerce sales. Omni-channel distribution requires state-of-the-art industrial buildings and our property portfolio is very well positioned to capitalize on this ongoing change. As a result of the shift in consumer spending from traditional store sales to e-commerce, retailers have become much more concerned with the inventory levels in their distribution centers than in their traditional brick-and-mortar stores. This shift has resulted in historically high occupancy rates for the industrial property sector. Over the 12-month period, the occupancy rate on our portfolio increased 180 basis points from 95.9% at fiscal year-end in 2014 to a sector leading 97.7% at the end of fiscal 2015. As a result of new leases that will become effective subsequent to year-end, our occupancy rate will rise further to 99.5% commencing on January 1, 2016. During the fourth quarter, the Company acquired two new Class A built-to-suit distribution centers containing approximately 368,000 total square feet at an aggregate cost of $42.1 million. One acquisition was a brand new 305,000 square foot distribution center leased to FedEx Ground for 15 years located at the Fort Worth Alliance International Airport. The other acquisition was a 64,000 square foot distribution center leased for 14 years to the American Bottling Company and is guaranteed by their parent company, Dr Pepper Snapple Group. During the fourth quarter, we sold our 160,000 square foot industrial building located in Monroe, North Carolina for $9 million to the building’s tenant, Charlotte Pipe and Foundry Company. Charlotte Pipe was leasing the property through July 2017 at an annual rate of approximately $571,000. We purchased this property in 2001 and it had a historic cost basis of $5.6 million and at the time of sale a net book value of $3.8 million. This sale resulted in a GAAP gain net of closing costs of approximately $5 million representing a gain of 59% over our historic cost and a gain of 131% over our depreciated basis. While we rarely dispose of our assets, this sale to our tenant was highly opportunistic for both sides. With regards to leasing activity, in fiscal 2015, 6% of our gross leasable area representing six leases totaling approximately 780,000 square feet was scheduled to expire. As previously reported, all six of these leases have been renewed, giving Monmouth the 100% tenant retention rate for fiscal 2015. These renewed leases have an average term of 3.8 years and an average GAAP lease rate of $5.06 per square foot and a cash lease rate of $4.95 per square foot. This represents an increase of 6.3% on a straight-line GAAP basis and an increase of 1% on a cash basis. As stated earlier, e-commerce continues to be a major catalyst driving industrial space demand. As a result of this increased demand, we’ve been experiencing an increase in expansion activity at our existing properties. During fiscal 2015, the Company completed work on three building expansions and one parking lot expansion, which resulted in extending the tenant’s lease expirations by an additional 10 years from the date of completion for each building that was expanded, and increasing the tenant’s rent on all four expansions. Prior to the lease amendments being executed, these three leases had a weighted average term of 5.7 years remaining at the time of completion of the expansion work. By obtaining an additional 10 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 $1.5 million at an average lease rate of $6.85 per square foot as compared to $5.84 per square foot previously, representing a 17.3% increase on a GAAP basis and a 17% increase on a cash basis. In fiscal 2016, approximately 2% of the Company’s gross leasable area consisting of three leases totaling 326,000 square feet is scheduled to expire. To date, the Company has renewed one of these three leases representing 81,000 square feet or 25% of the gross leasable area scheduled to expire in 2016. This renewed lease has a two-year term and an average GAAP lease rate that is 4.5% higher than the prior rent. The two remaining leases scheduled to expire in fiscal 2016 are currently under discussion. Subsequent to year-end, the Company acquired two brand new built-to-suit properties, containing a total of 506,000 square feet at an aggregate cost of $50.4 million. This brings our current portfolio to a total of 93 properties, geographically diversified across 29 states. These two recently purchased single-tenant properties are net leased for 10 years to FedEx Ground. These new acquisitions bring our total portfolio to 14.4 million square feet currently and as a result of recent leasing activity, our occupancy rate will increase to 99.5% commencing on January 1, 2016, representing a 180 basis point improvement in a single quarter. We’re very excited about our best-in-class acquisition pipeline, which now comprises seven new built-to-suit properties containing 1.9 million total square feet, representing approximately $200 million in acquisitions, scheduled to close over the next several quarters. Once again, in keeping with our business model, these future acquisitions consist of well located brand new built-to-suit projects currently under construction. These properties will be subject to long-term net leases to investment grade tenants. They’re situated near major airports, major transportation hubs, and manufacturing plants that are integral to our tenants’ operations. Approximately 92% of our acquisition pipeline consists of deals with FedEx, while the remaining 8% is leased to Snap-On Tools. The cap rates on these deals average in the high 6.5% to 7% range, and have a weighted average lease maturity of 14.1 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion and occupancy. In addition, the Company currently has three property expansions in progress, consisting of two building expansions and one parking lot expansion. These expansions are expected to cost approximately $8 million and expect it to be completed during the remainder of fiscal 2016. Upon completion of these expansions, annual rent will be increased by approximately $800 and the lease terms for all three expansions will be extended for 10 years from the date of completion. With regards to the overall U.S industrial market, 2015 is on track to be one of the strongest years ever in terms of net absorption, with 174 million square feet and positive net absorption through the third quarter, representing the most space absorbed during the first three quarters of a year since 2005. While new construction has been ramping up with 182 million square feet currently under construction, it is still less than the absorption levels which have been positive now for six consecutive years. This trend has caused vacancy levels to continue to fall to a current rate of 7.4%, representing a 90 basis point improvement over the prior year. National rental rates have not grown in 17 of the past 21 quarters and are up 4.7% year-over-year at an average asking rate of $5.34 per square foot. It is anticipated that industrial rent growth will continue in 2016. The migration toward online shopping will continue to be a leading demand driver from industrial space. This holiday season has shown a stark disconnect between online and brick-and-mortar sales expectations, with online sales growing by 15.2% in the third quarter over the prior year period, while brick-and-mortar retail sales remained relatively flat. E-commerce sales accounted for 6.8% of total sales in the third quarter, thereby providing plenty of room for future growth. The recent Black Friday through Cyber Monday holiday weekend saw a total online sales eclipsed brick-and-mortar sales for the first time. From a real estate standpoint, the direct beneficiary of this paradigm shift has been and will continue to be the industrial property sector. FedEx estimates that they will deliver 12% more packages this year compared to last year, anticipating approximately 317 million packages between Black Friday and Christmas Eve representing another record breaking year. And now, Kevin will provide you with greater detail on our results for the quarter and for fiscal 2015.

Thank you, Michael. I will start off by discussing some of our key financial indicators for the fourth quarter and then move into some of our key financial indicators for the full fiscal year. Core funds from operations for the fourth quarter of fiscal 2015 were $9.2 million or $0.15 per diluted share. This compares to core FFO for the same period one year ago of $7.7 million or $0.14 per diluted share. This represents a 7% increase in core FFO per diluted share. Adjusted funds from operations, or AFFO, which excludes securities gains or losses and excludes lease termination income were $9.2 million or $0.15 per diluted share for the recent quarter as compared to $6.7 million or $0.12 per diluted share a year-ago, representing a 25% increase in AFFO per share. Rental and reimbursement revenues for the quarter were $20.6 million compared to $16.9 million, or an increase of 22% from the prior year. Net operating income increased $3.8 million to $17.7 million for the quarter, reflecting a 27% increase from the comparable period a year-ago. This increase was due to the additional income related to six properties purchased during fiscal 2014 and 10 properties purchased during fiscal 2015. As Michael mentioned earlier, we acquired two properties for a total of $42.1 million during the fourth quarter. One of the acquisitions, the 305,000 square foot FedEx Ground facility at the Fort Worth Alliance International Airport was for $35.3 million. And we financed this transaction with a 15-year self amortizing mortgage loan in the amount of $24.7 million at a fixed interest rate of 3.56%. The other acquisition of 64,000 square foot distribution center in Cincinnati, leased to the American bottling company and guaranteed by its parent, Dr Pepper Snapple Group was for $6.8 million. And we purchased this property all cash. Although most of our growth is attributable to our acquisitions and expansions, we’ve been able to grow organically as well. Same property NOI for the three months ended September 30, 2015, increased 3.1% on a U.S GAAP basis and increased 4.4% on a cash basis. Subsequent to year-end, we acquired two additional properties for $50.4 million, financed with two 15-year self amortizing mortgage loans, totaling $33.7 million with a weighted average fixed interest rate of 3.95%. We expect these recently closed acquisitions and the other transaction is scheduled to close later this year, as well as our recent leasing activity to positively impact our results going forward. In addition to the pipeline of deals that Michael discussed, we remain well positioned to continue to pursue additional acquisition opportunities. I’d now like to discuss the results for the full fiscal year. Core FFO for the full fiscal year 2015 was $35.3 million versus $29.5 million in 2014. On a per share basis, core FFO was $0.60 per diluted share in fiscal 2015 compared to $0.59 per diluted share in 2014, representing a 2% increase. AFFO, which excludes securities gains or losses and excludes lease termination income was $0.57 per diluted share for fiscal 2015, as compared to $0.52 per diluted share a year-ago, representing a year-over-year increase of 10%. Growing our AFFO per share has been a key focus of ours, and in percentage terms this marks our second consecutive year of solid, double-digit, per-share AFFO growth. As a result of our recent acquisition and leasing activity, we anticipate continuing to grow our AFFO per share going forward. Rental and reimbursement revenues for the year were $77.8 million compared to $64.7 million, or an increase of 20% from the prior year. Net operating income increased $11.9 million to $65.3 million for the year, reflecting a 22% increase from the comparable period a year-ago. Same property NOI for the 12 months ended September 30, 2015, increased 1.8% on a U.S GAAP basis and increased 0.9% on a cash basis. With respect to our total property portfolio, end of year occupancy increased 180 basis points and was 97.7% at September 30, 2015, as compared to 95.9% at fiscal year-end 2014. As previously noted, as a result of new leases that will become effective subsequent to year-end, our occupancy rate rise further to 99.5% commencing on January 1, 2016. Our weighted average lease maturity continues to increase and as of year-end was 7.2 years as compared to 6.7 years at the prior year-end. Our weighted average rent per square foot was relatively unchanged at $5.48 as of the recent fiscal year-end as compared to $5.51 at the end of fiscal 2014. As Michael mentioned, our acquisition pipeline now contains 1.9 million square feet, representing seven properties with $200 million in total costs scheduled to close over the next several quarters. To take advantage of today’s attractive interest rate environment, we’ve already locked in very favorable financing for four of these acquisitions, which represent an aggregate cost of $135.3 million and total 1.2 million square feet. The combined financing terms for these four acquisitions consists of $92.1 million in proceeds, representing 68% of total costs and has a weighted average fixed interest rate of 3.81%. Each of the four financings are 15-year self amortizing loans. These four acquisitions will result in a weighted average leverage return on equity of 16.7%. As of the end of the fiscal year, our capital structure consisted of approximately $459 million in debt, of which $374 million was property level fixed rate mortgage debt and $85 million were loans payable. 81% of our total debt is fixed rate with a weighted average interest rate of 4.9% as compared to 5.2% in the prior-year period. We also had a total of $111 million in perpetual preferred equity at year-end. Combined with an equity market capitalization of approximately $606 million, our total market capitalization was approximately $1.2 billion at year-end, representing a 17% increase from the prior year. From a credit standpoint, we continue to be conservatively capitalized with out net debt to total market capitalization at 38% and our net debt plus preferred equity to total market capitalization at 47% at year-end. For the fiscal year-end September 30, 2015, our fixed charge coverage was 2.3 times and our net debt to EBITDA was 7.1 times. From a liquidity standpoint, we ended the year with $12.1 million in cash and cash equivalents. We also had $50 million available under our recently expanded credit facility, as well as an additional $70 million potentially available from the accordion feature. In addition, we’ve $54.5 million in marketable REIT securities representing 5% of our undepreciated assets. Net realized gains for fiscal 2015 were $806,000 as compared to $2.2 million in fiscal 2014. During the year, we fully repaid a total of four loans with unamortized balances totaling $10.7 million, which unencumbered approximately $20 million of properties to enhance our financial flexibility and further strengthen our already strong credit profile. And now, let me turn it back to Michael, before we open-up the call for questions.

Thanks, Kevin. Fiscal 2015 marked our 47th year as a public REIT and it was a great year for Monmouth. To summarize, we’ve now grown our portfolio to 14.4 million square feet, while remaining true to our high standards. The quality of our asset base is evidenced by a 100% tenant retention rate, as well as our sector leading occupancy rate of 97.7% at quarter end. And as we mentioned, our occupancy rate will increase further to 99.5% on January 1. We’ve increased our average lease maturity by 7% to 7.2 years, reduce the average age of our portfolio to 10 years and continued the trend of reducing our average interest rate to 4.9% currently. During fiscal 2015, we’ve grown our total market capitalization by 17% to over $1.2 billion and we continue to maintain a very strong balance sheet with a net debt to total market capitalization of 38%. Our recent acquisition activity has contributed to a 10% improvement in our AFFO per share earnings this past fiscal year, and with our $200 million acquisition pipeline, we anticipate additional growth going forward. Following 24 consecutive years of maintaining or increasing our common stock dividend, on October 1, we announced the 6.7% dividend increase. Monmouth is not only one of the few REITs that maintained its cash dividend throughout the global financial crisis; we’re now one of the very few REITs that is paying out a higher cash dividend today than we did prior to the global financial crisis. This solid long-term performance best illustrates the high-quality of our business model, our tenant base, and our property portfolio. We’d now be happy to take your questions.

We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from John Benda of National Securities Company.

Hey, good morning everyone. How are you doing today?

Very good.

Good. So, just thinking about the opportunity set ahead for MNR, this is on the debt front, it seems like in 2016 and 2017 there is a lot of high cost debt that’s going to be maturing, are you guys going to refi that as of current market rates or what’s the plan for that? It seems like in ’16 there is about $24 million at 6.5%?

Yes. I will take that John. So this is Kevin Miller. For fiscal 2016, we’ve about $20 million of fixed rate debt that we plan on paying off, and we’re not -- we plan on not refinancing that. We plan on when those properties are paid off, they become unencumbered and we throw those into the unencumbered pool in our line of credit. And that would actually – paying off about $20 million in debt in 2016 would actually make about $56 million of availability on our line. And then in ’17, it’s about $40 million in debt consisting about 14 loans that will free up another $64 million available on our line. And at that point, we’ll max out our line including the accordion feature of $200 million. So that’s our plan –is to slowly move from the fixed rate debt, encumbered debt to the unencumbered which will also get us close to that investment grade rating and have more of our NOI come from unencumbered properties.

Okay.

If I could just jump in on that, just add -- the large deals we’re doing, the new built-to-suit deals, the $30 million, $40 million, $50 million acquisitions, the brand new built-to-suit product and life lenders would give us investment grade type lending terms. So the new deals we’re financing, sub 4%, 15-year money fully amortizing at about 65%, 70% LTV. And then the stuff that comes due, because we have investment grade metrics, we’ll build up our own encumbered asset pool as Kevin just indicated, and then we’ll be able to get an investment grade rating probably in 2017 because the only thing holding us back is we don’t have a big unencumbered asset pool. We don’t have a lot of NOI drive from unencumbered assets. But we’re growing that as Kevin just indicated substantially in ’16, and in 2017 we feel pretty confident we’ll be there.

And the, the revolver is going to help fund some of the acquisitions that are coming in ’16?

Yes, that’s correct. And in addition we also have the drip and the sip. We also have marketable securities. We have many sources of financing to fund the drip and sip in addition to the fixed rate debt that Michael just mentioned.

Okay. And then, I know that you guys hold properties maybe a little longer than some of your peers. Are you seeing opportunity for any capital recycling as you look to maybe perhaps reduce the average age, as you’re putting up all these new buildings, its just some of that possibly coming in ’16? Or do you kind of like your footprint right now and just going to expand it where it is?

We want to expand the company. We did sell an asset in the fourth quarter, the tenant -- unusual circumstance where the tenant bid a very low cap rate, and so you can always do better economically when you’re selling to a user. So we made an exception there. We got about 153% gain on our depreciated basis, about a 60% gain on our historic cost, and that drove core FFO including gains above historic cost to $0.65 for the year, $0.21 for the quarter well above our $0.15 dividend, well above our $0.60 annual dividend. But that’s an unusual circumstance. We’re looking to grow the company. Getting back to your first question, Kevin has already locked in financing on a substantial portion of the deals we’ll be doing in ’16. So we already have sub 4% financing on about $100 million in proceeds I believe.

Yes. That’s correct, about a little over $90 million in proceeds. We locked in 4% at a fixed interest rate of 3.81% on the seven acquisitions that are still on our pipeline.

Okay. And then lastly real quick, so you talked about FedEx with all the increased volumes they’re slated to have this year and next. What's the current expansion opportunity in the portfolio for property that are already owned and rented that maybe you add on to or things like that?

Yes, the expansion opportunity for the company has been phenomenal, which is one of the reasons why we just raised our dividend. We completed 10 FedEx expansions in the last couple of years. We have three announced currently and more under discussion. Most of those are with FedEx, but we have some very large expansions under discussions with non FedEx tenants. So the portfolio is virtually fully occupied. On January 1, we’ll have only one vacant building. So the growth will mostly come from external acquisitions, but we’re seeing a large amount of expansions. We’ve been seeing that for years now and we expect that to continue.

Great. Thank you very much.

You are welcome.

And the next question will come from Paul Adornato of BMO Capital Markets.

Thanks. Good morning.

Good morning.

I was wondering; do you ever see FedEx leased properties trading in the market and if so, what cap rate did they trade at?

That’s a great question, Paul. And so the lease term is the key determinant on how high or low the cap rate is and the size and quality of the asset are factors and location of the asset is a big factor. FedEx Ground is the division we focus on. And there’s a lot of FedEx Ground buildings on the market and there’s the smaller buildings. So we’re not interested, and we’d rather do direct deals with our FedEx relationships, the modern class A 300,000 square foot buildings rather than the sub 80,000 square foot buildings. And there’s a lot of those sub 80,000 square foot buildings on the market, and if they have lease term six years or greater, if the cap rates in the low 6’s. If they have lease terms of 10 years, the cap rates is sub 6%. So here we are doing bigger, better quality buildings, better located buildings at much higher cap rates because we’re dealing directly with FedEx and not dealing with brokers who are out there marketing these deals foreign wide. I’d be very hesitant to buy the smaller buildings. If you listen to FedEx’s earnings calls, they’re focusing on expanding their network, doing 15 year leases with much bigger, better buildings and that’s been our focus as well.

Okay. And, I guess there’s been some concern about the energy sector, either Houston or elsewhere. What are you seeing in terms of the impact on industrial?

Well we have two buildings in Houston and one is a FedEx right next to Exxon Global’s world headquarters and that’s a multibillion dollar investment, multibillion dollar campus for Exxon Global -- Exxon Mobile. And so, FedEx is right next to that and we expanded that building already and that building we anticipate FedEx being in there forever. And our other building in Houston is leased to National Oilwell Varco, and we anticipate them being in that building for a long time and we hope to expand our relationship with them in the not too distant future. So I’ll just leave it there.

Okay. And then Kevin, you mentioned a little bit, you touched on the components of the same store NOI numbers. Sorry if I missed it. Could you go through perhaps the components being occupancy gain, contractual rent increases and the third one, acquisitions and expansions?

Sure. If you look at our supplemental package on page 7 we put a nice chart together showing the same store statistics. And you could see that our same store NOI for the three months on a GAAP basis was up 3% and on a cash basis up a little over 4%. And now for the 12 month period ended -- for the year ended GAAP was up 1.8% same store NOI and cash NOI was up just a little under 1% at 0.9%. And then, I did put a table -- while same store statistics does not include obviously acquisitions and it does not include expansions. So that’s like a huge factor of our growth that’s not included in that same store statistics which we put apathetically the details of what that would be, so you could see if you did want to add an expansions like what it would be?

If I could just piggyback on that Paul, just so you understand what Kevin just said, just to flush out some color there. Our weighted average lease maturity is 7.2 years and because with long-term leases to investment grade tenants you have pretty good reliability that you have that 7.2 years. But you have in excess of that really because a lot of our buildings get expanded. So before these leases ever fully mature the lease maturity date gets kicked out into the future. And what Kevin is saying into the same store pool, assets come out of that pool because the building gets expanded. So he’s given you the NOI growth and occupancy growth on the same store basis. But the buildings that got expanded as I said in my prepared remarks, the rents went up 17.3% on a GAAP basis and 17% on the cash basis because the building got expanded and it’s not in the same store pool. So you got to understand, the lease maturity gets kicked out and the rent increase is pretty exceptional.

Okay. So if we were to just isolate the occupancy gain that you achieved over the last year, what would it be excluding the occupancy gain?

Well our occupancy at September 30 was 97.7% for the whole portfolio, and on the same store it was 96.1% compared to 94.5% last year. So that -- and occupancy gain of about 160 basis points a little under 2%.

Right. And so, I guess, I’m trying to determine -- so I’m looking at the chart, same property cash NOI 4.4% for the quarter based on an occupancy gain of, it looks like 140 bps.

Yes.

So if you didn’t have the 140 bps that would -- am I reading that correctly, would it be 3.1% just based on the income of the properties?

But you’re trying to distinguish how much of the same store growth is due to filling vacant buildings I guess?

Yes.

I don’t have that off the top of my head. But I think most of it is -- I think it’s probably about 50-50 between filling some unoccupied buildings and some bumps in rent.

Okay. And finally I guess, as you -- if the industrial sector continues to do so well, you guys included. Are you noticing more capital or more players coming back into the market?

No question, Paul. I know you follow the cap rate trends and heading into the great recession, your cap rates went as low as 6.1% for industrial and then they went as high as mid 9’s and they’re below their record lows now, they are sub 6% on average I think Green Street’s number is 5.7% cap rates, a lot of foreign money coming in. Portfolios, you’ve seen the KTR transaction, the IIT transaction, the Encore transactions, all in the cap rates of low 5’s, high 4% range. So there’s a real disconnect in pricing between the public REIT sector versus the private market and it’s interesting but it’s at very wide margins. The implied cap rates which industrial REITs are trading at versus the private market valuations.

Okay. Great. Thank you.

You are welcome.

[Operator Instructions] And our next question will come from Michael Boulegeris of Boulegeris Investments.

Thank you. Good morning and congratulations on your sustained qualitative growth, the hard earned dividend increase and strong execution.

Thanks Mike.

With -- Mike, would you perhaps characterize the two ongoing lease renewal discussions has constructed a -- you certainly have a stronger track record in renewals?

All right. So we have three leases that we’re coming due in fiscal ’16 and we’ve already taken care of one. That lease was at a 4.5% increase only a two year renewal, but we’ll take the 4.5% increase. So that was about 25% of what is coming due in fiscal ’16. So we’ve -- or about 250,000 square feet remaining and pretty good prospects. I don’t anticipate either of those tenants moving out. So both those renewals are under discussion, and hope we’ll have more color to share in the ensuing quarters.

Great. We note that senior management over the last year, year and a half has exercised significant options and retained the underlying equity, securities. And we also note that these were not deep in the money options. So management appears to be really signaling high confidence as to the company’s future. So I have a two part question, Michael if you would share with us your thoughts as you look out into the future three to five years down the road, particularly in the company’s ability to translate the value added relationships that for example you built with FedEx Ground over 20 years, and how you might continue to build on that with other non FedEx blue chip companies as you have in the portfolio. And maybe Gene, if you could comment on your view of the horizon and that maybe size up in terms of how transformative ecommerce and the Panama Canal might be to Monmouth and the industry?

I’m going to let Gene go first. He’s one who just exercised I believe $0.5 million dollars in options. I only did a $100,000 in options. But I’ll get Gene go, and then I definitely want to chime in on the future of ecommerce.

Well, I’ve invested about $575,000 recently, and I know it’s in the form of x value of the stock option. But you have to realize that today substantial amount of that money came right out of my pocket. You’ve to put up half the money. You may be able to borrow from the bank. The remaining part, you’ve to come up with cash, and I have future options which I plan to exercise as well. I just feel Monmouth REIT is a great long-term investment and that the prospects as pointed out by Michael, the 12% growth in internet sales. Our major tenant is doing very, very well. Not only is the business going up, but the cost of fuel is going down. And their financial strength is increasing, it’s a marvelous company. So I think we’ve picked the right tenant, and we have a great future. So don’t be surprised if I continue to exercise all the options that I have. Now …

You do the Panama Canal. I’ll take e-commerce.

Well the Panama Canal is a favorite subject of mine. I’ve gone down to visit the expansion. I have gone back to the United States academy and talked to a lot of my captains and chief engineers and other people. We just think its going to be a game changer that people don’t recognize. I listen to panels and that sometimes the people on the panels don’t realize what's happening. If you double the size of the ship you increase the cost of operations by only 50%. So you’re getting bigger and bigger ships that are going through an expanded canal, and they’re going to go to the Gulf Coast. They’re going to go to the East Coast. Frankly when you take areas like New Jersey, I have no idea where they’re going to put all that merchandise. There’s going to be a tremendous shortage of warehouses when those ships start arriving. And it’s going to change the economics of shipping whether you go to California or you go through the canal and go to the Gulf or the East Coast so that’s going to change it and favor the Gulf and the East Coast. And if you look at the map of where we have all our buildings of Monmouth fleet it will favor our holdings. But we think long-term the demand for industrial space exceeds supply and it’s going to continue to exceed supply. So all-in-all I’m very bullish and I appreciate you giving me the opportunity to answer the question.

And Mike, on ecommerce its Christmas time and every year market share keeps moving from Main Street to Cyber Space, and FedEx is processing 100’s of packages a second this holiday season. They’re packaging -- processing millions of packages a day in excess of 25 million packages a day. And what was unique about this holiday season is for the first time ever the weekend of Black Friday through Cyber Monday more goods were purchased online than through conventional brick-and-mortar stores. And its amazing because, the economy hasn’t grown at over 2.6% in over 10 years, so we’re in a real low growth protracted sluggish environment and here ecommerce is growing 10 fold over the last 15 years from the turn of the century virtually under 1% to 15 -- 10% of total sales in 15 years. So it’s a digital world now. People don’t realize that since the late 80s space markets have changed. Well regardless of what property type you’re in, you’re effectively leasing space. And now with digital technology a lot of physical objects have been digitized and can be virtual objects stored in virtual places like the internet and clouds and that changes the whole way of thinking. You have to think in a non-linear manner and where is the demand going to come from? Where is the supply going to come from? And you’ve seen the industrial property type. Our numbers are strong, but all the industrial REIT peers are showing phenomenal numbers. Six consecutive years of positive net absorption, historically low vacancy rates, historically high rental growth. So here the industrial property type is poised to benefit as more -- it’s only rounding up, 10% of total sales being purchased online and that’s only going to continue. And in the future there’ll be algorithms that predict what you want to buy before you even have to go shopping. These goods whether its toothpaste or razorblades or shaving cream, whatever you buy on a recurring basis will just show up at your door, and FedEx has the network. They have built out the network that can process these orders for the future, the postal service; US Postal is designed to deliver letters. They loose over $5 billion a year. They are not equipped to handle this digital world. FedEx has expanded their network and we’ve grown alongside them and so the way the future is looking has -- is the reason we’re so optimistic in Monmouth.

Thank you for that, those insights. And again, congratulations on the dividend increase, particularly, coming at a time when we see a lot of dividend cuts out in other industries today and a lot of other business models coming under scrutiny, it certainly appears that the conservative business model of Monmouth and the resilient durable dividend streams are something to continue to look forward to.

Thank you, Michael.

Thank you.

And this concludes our question-and-answer session. I’d now like to turn the conference back over to Michael Landy for any closing remarks.

Well, thank you Laura. I’d like to thank the participants on this call for their continued support and interest in our Company. As always, Kevin, Gene, and I are available for any follow-up questions. And on behalf of Monmouth, I’d like to take this opportunity to wish everyone a happy healthy and prosperous New Year. We look forward to reporting back to you after our first quarter.

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