Good morning and welcome to the Monmouth Real Estate Investment Corporation's Fourth Quarter and Fiscal Year-end 2017 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 have 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 website at mreic.reit. I would like to remind everyone that certain statements made during this the 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 2017 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. I would now like to introduce management with us today, Eugene Landy, Chairman; Michael Landy, President and Chief Executive Officer; Kevin Miller, Chief Financial Officer; and Richard Molke, Vice President of Asset Management. 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 very pleased to report our results for the fiscal year ended September 30th. 2017 was an excellent year for Monmouth. During the year, we acquire 10 band new Class A built-to-suit industrial properties containing 2.8 million total square feet for $286.5 million. We experienced strong demand for our properties with over 99% occupancy achieved for the second consecutive year. In fact, much of this year saw full 100% occupancy. This year we generated AFFO per share growth of 8.6%, with our most recent quarter representing a 16.7% increase over the prior year period. During 2017, we also completed two expansion projects for approximately $5.6 million consisting of one building expansion adding additional rental space of approximately 51,000 square feet and one parking lot expansion. These properties are located in Florida and Texas and are both leased to FedEx Ground. These expansions resulted in annual rent increasing by approximately $552,000 and 10 year lease extensions from their respective dates of completion. Our 2.8 million square feet of new acquisitions combined with our 51,000 square feet of expansions, represents a 17% increase in our gross leasable area this year. During the fourth quarter we acquired three brand new Class A built-to-suite distribution centers, containing approximately 873,000 total square feet at an aggregate purchase price of $78.4 million. One acquisition was a brand new 354,000 square foot distribution center leased to FedEx Ground for 15 years located in Concord, North Carolina for a purchase price of $40.6 million. This facility is right next to our recently constructed FedEx SmartPost facility. As a result of this new acquisition, we now own a two building campus in the Charlotte market containing 685,200 total square feet. This large 116 total acre parcel is situated alongside Interstate 85. We also acquired a brand new 298,000 square foot distribution center, leased to International Paper for 10 years located in Kenton, Ohio for a purchase price of $18.3 million. This property has full rail access and is adjacent to one of International Paper’s largest manufacturing plants in the nation. The third acquisition was a brand new 220,000 square foot distribution center leased to Mickey Thompson and is guaranteed by Cooper Tire and Rubber Company for 10 years. This property located in Stow, Ohio was purchased for $19.5 million. Mickey Thompson has been in this market for over 25 years and outgrew their old facility. With regards to leasing activity, in fiscal 2017 10% of our gross leasable area representing 13 leases totaling approximately 1.5 million square feet was scheduled to expire. 11 of these 13 leases renewed this year, representing 1.4 million total square feet giving Monmouth a 92% tenant retention rate. Our fiscal 2017 lease renewals have an average term of 6.8 years and average GAAP lease rate of $5.70 per square foot and a cash lease rate of $5.59 per square foot, representing a decrease of 0.5% on a straight line GAAP basis and a decrease of 4% on a cash basis. As previously reported, one tenant that did not renew was for the Fort Myers, Florida location which was leased to FedEx Ground. FedEx moved its operations from this 87,500 square foot facility to our newly constructed 213,672 square foot facility, which is located at the Fort Myers International Airport. The currently vacant 87,500 square foot facility is under contract to sell for approximately $6.4 million, which is approximately $2.4 million above the company’s GAAP net book carrying value. The other tenant that did not renew was for a 36,270 square foot facility located in the Des Moines, Iowa, MSA. Effective November 1, 2017 the company entered into a new 10.2 year lease agreement for this facility with FBM Gypsum. The lease agreement provides for two months of free rent after which initial annual rent of approximately $160,000, representing $4.40 per square foot will commence with 2% annual increases thereafter resulting in a straight line annualized rent of approximately $172,000, representing $4.74 per square foot over the life of the lease. This represents an increase of 33.1% over the rent paid by the prior tenant. In fiscal 2018 approximately 8% of our gross leasable area consisting of 16 leases totaling 1.5 million square feet is scheduled to expire. To-date we have renewed three of these 16 leases, representing 298,000 square feet or 19% of the gross leasable areas scheduled to expire in 2018 on a long-term basis. These three renewed leases have an average GAAP lease rate of $4.55 per square foot and a cash lease rate of $4.52 per square foot. This represents an increase of 5.3% on a GAAP basis and an increase of 1.6% on a cash basis. These renewed leases have a weighted average lease term of 6.9 years. Two of the remaining leases set to expire during the fiscal 2018 are with the Kellogg Sales Company. Kellogg has informed us that they will not be renewing their leases at these two properties. However, we have entered into separate agreements to sell these two properties totaling 115,467 square feet for a combined total of $11.1 million, which is approximately $5.9 million above their GAAP net book carrying values. Another remaining lease set to expire during fiscal 2018 is with Caterpillar at our 218,120 square foot facility located in Griffin, Georgia through December 31, 2017. We've entered into a new three year lease agreement, which will become effective January 1, 2018 with Rinnai America. The new annual rent averages $3.81 per square foot as compared to $5.36 per square foot paid by Caterpillar, representing a 29% decrease. Subsequent to year-end, on November 2, 2017, we purchased a newly constructed, built-to-suit industrial building consisting of 122,000 square feet for $21.9 million. The property, which is leased to FedEx Express for 15 years through August 2032 is situated on 16.2 acres in Charleston, South Carolina near the Charleston International Airport. In addition, subsequent to year-end, we completed a parking lot expansion at our property leased to FedEx Ground located in Indianapolis, Indiana for a cost of approximately $1.8 million. This resulted in a new 10-year lease, which extended the prior lease expiration date to October 2027. The expansion also resulted in an increase in annual rent of $184,000 effective from the date of completion. We have also entered into agreements to purchase three new built-to-suit industrial buildings consisting of approximately 1.5 million total square feet each with a 10-year lease term. The total purchase price for these three acquisitions is approximately $117.4 million. The weighted average cap rate for these transactions is 6.3%. We anticipate closing these three transactions upon completion in occupancy during fiscal 2018 subject to satisfactory due diligence. We have continued to take advantage of the flat yield curve and highly favorable interest rate environment by extending our debt maturities as far out as possible and reducing our cost of capital throughout our capital structure. Our weighted average debt maturity at fiscal year-end was 10.2 years as compared to 9.6 years a year ago. During the year, we redeemed our high coupon perpetual preferred stock with a weighted average yield of 7.75% and with a liquidation value of $57.5 million. The funds for these redemptions came from our new 6.125% Series C preferred stock. In addition, at the end of the third quarter, we entered into a preferred stock ATM program to offer and sell additional shares of our 6.125% Series C preferred stock having an average at sales price about to $100 million. We began selling shares through the preferred stock ATM program at the beginning of our fourth quarter. And as of September 30, 2017, we sold 1.4 million shares under this program at a weighted average price of $25.31 per share and generated gross proceeds of $36.4 million. Subsequent to year-end, we sold approximately 820,000 additional shares under this program at a weighted average price of $25.14 per share and generated additional gross proceeds of $20.6 million. During fiscal 2016, we raised approximately $91.9 million in equity capital through our dividend reinvestment plan. Of this amount, a total of $10.1 million in dividends were reinvested this year, representing a 22% participation rate in our dividend reinvestment plan. With regards to the overall U.S. industrial market, our property sectors performing stronger than ever before, the continued growth in e-commerce has been a major catalyst for industrial space demand. Additionally, there has been strong growth in the manufacturing sector with the ISM Purchasing Managers’ Index rising to its highest reading since 2004. Port activity, rail volume and import levels are all at very high levels. Consumer spending levels are strong and rising. The 3.1% real GDP growth recently reported for the second quarter of this year represents over a 50% improvement from the anemic GDP levels that have held the U.S. economy back throughout this recovery. The industrial property sector is heading into 2018 with very strong momentum. Net absorption has now been positive for a record 30 consecutive quarters and will eclipse 230 million square feet for the fourth year in a row. This has resulted in a continued decline in vacancy rates falling by 40 basis points from the prior year period to a historic low of 5.1% currently. New construction has increased with $233 million square feet currently under construction. However, demand growth continues to outpace new supply by a healthy margin. National rental rates are up 4.1% year-over-year to an average asking rate of $5.80 per square feet. It is anticipated that industrial rent growth will continue in 2018 due to these favorable conditions. The continued migration toward online shopping will once again be the big growth story this holiday season. We've carefully put together a portfolio that is benefiting from these favorable trends. Our portfolio is currently 99.5% occupied and clearly our linkage to the digital economy has been one of the big drivers of our success. And now Kevin will provide you with greater detail on our results for the quarter and for fiscal 2017.

Thank you, Michael. I'll 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. Funds from operations or FFO for the three months ended September 30, 2017 were $15.4 million, or $0.21 per diluted share as compared to $11.9 million or $0.17 per diluted share for the same period a year ago, representing an increase in FFO per share of 24%. Core funds from operations for the fourth quarter of fiscal 2017 were $15.4 million, or $0.21 per diluted share. This compares to core FFO for the same period one year ago of $15 million or $0.22 per diluted share. This represents a 5% decreasing core FFO per diluted share. This decrease is largely due to the lower securities gains being realized in the fourth quarter of this year. Adjusted funds from operations or AFFO, which excludes securities gains and losses were $15.5 million or $0.21 per diluted share for the recent quarter, as compared to $12 million or $0.18 per diluted share a year ago, representing a 17% increase in AFFO per share. Rental and reimbursement revenues for the quarter were $30.4 million compared to $25.6 million, or an increase of 19% from the prior year. Same property NOI for the three months ended September 30, 2017 decrease 0.9% on U.S. GAAP basis and decrease 0.6% on a cash basis. Net operating income increased $4.2 million to $26 million for the quarter, reflecting a 19% increase from the comparable period a year ago. This increase was due to the additional income related to the eight properties purchased during fiscal 2016 and the 10 properties purchased during fiscal 2017. As Michael mentioned earlier, we acquired three brand new properties containing approximately 873,000 square feet for a total of $78.4 million during the recent quarter. Net income excluding the depreciation was $18.4 million for the fourth quarter compared to $16.8 million in the prior year period, representing an increase of 10%. As mentioned earlier, subsequent to year-end we require a brand new 122,000 square foot facility in Charleston, South Carolina for $21.9 million. This facility is leased for 15 years to FedEx Express and was financed with a 15 year fully amortizing mortgage loan in the amount of $14.2 million with the fixed interest rate of 4.23%. We expect this recently closed acquisition and the other transactions scheduled to close later this year to positively impact our result going forward. In addition to the pipeline that was already discussed, we are very well positioned to continue to pursue additional acquisition opportunities. I would now like to cover the financial results for the full fiscal year. FFO for the full fiscal year 2017 was $54.4 million or $0.75 per diluted share, as compared to $46.6 million or $0.71 per diluted share for the same period a year ago, representing an increase in FFO per share of 6%. Core FFO for the full fiscal year 2017 was $57.1 million versus $50.3 million in 2016. On a per share basis core FFO was $0.79 per diluted share in fiscal 2017 compared to $0.77 per diluted share in 2016, representing a 3% increase. AFFO, which excludes securities gains and losses was $0.76 per diluted share for fiscal 2017 as compared to $0.70 per diluted share a year ago, representing a year-over-year increase of 9%. Given our recent acquisition and leasing activity coupled with our acquisition pipeline, we anticipate continuing to meaningfully grow our AFFO per share going forward. Rental and reimbursements revenues for the year were $113.5 million compared to $94.9 million, or an increase of 20% from the prior year. Net operating income increased $16 million to $96.2 million for the year, reflecting a 20% increase from the comparable period a year ago. Net income excluding depreciation was $69.9 million for the full year, compared to $56.5 million in the prior year period, representing an increase of 24%. Again, this improvement was driven largely by the substantial acquisition activity that has occurred over the past year. Same property NOI for the 12 months ended September 30, 2017 decreased slightly by 0.1% 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 decreased 30 basis points to 99.3% at September 30, 2017 as compared to 99.6% at fiscal year-end 2016. Our occupancy rate has averaged above 99% for the past two years now. Our weighted average lease maturity continues to increase and as of year-end with 7.9 years as compared to 7.4 years at the prior year-end. Our weighted average rent per square foot increased to $5.93 as of the fiscal year-end as compared to $5.72 at year-end of fiscal 2016. As Michael mentioned, our acquisition pipeline now contain 1.5 million square feet, representing three properties for approximately $117.4 million. These brand new properties are currently under construction and are scheduled to close over the next several quarters. To take advantage of today’s attractive interest rate environment, we have already locked in very favorable financing for all three of these acquisitions. The financing terms for these acquisitions consist of three separate mortgage loans aggregating $72.4 million in proceeds, representing 62% of total costs. These three loans have a weighted average fixed interest rate of 3.75% and a weighted average maturity of 13.2 years and will result in a weighted average leverage return on equity of approximately 12.2%. As of the end of the fiscal year our capital structure consisted of approximately $711 million in debt, of which $591 million was property level fixed rate mortgage debt and $120 million were loans payable including $110 million in draws under our line. 83% of our mortgages and loans payable are fixed rate with the weighted average interest rate of 4.2% as compared to 4.5% in the prior year period. We also had a total of $246 million in perpetual preferred equity at year-end. Combined with an equity market capitalization of approximately $1.2 billion our total market capitalization was approximately $2.2 billion at year-end, representing a 22% increase from a year ago. From a credit standpoint, we continue to be conservatively capitalized with our net debt to total market capitalization at 32% and our net debt plus preferred equity to total market capitalization at 43% at year-end. For the fourth quarter ended September 30, 2017 our fixed charge coverage was 2.5 times and our net debt to adjusted EBITDA was 6.8 times. From a liquidity standpoint, we ended the year with $10.2 million in cash and cash equivalents. We also had $90 million available under our recently expanded credit facility as well as an additional $100 million potentially available from the accordion feature. At fiscal year-end, we held $123.8 million in marketable REIT securities, representing 7.7% of our un-depreciated assets. Our securities portfolio delivered strong results this year, as well as last with the net realized gains of $2.3 million as compared to $4.4 million in fiscal 2017. At year-end, our REIT securities investments reflect an additional $6.6 million in unrealized gains. During the year, we earned dividend and interest income from our securities portfolio of $6.9 million as compared to $5.6 million in fiscal 2016. This year we fully repaid a total of 16 loans associated with 15 properties with unamortized balances totaling $40 million, which unencumbered approximately $160 million worth of properties. The continued substantial growth of our unencumbered asset pool enhances our financial flexibility and further strengthens our already strong credit profile. And now, let me turn it back to Michael, before we open up the call for questions.

Thanks Kevin. To summarize, fiscal 2017 was very productive year for Monmouth. During the year, we grew our portfolio by 17% to over 18.8 million square feet comprising 108 properties, geographically diversified across 30 states. This growth was generated without sacrificing our high standards. The quality of our asset base is evidenced by our 92% tenant retention rate as well as our sector leading 99.5% occupancy rate. As Kevin mentioned, we've averaged above 99% occupancy for the past two years now. As our long-term investors have experienced throughout many business cycles, owning mission critical facilities, lease long-term to investment grade tenants provides for very reliable and predictable income streams. Subsequent to fiscal year-end and following 26 consecutive years of maintaining or increasing our common stock dividend, on October 2nd, we announced a 6.25% dividend increase. This represents our second dividend increase in the past three years. Monmouth is not only one of the few REITs that maintained its cash dividend throughout the global financial crisis; we are also one of the very few REITs that is paying out a higher cash dividend today than ever before. This solid long-term performance best illustrates the high quality of our business model, our strong tenant base and our modern property portfolio. We'd now be happy to take your questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Rob Stevenson of Janney. Please go ahead.

Good morning, guys. Mike, how active do you expect to be on a quarterly basis on the Series C preferred ATM? I mean, you did $36 million and change in the fourth quarter already $20 million this quarter. It is somewhere in the $25 million to $40 million a range a quarter run rate that you guys are going to do? Or you just accessing it now and you expect to turn it off at some point later down the road?

No, the former, Rob. We've been doing $25 million, $30 million a quarter, or about $60 million raised thus far. We have authorization to raise $100 million. So once we hit $100 million we'll look at where the yield curve is and consider continuing to raise perpetual preferred equity. Like I said in the prepared remarks, this low interest rate flat yield curve environment it's been lower longer than people anticipated. I think interest rates may go higher and faster than people are anticipating. So I'd like to raise perpetual preferred equity at these prices while we can.

Okay. And then in terms of the 18 lease expirations you said that you've got the two the Kellogg non-renewals that you're selling and the Caterpillars that you've already released. Is there anything else in the 18 renewals at this point that people have come back and said that they're likely to not renew?

Well just to clear, the Caterpillar is singular not plural, one Caterpillar. And then that’s being leased and the two Kelloggs are being sold. Rich, anything else?

It’s too early to tell at this point.

Okay, so nothing definitive.

Okay and then in terms of -- Kevin in terms of the Fort Myers asset sale and the Kelloggs stuff it’s about $18 million of proceeds. Is there any debt on those assets or is that equity freeing cleared to you guys once they are sold?

Yes, that’s correct, there is no debt on those assets.

Okay. And then given your comments around the leverage levels where you are currently, where is the -- I mean, where is the ranges that you guys are thinking about in terms of where you want to be operating the business over the next year or two in terms of those leverage ratios?

Sure, well given the quality of our income streams which I sound like a broken record, but it’s a point I want to get over and over to the investment public that you saw in the financial crisis, earnings were maintained occupancy was maintained, the dividend was maintained, so I do think having said that, we can uphold higher leverage ratios than those that have shorter term leases to less quality credits. Having said that, the answer to your question is I’d like to see net debt to EBITDA in the low 6s, I like to see net debt to total market cap in a low 30% range, which is where it is, fixed charge coverage above 2.5 times, which is where it is. So our net debt to EBITDA that we were at quarter end was 6.8 times, but that’s a lot of debt that hit at once and EBITDA is coming. So I think we’re well within those ranges currently. Kevin you want to add to that.

Yes, I agree. I feel like we’re in a good spot right now and I feel based on our revenue stream we probably could get a little more aggressive as far as leverage and try to generate these high AFFO growth.

Okay. And then just lastly for me Mike, your cap rate on forward deals seems to be holding in there, as you look forward through ‘18 and the deals that you are negotiating now any downward pressure of any significance on cap rates given how hot industrial remains and how competitive the marketplace winds up being?

Yes, no question, downward pressure on cap rates, Kevin was talking about our leverage returns on equity. So we were spoiled three, four years ago high-teens, 18%, 19% leverage returns on equity came down to mid-teens two years ago. Today they are back to historic norms, 10% to 12% leverage return on equity, it feels like the spreads have compressed too much, but really we’re just back to historic norms. Having said that though, the cap rates continue to go lower, I anticipate interest rates going higher and our historic low spread was 125 bps, we are getting well in excess of that, we are getting in excess of 200 basis point spreads currently. But should it compress further we’ll slow down, but we do have a good pipeline. The last three years, every year we hit a record in new acquisitions it was the right time in the cycle to grow at an accelerated rate and I anticipate doing about $200 million in acquisitions in fiscal ‘18 at roughly 12% leverage returns on equity.

Okay, guys appreciate it.

Thank you, Rob.

And our next question today comes from Craig Kucera of B. Riley FBR. Please go ahead.

Hey, good morning guys. You had a pretty healthy pickup in G&A the last two years and in this year it was down effectively flat on a cash basis, is it fair to say that the company has now decided that incremental acquisitions don’t really require additional headcount?

No, it’s unfair to say that. Yes, it’s amazing this company rounding up is run with $8 million in G&A, you are talking about 20 million square feet, 110 properties, 15 people running that and a lot of our peers that aren’t even that much bigger are running annual G&As greater than --quarterly G&A greater than our annual G&A. So we watch G&A closely, we want to keep G&A as a percentage of gross assets under 100 basis points, it’s under 50 basis points currently because like you said, G&A came down and gross assets were up 20%. As a percentage of revenue, revenue was up 20% and G&A came down, so we want to keep that under 10% and it went from 7.9% to 6.5%. So it’s a very efficiently run company, but as we grow I think the staff and the man power of the company needs to grow as well.

Got it. This year I think your redevelopment activity slowed down a little bit, but as you talk to your tenant base, do you have a sort of shadow number of kind of where you think clients may eventually ask for parking lot expansions and other forms of expansions over the next several years?

There is certain assets that are highly expandable and they will get expanded, the tenants talking about it's not a question of if it's a question of when. And so we look forward to those large expansions. But that’s just a handful and I have nothing concrete at this time to elaborate on further.

Got it. One more for me, I know in the past that you had a goal of becoming investment grade and that was really to get I believe primarily better pricing on your preferred, but you were able to achieve that without it. As you think about the balance sheet, is that necessary to maybe go more into the public bond market or are you still thinking longer term that you're going to continue to finance the assets on an asset-by-asset mortgage basis.

Okay, my answer to that Craig, but I want to just back up to your prior question and add. Our land to building acreage is so plentiful the ratio is 7 to 1. So we have ample land to expand our building. So in your question about future expansion capability, at least we already have the in place land. So we won't be losing tenants due to their growth, we'll be able to accommodate that growth. And I think over the last three years, we did about 15 expansions, we did two last year. So I just want to bring that up that we do have the capacity should our tenants require additional space to accommodate that. As far as the investment grade rating, you're right. I mean, the plan was that our Series A and Series B which had a blended yield of 7.75 we didn't dream of being able to refinance that in the low 6s without an investment grade rating after Brexit happen the tenure treasury went to 1.36. We executed rapidly and we were able to print Series C at 6.125%, which anybody who has followed the REIT preferred market you needed investment grade ratings historically to do 6.125%. So we're glad, we were able to get rid of the high coupon preferred, refinance it substantially lower, will save the company $1.8 million a year forever. But -- so then your question is so would we still consider getting an investment grade rating. I think the markets pricing us as an investment grade company they know 85% of our revenue is secured from an investment grade tenants, the other 15% non-rated credits, but investment grade quality credits. I don't think as $3 billion asset company we're really at that -- and that's rounding way up. We're at the level of getting investment grade rating. As we grow it will be the quadrant of the capital markets we’ll need to access the unsecured debt market. But currently, we borrow secured from the life lenders, they underwrite the assets as investment grade assets, we're borrowing 15 year money at 3.75% fully amortizing and that's generating the levered f returns that have grown AFFO 17% year-over-year. Kevin add to that.

Yes, I just want to add to that, I think eventually in the long-term, we would ultimately like to be investment grades, just no need right now for all the reasons that Mike has just pointed out. And I just want to say a couple of years ago when we did say we wanted to become an investment grade, one of the big hurdles was our large -- we didn't have a large enough unencumbered asset pool. And we've been growing out on unencumbered asset pool by debt that as it matures we pay it off and we don't refinance it. And the investment -- the rating agencies like to see about half of your NOI come from unencumbered assets. And back then maybe we had about 10% and now it's about 27% 28%. And it should grow to about 30% in a year. So we're definitely getting towards that one of those -- one of the hurdles that we need to get to investment grade. Maybe we're not getting there as quickly as we hope, because as you know we do finance new acquisitions with fixed rate debt. And the main reason is just to generate those high levered of returns on as Mike said, we've locked in on the pipeline now that we have three deals 3.75% for long-term money just can’t pass that up.

Just add some numbers to what Kevin just said. In Fiscal '17 we repaid '16 loans freeing up $160 million worth of assets. So the unencumbered asset pool is growing. And as the total assets of the company grow, then it will make more sense to get investment grade rating.

Okay, thank you guys.

Thanks, Craig.

And our next question today comes from John Benda of National Securities Corp. Please go ahead.

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

Good. How are you?

Good. So quickly, on the two examples you gave of lease expirations, the Kelloggs building, the Caterpillar building, the Kelloggs building you decide to sell and the Kelloggs building you decided to put new tenant in at a lower lease rate, so what drove the decision on those two expirations; A, to sell one property and keep the other versus just selling both I mean, it seems like there will be some gains to be had on both properties. So, what drove a decision to put a different tenant in there at a lower rate versus just selling the property?

First of all it’s two Kellogg buildings, one in Orangeburg, New York, one in Kansas City, Kansas. So two Kelloggs that we're selling both, and the Caterpillar building in Griffin, Georgia that we found a new tenant. So what drove the sale was when a property becomes vacant, we market it for sell or lease and then we entertain the offers that come in. And the two Kelloggs different buyers but we realized the 30% gain over our historic cost we sold them vacant for $100 a foot each building and it was just a best offer. Griffin, Georgia Rich, I don't know we had any offers to buy to building, but I'll turn it over to you.

Yes, that was -- those rents reverted to market rents and we found Rinnai which is the great credit and that asset, they were there for 15 years so that's a free and clear asset goes into our unencumbered asset pool and that's where it landed. So when we -- when these things become vacant they’re for sale or for a lease we entertain whatever comes.

Okay. And then secondly on the acquisition financing, I think, it seems like some of the rates have been creeping up and you made a comment before that you expect rates to continue to increase. So what do you think are the largest drivers of some of the increase in the financing? We started the year back in December with 200,000 square foot acquisition at 397 and now we're at 445 and 417, so what do you guys seeing on that front?

I'm not getting your numbers though. We're borrowing, it depends on the credit, it depends on the lease term I think the financing we've been getting to-date is not that much higher interest rates have not risen that much. So there is 4.5 trillion on the Federal Reserve’s balance sheets that needs to be unwound they say they are going to do it slowly, but I’d be surprised if interest rates stay at these historic lows and the yield curve stays as flat as it is today and it’s just a conservative assumption to assume rates are going to rise and we want to have this company in sound footing. So if rates do rise if the yield curve does steepen Monmouth will performance very well and I'm sure that will be the case. But Kevin, I mean, you through up some numbers that aren’t really driving with reality anything you want to add to that?

Yes, I just want to add for the 10 acquisitions that we did close on during fiscal 2017, they had a weighted average interest rate of 3.9%. They did range from a low of about 3.6% up to like 4% or 4.5%. It depends on the market, it depends on the tenant and it depends on a lot of factors and it depends on the term of the loan, the weighted average loan is about 14.9 years on those 10. And then in the pipeline, the weighted average interest rate is 3.75%. So that's the most current rate I guess that we -- that you could look too. So, there is still sub 4% overall some might be a little higher, some might be a little lower, but they’re definitely a little higher than they were let’s say a year ago, where like the weighted average interest rate.

Alright, great. Thank you guys.

I'm sorry a year ago over the weighted average interest rate was about 3.8%.

Yes, 3.61%, 3.67%. Okay, thank you very much.

You’re welcome.

And our next question today comes from Barry Oxford from DA Davidson. Please go ahead.

Great, thanks guys. Real quick, just following up on the sales question Mike, why not -- how much do you think you are kind of giving up by selling the building vacant versus hey look we’re in the decent strong leasing environment, why not lease it up do what you guys invest get a 10 year lease on that building and then put it out in the marketplace?

Yes, it is a dilemma the asset we sold in Orangeburg, New York, much better market, Orangeburg is a last mile Manhattan asset. I would love to have kept that asset. But look cap rates are at historic lows there was multiple bidders to buy it and we took the deal at hand. But you are right, I don't want to shrink the company, I want to growth the company, I don't want to -- we're not in a big disposition mode. But like Rich said, if the asset is vacant we market it for sell or lease and those were very good offers. So were multiple bids and we sold it for $100 a foot vacant and realized a 30% gain over historic costs, nothing wrong with that, we will do that all day long. But you are right we could have waited for a credit and it is a last mile asset for Manhattan and in an ideal scenario perhaps a private -- REIT was private perhaps we keep it. But as a public company to sell it and redeploy the asset into our pipeline made sense.

So you just thought it was better look, I am only given up a little bit of upside and I am not going to have the dilution drag on my earnings, is that -- was that kind of your thought process?

Selling asset at historically low cap rates there is nothing wrong with that.

Right. Okay, thanks Mike.

You’re welcome.

And ladies and gentlemen this concludes our question-and-answer session. I would like to turn the conference back over to Michael Landy.

Sure you know, we’re going to take a couple of questions over the internet. Mike Boulegeris from Boulegeris Investments has three questions. So let me read them and we’ll take them as they come. So here is the question. Over the next several years lease expirations are rather limited and well disbursed until 2023, historically Monmouth has achieved an enviable track record of renewals for the blue chip tenant base. However, with the advent of normalizing interest rates will this affect the forward looking approach to renewals and might this renewal process provide Monmouth the opportunity to further strengthen tenant relationships in the context of expanded potential for your pipeline?

So first of all I’d say yes, our lease maturities are well laddered, our average maturities nearly eight years out. We have no double-digit lease explorations as far as annualized base rent or gross leasable area, no double-digit expirations until 2025, our longest leases go all the way out to 2034. But as far as normalized rates, we just look for the best deal, as far as rising interest rates affecting how we are going to transact a lease renewal negotiation. I will say TDP growth has printed above 3% last two quarters that’s a 50% -- over 50% improvement over the 10 year average. So GDP growing is a sign of the ability to lock in higher rents. Our 2018 expirations have been renewed plus 6% roughly so they are coming in at a higher rents and a weighted average maturity of seven years. So we are getting good term, we are getting higher rents and we take it as a case-by-case basis and normalize rates as far as affecting how we transact our lease renewal negotiation, it’s more how is the macro economy as a whole in each asset specifically. He has two more questions, anybody want to add to that one, okay, next one. With the conservative balance sheet of Monmouth strong liquidity and operating fundamentals and perhaps the possibility of a more modest acquisition pipeline in the intermediate term might Monmouth consider moderating the DRIP and SIP to reflect the overall climate? I’ll turn that over to Kevin, but I will say one thing I will take a little bit of a modification to the modest acquisition pipeline, like I said the levered returns from high-teens have come down to normal levels 12% levered return for equity. So while the spreads have tightened there is still good returns and I anticipate a pipeline of $200 million and that’s not a modest acquisition pipeline, it’s not record breaking, we set records for the last three years in new acquisitions going from what was I think in 2015 $192 million in acquisitions, in 2016 $211 million in acquisitions, last year was the record $286 million. So each year was -- each ensuing year was a new record and this year it will come down to about $200 million, but that’s not a modest acquisition pipeline and the spreads are favorable. But if the spreads should get very thin you will see the company slowdown on these acquisitions. Kevin anything to add to that?

Yes, with our stock at all time high it’s been great raising money through the DRIP, SIP program and getting it’s the cheapest form of raising capital. So as long as that’s continues, we’ll continue to use the DRIP and SIP money and as long as the acquisition pipeline continues to grow and there is a need for that money that’s what we’ll continue to do.

Last question from Mike Boulegeris, Gene you have been too quiet, I am giving you this one. So here it is. You've been constructive for some time as to the positive effects that the Panama Canal expansion is having for the East Coast ports. Certainly we're seeing major strategic investment here in Georgia at the Port of Savanna. With Monmouth owning a portfolio of the youngest Class A industrial warehouses up at down the East Coast, many of which are located in close proximity to the nation's leading ports. Do you believe that the value of these properties will continue appreciate in the years ahead or will new construction in and around these key ports Savanna, Jacksonville and Charleston limit their long-term appreciation potential to the current level?

So the answer to the question is we see no limit in the long-term appreciation. Our philosophy is that well located buildings, modern buildings to investment grade tenants that gives us a 10 or 15 year window is to realize appreciation in an economy where inflation is scheduled to be 2% to 3% in an economy that's growing 2% to 4%. We look at our total return and we get the current return from the current lease. But we think it's equally important is total return which includes the appreciation, and we believe that over the next 10-15 years this company is going to see a great deal of appreciation. At the present time the value of our properties on our books is much higher than the original costs. And we see that continuing and it's just been a great game plan and it's working very well.

So just to add to that, I'll say that wasn't long ago the market shift between containers, we had 60% container traffic coming through the West Coast, 40% coming through the East Coast with the advent of expanded canal it's almost 50-50 now it's about 52% coming through the West Coast, 48% coming through the East Coast. So pretty soon it will be equilibrium. And Savanna is the market we're not in we're in Jacksonville, we're in Charleston in a big way, we're in Tampa we're in Miami. But one of our deals in the pipeline is in Savanna it’s a large deal 835,000 square feet, so we're excited to enter that market. Any other questions Suzanne?

No, Mike that's all.

Okay. So thank you operator. 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. On behalf of Monmouth, I'd like to wish everyone a happy, healthy holiday season and a very prosperous new year. We look forward to reporting back to you after our first quarter. Thank you.

Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. The teleconference replay will be available in approximately one hour. To access this replay, please dial U.S. toll free 877-344-7529 or international toll 1-412-317-0088. The conference ID number is 10111763. Thank you and please disconnect your lines.