Good morning. And welcome to Monmouth Real Estate Investment Corporation's First Quarter 2018 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 first 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 first quarter 2018 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; 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 pleased to report our results for the first quarter ended December 31, 2017. On October 2nd, we raised our common dividend 6.25% to $0.17 per share, representing our second dividend increase in three years. These two dividend increases totaled 13%. Following 9% AFFO per share growth in fiscal 2017,our first quarter fiscal 2018 AFFO per share has increased 16% from the prior year quarter and is up 5% sequentially. This represents a 77% AFFO dividend payout ratio. Given the predictability and long term visibility of our income streams, this represents a very conservative payout ratio. Monmouth has now maintained or increased its common stock dividend for 26 consecutive years. Our property portfolio is currently 99.5% occupied, representing a 20 basis points increase over the prior quarter. We are now in our third consecutive year with above 99% occupancy. During the quarter we acquired two brand new Class A built-to-suit properties, these acquisitions were purchased for an aggregate cost of $52.1 million and contain a total of 422,000 square feet. One property located in Charleston, South Carolina is leased to FedEx Corporation for 15 years. This 122,000 square foot distribution center is situated on 16 acres near the Charleston International Airport. The other property is a 300,000 square foot distribution center in Oklahoma City leased for 10 years to Amazon. This large property situated on 123 acres in close proximity to the Will Rogers International Airport. These two properties have a weighted average lease term of 11.4 years. The cap rates for these two acquisitions average 6.1%. From a run rate standpoint, we expect these two properties to generate a combined total annual rent of approximately $3.2 million. Also during the quarter, we completed a $1.7 million parking lot expansion at our Indianapolis property leased to FedEx Ground. This resulted in a new 10 year lease expiring in October 2027. The expansion also resulted in an increase in annual rent of $184,000 effective from the date of completion. Following last year's 17% growth in our gross leasable area, at the end of the first quarter, our gross leasable area grew to approximately 19.1 million square feet, representing a 15% increase over the prior year period. As of the quarter end, our portfolio consisted of 108 properties geographically diversified across 30 states. Our weighted average lease maturity at quarter end increased to 7.9 years from 7.4 years in the prior year period. Subsequent to quarter end, on January 22nd, we purchased a newly constructed 832,000 square foot industrial building for $57.5 million. This property is leased for 10 years to Shaw Industries a wholly owned subsidiary of Berkshire Hathaway. This property is situated on 62 acres near the Port of Savanna, which is the fourth largest port in the U.S. is the fastest growing port in North America. Over the years Monmouth has built a substantial presence at many of the East Coast and Gulf Coast ports. Given the recent increased capacity at the Panama Canal, the evolving global supply chain, the return of domestic manufacturing and the continued population growth east of the Mississippi river where over 70% of the U.S. population currently resides. We're confident that our portfolio is strategically situated to take advantage of our growing economy. With the addition of our recent acquisition Savanna our gross leasable area is now approximately 19.9 million square feet. From a leasing standpoint, in fiscal 2018, approximately 8% of our gross leasable area representing 16 leases totaling approximately 1.5 million square feet was scheduled to expire. I am pleased to report that thus far, 6 of the 16 leases have been renewed. The six leases that have been renewed to-date represent approximately 569,000 square feet or 37% of the expiring square footage and have a weighted average lease term of 6.1 years. These six renewals have a weighted average lease rate of $4.85 per square foot on both the GAAP and initial cash basis. This represents an increase in the weighted average lease rate of 3.9% on a GAAP basis and 1.5% increase on a cash basis. Two other leases that were set to expire during fiscal 2018 were leased to Kellogg's at our 65,000 square foot facility located in Kansas City, Missouri through July 2018 and at our 50,000 square foot facility located in Orangeburg, New York through February 2018. As previously disclosed Kellogg informed us that they would not be renewing their leases at these two locations. In December 2017, we sold both of these properties for a combined total sell price of $11.1 million. The sale of these two properties resulted in a realized gain of $5.4 million on a GAAP basis, representing a 105% gain over the depreciated cost and of realized gain on historic un-depreciated cost of $1.8 million, representing a 21% gain over our historic cost base. In conjunction with the sale of these two properties, we simultaneously entered into lease termination agreements for each property whereby we received the termination fee from Kellogg's totaling $210,000, which represents a weighted average of 80% of the remaining rent due under each respective lease. Another remaining lease set to expire during fiscal 2018 was leased to Caterpillar at our 218,000 square foot facility located in Griffin, Georgia through December 31, 2017. In September 2017, we entered into a three year lease agreement with Rinnai America Corporation through December 31, 2020 for this location. The new lease commenced on January 1st, with initial annual rent of $807,000 or $3.70 per square foot. The rent escalates at 3% per year, resulting in a straight line annualized rent of $831,000 over the term of the lease. Our 68,000 square foot facility located in Colorado Springs is leased to FedEx Ground through September 30, 2018. As previously noted, FedEx ground has informed us that they will not be renewing this lease as they moved their operations to our recently constructed 225,000 square foot facility near the Colorado Springs Airport. The original 68,000 square foot facility is under contract to be sold for $5.8 million, which approximates our net book carrying value. The sale is anticipated to close during the third quarter of fiscal 2018 subject to customary closing conditions and requirements. Lastly, one of our tenants have leased 81,000 square feet at our 256,000 square foot building location in Monaca, Pennsylvania informed us that they would not be renewing their lease. This lease expired on December 31, 2017. Economic activity is strong in the area and therefore we expect good demand for this space. The five remaining leases that are set to expire this fiscal year are currently under discussion, and we expect to have more to share with you in the ensuing quarters. With regard to our acquisition pipeline, in addition to the previously mentioned 832,000 square foot property in Savanna, Georgia purchased subsequent to quarter end. We have entered into agreements to acquire two new built-to-suit properties containing 660,000 total square feet, representing $78 million in acquisitions scheduled to close over the next several quarters. And keeping with our business model, both of these acquisitions consists of well located, brand new built-to-suit projects currently under construction. The cap rates on these two new built-to-suit properties average 6.2% and have a weighted average lease maturity of 12 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion and occupancy. To-date we've already secured $49.4 million in financing for these properties for 15 year term with the weighted average interest rate of 3.99%. Based on the average cap rates and the debt cost we've already locked in, these two acquisitions are expected to generate a blended levered return on equity of approximately 12.6%. Looking at our balance sheet, our weighted average debt maturity and our fixed rate debt at quarter end is a very healthy 11.5 years as compared to 10.7 years in the prior year period, representing one of the longest debt maturity schedules in the entire REIT sector. Our weighted average interest rate on our fixed rate debt at quarter end was 4.16% as compared to 4.44% one year ago. In addition during the quarter we sold 1 million shares of our 6.125% Series C Preferred Stock through our ATM program at a weighted average price of $25.13 per share, generating net proceeds of approximately $25.7 million. As of the end of the quarter 10.9 million shares of the 6.125% Series C Preferred Stock were issued and outstanding representing an aggregate liquidation value of $272.5 million. During the first quarter of fiscal 2018 we also raised approximately $25.5 million in equity capital, through our dividend reinvestment plan at an average price of $16.50 per share. Of this amount, a total of $2.9 million in dividends were reinvested this quarter, representing a 22% participation rate in our dividend reinvestment plan. With regard to the U.S. industrial property market, 2017 marked another very strong year for industrial real estate. Fourth quarter net absorption came in at 44 million square feet, marking the 31st consecutive quarter of positive demand. Total net absorption for the year exceeded 200 million square feet for the fifth year in a row. The national average vacancy rate continues to come down and is currently at 4.5%, marking a record low. Average asking rents continue to increase they are now at $6.92 per square foot, representing a 5.3% increase from one year ago. New industrial development also continues to increase as the supply-chain evolves, in order to embrace e-commerce and omnichannel consumption. The industrial pipeline under construction here in the U.S. is currently 237 million square feet, up 2.2% over the prior quarter. The U.S. economy is picking up, with consumer and business confidence both rising on the heels of the recently passed tax reform. Following two consecutive quarters of over 3% real GDP growth, the initial read on fourth quarter GDP came in at 2.6%. The U.S. unemployment rate of 4.1% marks the lowest level in 17 years. This past holiday season saw a very strong retail sales, with an increase of 4.9% over the prior year period. E-commerce was once again the biggest story this past holiday season, with online sales increasing by 18.1%. Our portfolio comprising high-quality properties and tenants in strategically important locations is very well positioned to take advantage of these positive economic trends. And now Kevin will provide you with greater detail on our financial results, for the first quarter fiscal 2018.

Thank you, Michael. Core funds from operations for the first quarter of fiscal 2018 was $16.9 million or $0.22 per diluted share. This compares the core FFO for the same period one year ago of $13.9 million or $0.20 per diluted share, representing a 10% increase. Adjusted funds from operations or AFFO, which excludes net realized gains on our securities investments was $16.5 million or $0.22 per diluted share for the quarter compared to $12.9 million or $0.19 per diluted share in the prior year period, representing a 16% improvement. On a sequential basis, AFFO per share increased 5% over the prior quarter. As a result of our recent acquisition and expansion activity and our acquisition pipeline, we anticipate continuing to meaningfully grow our per share earnings going forward. Rental and reimbursement revenues for the quarter were $32.7 million, compared to $27.2 million or an increase of 20% from the previous year's quarter. Net operating income or NOI, which we define as recurring rental and reimbursement revenues, less property taxes and operating expenses was $27.4 million for the quarter, reflecting a 19% increase from the comparable period a year ago. Net income was $17.6 million for the first quarter, compared to $9.9 million in the previous year's first quarter, representing a 79% increase. The large increase in our net income was primarily driven by the sale of two properties during the recent quarter. As Michael mentioned earlier, during the quarter we acquired two newly constructed industrial properties for a total of $52.1 million. One of the acquisitions a 122,000 square foot distribution center leased to FedEx Corporation for 15 years in Charleston, South Carolina was for $21.9 million. We financed this transaction with a 15 year fully amortizing mortgage loan in the amount of $14.2 million at a fixed interest rate of 4.23%. The other acquisition a 300,000 square foot distribution center leased to Amazon in Oklahoma City for 10 years was for $30.3 million. We financed this transaction with a 10 year mortgage loan amortizing over 18 years in the amount of $19.6 million at a fixed interest rate of 3.64%. Same property NOI decreased slightly by 1.4% on a GAAP basis over the prior year period and decreased 1% on a cash basis. This decrease was primarily attributable to a 60 basis points decline in same property occupancy percentage from 100% at the prior year quarter end to 99.4% as of the current quarter end. With respect to our properties, end of period occupancy for the first quarter decreased to 99.5% as compared to 100% in the prior year period, representing a 50 basis point decrease. And as previously noted we are now in our third consecutive year with above 99% occupancy. Our average lease maturity as of the end of the quarter increased to 7.9 years as compared to 7.4 years in the prior year period. Our average annual rent per square foot increased 3.3% to $5.99 as of the quarter end, as compared to $5.80 one year ago. As of the end of the quarter our capital structure consisted of approximately $723 million in debt, of which $613 million was property level fixed rate mortgage debt and $110 million were loans payable. 85% of our debt is fixed rate, with the weighted average interest rate of 4.2% as compared to 4.4% in the prior year period. We also had $272 million in perpetual preferred equity at quarter end. Combined with an equity market capitalization of $1.4 billion, our total market capitalization was approximately $2.4 billion at quarter-end. From a credit standpoint, we continue to be conservatively capitalized with a net debt to total market capitalization at 30.1%. Fixed charge coverage at 2.4 times and our net debt to adjusted EBITDA at 6.2 times for the quarter. From a liquidity standpoint, we ended the quarter with $10.8 million in cash and cash equivalents. We also had $90 million available from our credit facility as well as an additional $100 million potentially available from the accordion feature. In addition, we held $130.4 million in marketable REIT securities, representing 7.8% of our un-depreciated assets, with an unrealized loss of $4.1 million at quarter end. Additionally we generated $100,000 in net realized gains during the quarter. And now, let me turn it back to Michael, before we open up the call for questions.

Thanks, Kevin. To summarize, following the substantial growth achieved in fiscal 2017, the first quarter represents an excellent start to the New Year. Our recently increased dividend is very well covered by recurring earnings. This 6.25% dividend increase marks our second dividend increase in three years totaling 13% in dividend increases. Our occupancy rate remains nearly full at 99.5%, reflecting the mission critical nature of our properties. Following 9% AFFO per share growth in fiscal 2017, our first quarter per share AFFO is up 16% year-over-year and 5% sequentially. We've put together a high quality industrial property portfolio that we believe we'll continue to benefit from the opportunities presented by e-commerce and the evolving global supply chain. Lastly, our new Annual Report is featured on our website and represents an excellent resource for understanding our company and our future outlook. We put a lot of thought into our annual reports, and we're especially proud to this year's addition. If you would prefer to receive a hard copy, please contact Susan, and we'll be more than happy to FedEx it out to you. We'd now be happy to take your questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Jeremy Metz with BMO Capital. Please go ahead.

Hey, good morning guys. Mike, in your opening remarks you gave a pretty thorough update on the 2018 lease expirations here, but as you look at that next layer of leases the 2019 stuff, just wondering how early do those discussions realistically start? And then given the strength in the market today and the upward pressure we're all seeing on rent, our tenants looking to have those discussions and those conversations earlier and maybe you are the one in the whole off and let rent striped higher?

Well I'll turn it over to Rich in a second to drill them deeper if he wants, but historically the FedEx conversations could begin well in advance and given what's going on in e-commerce and the industrial sector as a whole, I really don't see any need to worry about the FedEx leases. And looking at 2019, I see we have three FedEx leases coming due and I think we are already in discussions on one and I am confident about all three. We have nine leases rolling in 2019, it's 1.4 million total square feet. So 7% of our gross leasable area about 6% of our annual base rent. And it's a tight market, I know, you listen to all the other industrial REIT calls and it's clearly a landlord's market. And so we have strong tenants and therefore I don't know where they are going to find other space. So, I am confident for good lease rollups in fiscal 2019. Rich you want to add anything?

We have been pretty much talking to everybody on the 2019 list so far. So they have reached out talked to us so we have been in discussions with all those buildings already and as we close those renewals we will give you more updates.

Okay, appreciate. And just maybe not something you have on hand, but how many of those do you have fixed renewals options versus rolled to market, I would assume the FedEx - the three FedEx are some fixed renewal type options or maybe the other six?

Yes, they all have options. So depending on what they're asking for going above or beyond their options, we will discuss that with them, but most of our leases have options.

Yes, but just to clarify most of our leases have options, but many I would say 50% are options at fair market rents so that's to be determined. The FedEx leases typically have options to renew up 15% for five years and then up 5% for the next five years. So then they just do the math is market rent above or below the 15% increase and we go from there.

Got you, that's what I wanted. Thanks. And then last one for me, just in terms of acquisitions, can you just talk a little bit about what the pipeline looks like beyond the roughly $80 million you have under contract today. Are you seeing a lot of opportunities that fit the box still or is pricing move into a point where maybe you're not as comfortable and activity could actually slow a bit from here?

Agreed, the last statement you said, pricing is moving lower and lower as far as cap rates higher and higher as far as acquisition costs, which is interesting given what's going on in the REIT market down 10% year-to-date. So there has been a real disconnect between the real estate prices on Wall Street versus Main Street heading ever higher on Main Street and lower on Wall Street. So you're talking sub five cap rates to win new build-to-suit deals and we're not really comfortable growing at the rate I think our shareholders been accustomed to over the last several years, given the compression, the continued compression in cap rates.

Thanks for the time.

You are welcome, Jeremy.

The next question comes from Barry Oxford with DA Davidson. Please go ahead.

Great. Thanks, guys. Mike just to build on the cap rate discussion and pricing you are buying generally speaking relatively new buildings, are you seeing construction pricing and labor pricing affecting going in yields that you have to pay, given that the price of those buildings could be - could cost more to make.

Yes, that's all true, especially the land component, the most expensive component in the industrial development, cost structure is land and land is rising dramatically, it's hard to find entitled land, it's hard to find flat well located land. So given the demand, given we're heading into eighth year of positive net absorption, it's going to take higher costs and higher rents to develop industrial going forward. The good news is I feel great about the last four years each year was a record in new acquisitions and in hindsight we have substantial gains in all those assets we acquired. But going forward to develop you're talking sub-five cap rates on built-to-suit spec deals are at low six cap rate. So it's pretty amazing how rapidly industrial real estate pricing has increased.

Is it fair any to say that rents are kind of keeping up with the cost of goods for lack of a better word?

Yes, I think rents are up over 5% last year, and I think people are baking in pretty big assumptions on NIO spreads going forward same store NOI growth, and the tenants they need the space. So the trade office we value our all-star tenant base very highly and so we are looking for term and it may sound a little unusual, but given our portfolio it's proven to work that we'll push rents very aggressively on three year, two year, one renewals. But if we could lock in the investment grade tenant long-term even though market rents might want higher increases we want a strong increase and we want bumps, but we will be less aggressive to lock in the predictable earnings stream.

Alright, great. And then last question switching gears just a little bit, Mike, like to get your input on this, you quoted 237 million square feet under construction is something is going to kind of probably bring this party to an end it's going to be over supply 237 million square feet not really an over concern of yours at this point in time?

No, not at all, there is a footprint in the U.S. of roughly 20 billion square feet. The rule of thumb is obsolescence is about 1%. That would be 200 million square feet. So 237 million square feet under construction is only a net gain of 37 million square feet. And given that industrial is now largely eating into the market share of the retail property type, you could argue that we need omnichannel space, you could argue that obsolescence is 2%. So we need 400 million square feet to stand still because the older buildings can accommodate omnichannel distribution. So no, I don't think 237 million's a number to meet demand. We need much more supply than that.

Great, I will yield the floor. Thanks, guys.

Thank you, Barry.

The next question comes from Rob Stevenson with Janney. Please go ahead.

Good morning guys. What's the current expectations for same store NOI growth for fiscal 2018? When you take a look at the portfolio today.

So, same store NOI, I think GAAP was up 5% and cash was up 3%. What were the numbers Kevin?

Yes, that's correct. So for the six leases that we have renewed thus far we had a…

While Kevin is looking, I will just say last year we were at 100% so the reason same store NOI was down for the quarter was the 60 basis points diminution in occupancy. Because from 100% you are only going to go lower and we went to 99.4%, but now we are back up to 99.5%, but go ahead, Kevin

I am sorry, so the six leases that we renewed thus far were up about almost 4% on a GAAP basis, about 1.5% on a cash basis. We still have a few more leases to sign up and we have good expectations that overall we will probably increase. And as Richard mentioned before we are already in discussions for fiscal 2019, and just given the way the market is we feel pretty confident that - even though we had a decrease in same store NOI for this short three month quarter that we feel going forward it should increase.

The only thing I will add to that, Rob, is the weighted average lease terms on those renewals is 6.1 years. So, that's another important variable in the same store NOI rollup, roll down equation is when you are talking about investment grade tenants 6.1 year of lease renewal is very valuable to bake into the whole analysis.

Okay. And then other than the two dispositions that you have under contract anything else that you guys are looking to sell this year especially any of the potential non-renewals in either the remainder of the 2018, or 2019, if that comes to fruition, is that highly likely to be sold rather than re-tenanted, how are you guys thinking about that today, and disposition over the next sort of six to twelve month beyond these two that you have under contract.

Sure, well just to give you some color on insatiable demand out there we get unsolicited calls and emails all the time people looking for the acquisition of our properties, we joke that we are going to put not for sale sign at some of the assets because the calls come in monthly if not more frequently than that unsolicited. So the answer to your question is, no we are just selling the two that are currently under contract for sale, but it's a seller's markets. So if we have a tenant that's not going to be renewable we'll market it for sale or lease and the sale prospects are very strong and you're seeing that across the board with the other REITs you know the other industrial REITs that they are going to ramp up their non-core dispositions, non-core is not an asset type, we're interested in but the point being that there's insatiable demand for industrial real estate and as a premium being placed on portfolio. So as you place the assets into blocks of size the multiple goes up accordingly.

Okay. And then lastly for me, can you talk about how you guys are thinking about the marketable securities portfolio both in terms of size? And then sort of mix between common and preferred in the wake of the continued REIT underperformance and the nearly 50 basis point increase in the 10 year treasure over the last six weeks. How you guys think about that going forward?

It's getting exciting, is the way I think about it, I think, there has been a lot of strategies we've employed that are unorthodox admittedly, but over time you see other people mimic our strategy and I think imitation is the sincere form of flattery. So we've been doing the two pronged approach to capital allocation looking for value on Wall Street and Main Street. The Wall Street REIT securities assets we limit to 10% of total assets and we have a great track record. But it's a Berkshire Hathaway type approach, Warren Buffet talks about in his annual report and saying it gives them an edge to look in both realms and Blackstone has done it for a long time quite successfully, you open up the paper today and suddenly Blackrock is raising $10 billion to do the same thing. So it's nice to see other people validate this successful strategy. Now to your question, two years ago the tenure was at 1.9% and REITs were yielding 8%, 9%. Today the tenure has moved to call it 3% seems to be heading there and suddenly you can buy REITs at yields over 10% and those are dividend yields and FFO yields are in the teens. So clearly there's a disconnect between pricing on Wall Street being getting compellingly cheap and for some reason on Main Street is a less efficient market it's a less forward-looking market, but it's the bigger market the REIT security is only 15% of the total real estate market. And so you get volatility and you get artificial supply and demand pressures from the ETFs and that's the land of opportunity as far as the way I see it. Gene you want to add to that.

We are very pleased with the securities market, the securities portfolio and there we're waiting the earnings reports from the 10 or 12 companies we have in the portfolio, which will come out in the next few weeks, we expect that they will continue to be good. So we continue to invest in REIT securities, we think it's - it gives us liquidity, it gives us the ability to learn from the other companies we invest in and we are very pleased with the portfolio. We are aware of fact that the overall stock market has gone up much more than the REIT's stocks have gone up and we are aware that in the last few days some of the REITs have gone down a bit. That doesn't bother us at all. We build the REIT industry and REITs as we have a stake and we take a long-term approach. And then The National Association of Real Estate Trust has done a 20, 30 year study and REITs perform as well as the real estate market and the real estate market looks like it's going to perform very well.

Okay, thanks guys.

Thank you, Rob.

[Operator Instructions] The next question comes from Craig Kucera with B. Riley. Please go ahead.

Hey, good morning guys. I guess it's circling back to the last question on the securities portfolio, I think you spend about $90 million in your fiscal first quarter and sold $2 million. Is that - when we think about sort of the pace of investment is that likely to kind of bring you up to closer to 10% and would you think at all about selling assets and buying asset and buying securities?

Okay, just to jump back to Rob, did ask on the breakdown between common and preferred, we are much more interested in potential of REIT common versus preferred today, we've 94% of our portfolios in common, 6% in preferred currently, just to answer that. As far as you selling property, it's a sellers' market, and other REITs are in the industrial sector are ramping up their sales. And historically low cap rates certainly that's nothing to argue about. But given the size of our company and the need to grow and the successful growth we have been able to deliver I don't see the arbitrage of taking gains on street and investing into securities. The arbitrage is there, but we will allocate new capital to REIT security. So, yes, I think we should take the portfolio higher, take it up to 10% of assets if we can, but not shrink our core business. The 110 - the 20 million square feet, 110 industrial properties we currently own.

Okay. With your - based on your comments of your fourth quarter earnings it did look like you sold much other preferred ATM in December, has demand picked up in January or are you likely to see a slower pace of issuance?

So the preferred market is definitely seeing less demand, part of the reason why we didn't raise as much capital in December has to do with reporting and blackout periods. So the ATM wasn't opened, as much as it was. But be there as it may demand for fixed income is abating and while we're happy we've raised $70 million of the $100 million we have authorized to raise, the velocity of which the demand is coming in for preferred shares is curtailed relative to what it was.

Okay.

But we do believe that having as an essential part of our capital stack, issuing preferred stock we think over 10 years, 15 years of used preferred stock as a means of using - of raising capital that in the long run you will get somewhat increased leverage and substantially the ability to enhance your overall performance for your common shareholders.

Got it. Going to the dividend, I know you raised this year to $0.17 and your payout ratio has dropped from a couple years ago maybe 90% to the mid-80s last year, how are you thinking about sort of a slower for payout going forward?

Okay. So the dividend is key, I see REIT dividends as being the mother milk of REIT securities. We're happy with our 26 years of consecutive payouts or increased payouts. You're absolutely right in the fourth quarter of fiscal 2017 our $0.16 dividend represented a higher payout ratio than our raised dividend in the first quarter. So we paid out $0.16 in the fourth quarter of 2016 and - of 2017 and that was a 84% payout ratio. And now with the 17%, at 6.25% increase payout ratios has fallen 8% to 77%. So in other words, we were very confident in our ability to grow the dividend 6.25%, we've grown it 13% over three years and there is nothing we want more than to keep that track record going.

Okay. One more for me, Kevin I know you don't have a lot of floating rate debt exposure, I think, it's probably about 15%, but as we enter a rising rate cycle are you thinking at all about maybe hedging that some way through maybe some interest rate caps or some other derivative?

No, we really - I just said, it's not a big portion of our debt, 85% of our debt is fixed rate and it's getting lower, it's 4.16% now. So, yes, only about 15% or $110 million of our debt is fixed rate based on LIBOR. But now we really haven't - since it's not a big portion of our amount, we haven't really given it thought to try to cap that. And if it really gets that crazy we can just pay it down and then just keep the availability there in case of emergency.

But I'll add to that is what Gene was saying by having a substantial trench of preferred, perpetual preferred equity in our capital stack, rounding up $300 million in 6.125 that matures never and plus our debt maturities are the longest debt maturity schedule in the REIT sector, one of the longest if not the longest going out 11.5 years. So by locking in these historically low rates so far out on the yield curve I think that's the best hedge you can have.

All right. Thanks, guys.

Thank you, Craig.

The next question comes from Michael Boulegeris from Boulegeris Investments. Please go ahead.

Thank you, and Michael congratulations you, Kevin, Gene and your entire team for sustained growth and strong execution.

Thank you, Mike and I apologize just to hear out your name is always pronounced. Mike Boulegeris, Boulegeris Investments, long-term shareholder, one of the smartest guys out there, go ahead Mike.

Thank you. I guess my first question to follow-up on the question on the dividend I think Michael you opined on the total return in the annual report that was just presented. And can you maybe comment on the quality of the dividend looking forward with near 100% occupancy you had the stress test of the great recession? And then maybe further attractiveness with the new tax policy where you've had dividend tax ability reduced by 20%. Might you share your comments looking - just generally looking forward?

Sure, I guess, I would start with the fact that 40% of public equity ownership is index and EPS and passive algorithmic investing and because of that quantitative analysis is done very well through computer algorithms. But the qualitative aspects tend to fall by the wayside and I think from an active investor, human investor standpoint a lot of value can be found by finding situations where quality is not being priced as it should be, it's being largely ignored in the market place. So I think the ETF phenomena has created an average holding period that's measured in months sometimes milliseconds, we invest looking at an investment horizon years, real estate is a cyclical asset class and you certainly have to have long-term envisions of what's going to happen, not millisecond and monthly time horizons. The dividend, I guess, I would just say past is prolonged for the future. The fact that we had this global financial crisis where companies with 75% cushions on a 25% dividend payout ratio you would think and investment grade credit balance sheet you would think that dividend is iron clad. But there's no certainty in this world and the tide went out and very few REITs maintain their cash dividend. And our payout ratio as you remember was 100%, but our occupancy stayed high and our earnings came in strong and our dividend was maintained. We think dividend growth is an important factor in addition to the safety of our dividend. We've raised it 13% over the last three years, we've a bigger cushion than ever. But as we said last quarter if you remember our call that people getting complacent that interest rates are going to stay lower, longer and we think they're going to go higher faster and we're seeing that. So dividend growth is going to be an important aspect in REIT performance, REITs are highly convex, you would think the dividend growers and the REITs with qualitative earnings and cushions would be less convex. But no, they're all behaving the same regardless of quality of income streams. And so I think this will be the year where passive investors don't outperform, this will be the year of the active investors.

Thank you for that emphasis. And maybe Gene if you may comment or tackle the other part of the total return equation, Michael previously commented on the rising replacement cost and construction cost. And certainly you provided over Monmouth has one of the most useful let's say strategic mission critical Class A portfolios, can you comment on intrinsic value of your underlying assets from your loan perspective of going back…

We've focused on if you have $1 billion or a $2 billion portfolio and the economy is heating up and inflation is going ahead and we know from history that the value of our properties will be going ahead 2%, 3%, 4%. And so that over a period of 10 years you are talking about $20 million, $40 million of your appreciation. We've focused on that and we don't focus on same store FFO value in 2019 because we negotiate with our tenants, we have a great relationship with our tenants. We are less concerned about 2019 than we are about 2024 and 2025 and where we're taking the company. And we believe if we sat the capital structure right and if we have total return, total appreciation that over that period we will find ways to get our shareholders cash returns equivalent to the gains that we foresee. And we really do plan with the preferred stock and equity issuance to be able to reward our shareholders so that they can share in the appreciation in the properties. We take a long-term approach, but we don't want our shareholders have to wait for many years, we want them to receive the gains, as we go over the next 5, 10, 15 years.

Well, thank you. And finally Michael maybe or Kevin can give some color to one of your recent acquisitions. Obviously you have a 20 year plus relationship with FedEx, FedEx Ground so you know that last mile, the Internet very, very - e-commerce very well. But then should we think of this Amazon recent acquisition, new tenant as one-off situation or is there let's say possibility that this might be the beginning of a new expanding relationship with knowing that there is no guarantees?

Well, Amazon has been a big catalyst in new industrial construction. Nobody is building more industrial real estate than Amazon demand is requiring. So we hope that with all our tenets we would like to cultivate long-term relationships. We're certainly in discussion to grow the relationship and do more deals. FedEx is a special situation, FedEx I would go to the FedEx website and look at the video they put together. Go to fedex.com/dream and you'll see a great video that FedEx put together on how over 40 years they've built this mission critical network to service e-commerce. And Amazon is great for being the portal to conduct the sales, but as far as the logistics and as far as the profitability FedEx's is a unique situation. But yes, I hope to grow with all our tenants and we're proud to add Amazon into the folder, which didn't take so long, but yes we plan to keep growing with them.

Thank you for the questions.

This concludes our question-and-answer session. I would like to turn the conference back over to Michael Landy for any closing remarks.

Well thank you, Anita. I would like to thank everyone for joining us on this call and for their continued support and interest in Monmouth. As always Kevin, Gene and I are available for any follow up questions. We look forward to reporting back to you after our second quarter. Thank you.

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