Q2 2020 Earnings Call
Thursday
good morning, and welcome to Monmouth Real Estate Investment corporation second quarter 2020 earnings conference call. All participants will be in a listen-only mode. Did you need assistance, please signal a conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions. You ask a question. You may press * then 1 on a touch-tone phone you withdraw your question, please press * then two.
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 second-quarter 2020 earnings release and filings with the Securities and Exchange Commission off the company disclaims any obligation to update its forward-looking statements.
Little job keeping things on track while working remotely. I cannot be more proud of how well everyone has stepped up during this challenging environment.
For decades our business model has been and continues to be to provide consistent high-quality income streams by investing in industrial buildings on long-term leases off to investment-grade tenants.
Please note. This event is being recorded. It is now my pleasure to introduce your host Mister vice president of a
At various points in the business cycle this type of conservative business model is more highly favored than at others, for example during the global financial crisis are strong results allowed for our investors to receive uninterrupted cash dividend payments. This is something that very few reads were able to achieve Mama represented one of the only safe harbors during the Great Recession and we are uniquely positioned to outperform once again,
Having said that I'd like to introduce management with us today Eugene Landy chairman president and chief executive officer. Kevin Miller Chief Financial Officer. Richard monkeys vice president of asset management. It is now my pleasure to turn the call over to Mom's president and chief executive officer Michael. Landi.
You should recall that prior to the covid-19 Black Swan event much more aggressive strategies were favored by the investment Community companies in our sector were may be sacrificing occupancy rates for more aggressive leasing spreads.
Thank you, Becky. Good morning everyone and thank you for joining us. We hope you are all.
Same-store analyzed growth was the biggest Factor many looked to in ranking industrial reads while focusing Less on 10:00 and quality lease duration and other important factors off today 10 and quality least term safety and stability or once again, the predominant focus of the investment community at large. This is just the most recent of many examples illustrating why it is important to stick to strategies that have worked well over the long term as opposed to succumbing to short-term trends that may appear to work up in any given moment until sooner or later. The proverbial tide goes out and business models truly get tested.
Mamas assets are mission critical to some of the strongest companies in the world. Many of our properties are currently seeing record throughput and are working extra shifts do to stay at home environment. We are dealing with today are consistently High occupancy rate has been over 98% for more than five years and it is currently 99.4% off. Our weighted average lease maturity has exceeded seven years for more than six consecutive years and it is currently averaging seven point four years at the intersection of quality versus a growth. We have always favored quality and our strong results through this difficult period will bear this out.
Collections have been the most prominent investor concern of late. So let's drill down on that in March one hundred percent of our tenants rent payments were received and for the month of April ninety nine percent of rents have been received while it's still early does far for May. Ninety 3% of rent payments have been received which is normal given we are still in the first week of the month.
The date Monmouth has received very limited request for rent deferment representing. Only two hundred basis points of our annual base rent of this amount. We've agreed to check for $320,000 which represents just 23 basis points of our annual base rent. This deferred amount is due to be paid by the end of the calendar year.
From a portfolio standpoint during the first two quarters of fiscal 2020. We grew our GLA by 769000 square ft through the acquisition of two brand-new built-to-suit properties at a total cost of 99.4 million dollars. The first acquisition consummated in the first quarter was a 616000 square-foot distribution center to Amazon for 15 years. This property acquired for eighty one point five million dollars is situated on 79th acres in the Indianapolis MSA off on March 30th. We acquired another property for Seventeen point nine million dollars consisting of a newly constructed 153,000 square foot Distribution Center leads for ten years to Magna seating of America, the division of magnet International this property is situated on over 24 acres in the Columbus, Ohio MSA this job
Position did not contribute to our results this quarter, but will do so going forward.
Gross leasable area has now increased to approximately 23 million square feet representing a 6% increase over the prior year. As of the quarter end our portfolio consisted of 116 properties geographically Diversified across Thirty States our acquisition pipeline grew during the quarter to two hundred twenty nine point six thousand dollars. We now have for build-to-suit development projects representing one point five million square feet currently under construction.
Three of these projects have 15 year leases and one is a 20 year lease resulting in a weighted average lease term of 17.2 years and keeping with our business model of these projects are subject to long-term net leases to investment-grade tenants of these four properties three properties comprising eight hundred and forty four thousand square feet or 56% of our pipeline or at least a FedEx for 15 years. The remaining property consisting of 658000 square feet is leased a Home Depot for twenty years.
From a timing standpoint we expect to close on two of these Acquisitions for approximately 60.5 million dollars representing 356000 total square feet or approximately 24% of our current pipeline during this fiscal year.
Getting to build to suit projects representing 169.1 million dollars containing approximately 1.1 million square feet are expected to close in fiscal twenty one month to take advantage of today's attractive interest rate environment. We have already locked in very favorable financing for three of these Acquisitions. The combined financing terms for these three months is consists of eighty five point seven million dollars of proceeds representing over 64% of the total cost. These financings have a weighted average interest rate of 3 per month.
All three mortgages are fifteen years self amortizing loans. These build-to-suit Acquisitions are all well located state-of-the-art industrial assets that will represent excellent additions to our high-quality portfolio. As always these future Acquisitions are subject to satisfactory due diligence and we anticipate closing these transactions upon completion and occupancy. We expect that the combination of our recent acquisitions along with our increased acquisition pipeline will contribute positively to earnings and ensuing Quarters off.
During the quarter. We raised approximately eight point six million dollars in equity Capital through our dividend reinvestment plan of this amount a total of 1.4 million dollars in dividends were reinvested representing an 8.6% participation rate. We also raised 37.1 million dollars in net proceeds through our preferred stock ATM program with the sale of one point five million shares of our 6 1/8 c r e c preferred stock at a weighted average price of $25.12 per share as we announced during our last earnings call back this past February. We established a common stock ATM program that provides for the issuance of up to $150 billion dollars of our common stock at prevailing market prices.
Today we have not raised any Equity through our common stock Equity program and based on current prevailing prices. We do not expect to utilize the common stock ATM program at this time in March as a result of the rapid and massive sell-off in the broad Market. We repurchased 300,000 shares of our common stock for 3.2 million dollars at an average price of $10.70 per share.
Subsequent to the quarter end we purchased an additional 100,000 shares of our common stock for 1.1 million dollars at an average price of $10.66 per share. We ended the quarter with a strong balance sheet that completely unused Bank line and ample liquidity which will allow us to continue to allocate Capital opportunistically off.
with regards to the industrial model
Get heading into this downturn the vital signs with regards to occupancy and rental rates were very strong consistently registering at or near record levels bought a new industrial construction has historically been very responsive to shifts in the broad economy. And that has been the case thus far as new construction decreased by over 50% from 320 million square feet in the prior quarter to approximately 140 million square feet currently under construction.
Initial reports for u.s. GDP in the first quarter came in at an annual rate of -4.8 per cent ending the longest expansion on record dating back to May 2009 as the result of much of the economy being shut down unemployment claims have eclipsed Thirty million people in just 1 and 1/2 months.
I SM manufacturing readings are deep in contraction mode at 41.5 for the month of April due to the demand destruction that comes with a broad economic shut down too early to say to what extent The New Normal will resemble the old the global Health crisis came on Fast and whether it plays out quickly or lingers longer will be the key determinant as to the depth of the destruction and now let me turn it over to Rich so we can provide you with more detail on the property level as well as her progress on the leasing front.
Thank you Mike with respect to our property portfolio our occupancy stood at 99.4% at quarter-end representing a fifty basis point increase from a year ago off any 20 basis point increase sequentially are weighted average lease maturity is 7.4 years and are weighted average rent per square foot is $6.28. As of quarter-end are weighted average rent is 3 percent below the national average asking rent of $6.41 per square foot representing good embedded rent growth potential am leasing standpoint in fiscal 2025 leases representing approximately four hundred and ten thousand square feet or 2% of our gross leasable area were scheduled to expire for the five expiring leases representing three hundred and fifty five thousand square feet or 87% of the expiring GLA have been renewed.
The for lease renewals resulted in a 12% increase in rental rates on a gaap basis and a 4.4% increase on a cash basis. The weighted average lease termination fees for renewals was 4.2 years.
The one property that did not renew his lease expired this past February is a 55,000 square-foot building in the Hartford Connecticut MSA as reported in the prior quarter of this property was under contract to sell for four million dollars. However, given the recent uncertain market conditions created by covid-19 the purchaser terminated the contract during the due diligence. And this property is now currently being marketed for sale or lease out of our entire hundred sixteen property portfolio. We currently have only two volts buildings representing sixty basis points of our total GLA. Both buildings are being actively marketed and we expect to have more information to share with you in the ensuing Quarters off in this most challenging environment. I think it warrants repeating that to date we have agreed to only $320,000 in deferred rent to be paid by the end of this calendar year long.
This amount is only twenty-three.
At this point of our annual base rent and handily represents the best rent collection figure reported this far for the entire read sector looking ahead and 20 Twenty One. Am only 4.4% of our annual base rent comes up for Renewal with an All-Star tenant base that includes FedEx Amazon Coca-Cola Anheuser-Busch a Home Depot Sherwin-Williams Siemens United Technologies, Toyota International Paper beam suntory and many other great companies. We remain confident that we will continue to report excellent rent collection results Supply chains and logistic companies are now more critical than ever our two largest tenants FedEx and Amazon are seeing tremendous demand and this demand is likely to continue for the foreseeable future. We look forward to reporting continued strong property level results throughout the year off.
And Beyond Now Kevin will provide you with greater detail on our financial results.
Thank you. Rich ones from operations or ffo for the second quarter of fiscal 2020 with 20.2 million dollars or Twenty One cents per diluted share this compares to ffo for the same. Year ago of nineteen point six million dollars or Twenty One cents per diluted share which is unchanged on a per-share basis adjusted funds from operations or a f f o r 19.4 million hours or Twenty cents per diluted share for the recent quarter as compared to nineteen point two million dollars or Twenty One cents per diluted share a year ago representing a per-share decrease of 4.8% from the prior year.
Sequentially our ffo of Twenty One cents per diluted share for the second quarter of fiscal 2020 is $0.01 or 5% higher than our ffo of twenty cents per diluted share for the first quarter of fiscal 2020 and r a f f o of twenty cents per diluted share for the second quarter of fiscal 2020 is $0.01 or 4.8% lower than r a f f o of Twenty One cents per diluted June for the first quarter of fiscal 2020.
The quarter year-over-year one cent decline in a f f o is primarily attributable to a 2.3 million dollar increase in preferred dividend expense as a result of an increase in preferred shares outstanding a rental reimbursement revenues for the quarter were forty one point seven million dollars compared to thirty eight point four million dollars representing an increase of 8.7% from the previous year.
Net operating income was $35 for the quarter reflecting a 7.7% increase from the comparable period a year ago. This increase was due to the additional income related to two of the three intellectual properties purchase since the prior year. As mentioned the third industrial property purchased since the prior year. Was a quiet on March 30th. Therefore it will not be contributing to our results until the upcoming third quarter.
Net loss attributable to Common shareholders was 75.1 million dollars for the second quarter as compared to net income attributable to Common shareholders of twenty three point eight million dollars in the previous years so I can cross this decrease in our net income was primarily driven by a ninety-eight point six million dollar variance from an unrealized gain on a Securities portfolio of 15.6 million dollars during the prior-year quarter to an unrealized loss on a Securities portfolio of 83.1 million dollars during the current year quarter, excluding the effect of this change in unrealized loss. Net income attributable to cup holders would have been eight million dollars for the current quarter as compared to eight point three million dollars for the prior-year quarter representing a 3% decrease from the prior-year quarter.
With regards to the same property metrics for the current 3 month. Our same property noi increased 2% on a gaap basis and 2.1% on a cash basis these increases in st. Property on or off mostly due to a fifty basis point increase in same property occupancy to 99.4%
as of the quarter end our capital structure consisted of approximately 854.7 million dollars in debt of which 779.7 million dollars was property level fixed rate mortgage dad and said five million dollars with loans payable.
Ninety 1% of our debt is property level fixed rate mortgage that with the weighted average interest rate of 4.04% as compared to 4.07% in the prior year. Our weighted average temperatures for our property level fixed rate debt was 11.3 years at quarter-end as compared to eleven point six years in the prior-year.
A loans payable consisted of a $75 Term Loan that has a corresponding interest rate swap agreement to fix Libor at an oil and interest rate of 2.92% off the term loan 100% of our debt is fixed rate with the weighted average interest rate of 3.94% along with a weighted average debt maturity of 10.7 years. This represents. One of them is that maturity schedules in the entire read sector.
Taking our maturities out even further. We also had four hundred twenty nine point two million dollars outstanding on our Series 6 and 1/8 Perpetual preferred Equity at quarter-end the bottom wage Equity market capitalization of one point two billion dollars. Our total Market capitalisation was approximately 2.5 billion dollars at quarter-end from a credit standpoint. We continue to be conservative or capitalize with our net debt the total Market capitalisation at 33% or fixed charge coverage at two point three times and our net debt to adjusted either improved. The 5.7 wage is for the quarter as compared to six point four times in the prior-year.
I mean liquidity standpoint. We ended the quarter with 35.9 million dollars in cash and cash equivalents and we do not have any borrowings drawn down on our $225 revolver in addition of $99 in marketable Securities representing 4.6% of our under appreciated assets with an unrealized loss of 136.1 million dollars at quarter-end.
A Securities portfolio currently generates approximately 11.1 million dollars in annual dividends as compared to $14 in the prior year. And now let me turn it back to Michael before we bring up the call for questions. Thanks, Kevin Mama 22 this downturn very well positioned with a strong balance sheet a high-quality property portfolio page operating fundamentals and a well covered dividend going forward. We are very well-situated to not only endure but to prosper throughout this difficult. The valve of our properties has appreciated substantially over the past decade as e-commerce demand has increased and online shopping has become an integral part of the Retail Landscape the current month Social distancing environment has now created an even greater move towards online shopping.
Because of this surgeon e-commerce demand some of our tenants are running seven-day work weeks and increasing their daily shifts that their services are now more essential than ever covid-19 pandemic is also forcing Industries and entire nations to rethink their supply chains areas of focus going forward will be increasing domestic manufacturing output greater stockpiling of inventories and less dependence on foreign sources as a result of the secular shifts Us warehouse and Logistics space wage will greatly benefit from increased demand and continued value appreciation in the years ahead appears likely, we now be happy to take your questions.
We will now begin the question-and-answer session to ask a question. You may press * then one on your telephone keypad. If you are using a speaker phone, please take up your handset before pressing the keys.
To withdraw your question, please, press * then two at this time. We will pause momentarily to assemble our roster.
And our first question comes from Jeremy Mets of BMO, please go ahead.
Hey guys, I guess the start the building issue or deal pipeline changed here in composition. So I should just mention what happened to the deal that fell out and you see it coming back and then along those same lines, you know, can you talk about just the pipeline off today beyond what she you have to disclose here? Just so you seeing like an increase in Opportunities or you shielding more incoming calls today? And in the in process deals home buyers, perhaps Fallout
Very good Jeremy happy to take that question before I do just a point of clarification or press release went out last night. And it said our rent collections for this month month of May were 95% And today they're already over 95% in the prepared remarks which were recorded two days ago. The number I I stated was ninety 3% So that's what happens when you report a number early in the month. It's ninety-three was a very respectable number relative to anyone else, but it's already above 95% So I just wanted to anybody who's trying to reconcile those that discrepancy. It's just timing and it's continuing to head towards the hundred percent which we achieved in March and the 99% we achieved as far as your questions Jeremy.
1
Deal fell out of the pipeline it was in the Pittsburgh Market. It was a ten year lease to Komatsu. We is what we contemplated what we under wrote down for various reasons. They wanted to put a subsidiary on the lease Mom. It's only does long-term leases to investment-grade tenants. You see the current environment shows the strength of that page this model. So we said, you know cure this problem with the lease either get the parent company in Japan to guarantee it or we're passing and so they're working on resolving that they do resolve it that will come back on the pipeline, but it's off the pipeline now and we edit a 20 year lease with Home Depot under construction in Atlanta, which is where their headquarters is and that's full steam ahead. So it's rare that a deal falls off of our our pipeline, but in this environment things happen, I don't anticipate anything falling off our pipeline the construction.
Who's going forward in every deal on her pipeline? Currently all these buildings are deemed essential constructions and construction activity has not slowed down at all then as far as long as there's no question that the buyer pool has diminished substantially. And so, you know our deals come to us from a real life Merchant builders that we have long-term relationships with and I prefer to continue to do deals with them. It's just been a mutually satisfactory arrangement for four decades in a some cases. But we do have Brokers calling us with deals that we were at the bottom of their list and suddenly we were at the top of the list and we're seeing way more deals because people are opting out of deals and there's just fewer buyers which in my mind means cap rates should probably increase it was very unusual heading into this environment where wage
The cap rates had compressed regardless of asset-quality tenant quality. So you had a long-term lease to investigate tenant not trading at a significantly lower cap rate than a more challenge to asset off to a week or credit and and the demand for the properties. We do long-term leases investment-grade tenants will continue to be strong. I suspect with the more challenged demand will be curtailed substantially in the spread of cap rates will increase but everybody is favoring sort of portfolio that we own today. Did I bought a vehicle everything Jeremy or did I forget anything? Yeah. No, that was great. And then he alluded to some of the thing you're opening. But just you know, there's a focus on you know, yep. You know, are you seeing that you know, it's a little early in some of that. But are you at all seen that filter into demand and and some of the Dead
the you know secondary markets that you're in is that started happening yet, or
I would say it's a little early but you know in the medical supply sector, you're definitely seeing the need for expansion and and demand is is off the charts, but you know, it's too early to say what will be secular shift going forward. But I do think about the ports that were reliant on China us trade will probably see decreased container traffic and the ports that deal with South America. I will probably see increased and that's been the trend even prior to the pandemic. So I just think that Trend will be exacerbated and and we have a lot of assets on the Gulf of Mexico and up the Eastern Seaboard and they were already dead seeing the shift go from 60% shipping container West Coast versus 40% East Coast to a more equilibrium. And and I do think that Trend will be more pronounced going forward.
All right, great and last one from Oz and I know you know as I look at, you know, the security book here not always the best topic to get onto here, but you know that you took a pretty significant shit in the first quarter, but is there a point you know where you just decide it's not worth it anymore. Just just bail on this aspect all together. I guess I'm trying to understand. What's the latest thinking I continue in the whole days. I'll just get not wanting to crystallize the laws but that was the case last year as well. And you know, you're looking at it in the lower today. So just you know kind of how are you thinking about taking it all in on and go for it? I did you're not buying anymore of what point do you maybe just uh, you know looked at to access some of this man. Just reduce it that way. Thanks my club. It's very good. I'll have Jean answer that but just some
Broad comments on the topic before I turn it over to Jean, you know, it's important to keep the Securities portfolio in perspective of our overall Capital stack awful announcing over a year ago that we were going to decrease it from 10% of gross assets to 5% at that time. We stopped buying Securities. Of course, if we knew the pandemic was coming, you know, we would have reacted accordingly, but our pipeline today is bigger than the whole portfolio at cost not the current value at cost. So so I have to have some context of exactly what it means to the overall results of Monmouth and the logic of having liquid real estate on the balance sheet was the quiddity liquidity liquidity and the good news with the portfolio the one silver lining even though you have to look hard to find it. We used to borrow a 3% to get capital from home.
Securities portfolio 50% barring ability at 3% That's come to
Down to 75 basis points. So, you know if we have property expansions and I do anticipate property expenses coming. It's very advantageous to fund them with a cost of capital at $75 bibs Jean. I just wanted to get that out there but please well, we we still believe the weed concept and we've been fortunate enough to be in a sector that is survived financial crisis has now a medical crisis and some other reads have not been as well as 4 a.m. But the wait in the long-term will turn out to be values depending on the value of their real estate and we have a lot of faith in the United States. We think we're get through the choices.
As soon as we get the vaccine and even sooner if we get a cure and we'll be back to a growth area and some of the stocks we have the portfolio which flew off the wrong with really deteriorated because of the the crisis, you know, if you lose your top-line, there isn't much management can do the expenses are still there. So we're holding on to the boss bolio's, uh, but they've diminished to the point that the the the not as significant as they were and we have in the portfolio some we think highly off so we we could take it a hold and we held the same stocks for decades and we know the management so most of the rebates and it's something we're going on. We we don't offer to cover the particular reads individually because we don't have enough time for that.
Jane Mike, thanks.
Our next question comes from Rob Stevenson of Jenny, please go ahead. Good morning guys, Mike. What's the expected cap rate on the four properties in the $230 pipeline?
No, you know I don't like to give out pipe exact cap rates and then know you're really good at triangulating in on them. Let's just say it's substantially above our current dividend rate of low fives and I'll go even further and say it's in the low 60s. Okay, so in line with historical norms
Correct. Okay. What sector does the 320k of deferred rent operate in just curious as to where the paint is within your portfolio page so I know I'll turn it over to Rich for that. And if I need to chime in I will go ahead and reach out of the we've had twelve tenants that ass various Industries, but the ones that really needed some help where our entertainment and Retail spots so that those are the ones that we agreed to at but we fully expect to get those paid back by the end of the calendar year as we reported really not much pain everything stayed pretty much Essential and they were open to some various degree. So that was that really good to see so I can just add to that. I you know, it's for all the industrial reads. They're seeing the deferment request come from smaller tenants in smaller buildings and we're predominantly two hundred thousand square foot buildings with dead.
Great tenants. Now. We do have some smaller buildings and where the
Legacy investment-grade tenant moved out. We took on whoever would take the space and and so that's what we're seeing the small amount of our portfolio the smaller tenants in older buildings that are that are requesting and you know, there's a mandate that their businesses are shut down and we're trying to work with them. Okay, Kevin, you know, Mike had talked about 95% of May rents paid. Where are you normally 5 to 6 days in the month what level is sort of normal? Is it right around here or are you basically getting you know, ninety nine hundred percent of your rents this early in the month typically.
Yeah, we're right around normal as we normally would be there's a few tenants was Lisa's say they pay in the middle of the month. So that's part of it. And then part of it is the the rent deferment that we agreed to so that's part of the five digits that I'm I'd say. It's about half and half so normally probably around ninety-seven ninety-eight percent at this point. So I'd say most of it is just a half of it is from like I said from the first 10 and 1/2 is but I think it's normal that it would be sluggish. The whole world is slowed down. So checks are just not being cut. This fast mail is not being delivered as fast everything slowed down. So so I wouldn't expect it to be exactly like a quarter ago know, I mean that's surprising. I mean, I guess the other question here is what percentage of your tenants are paying electronically that you've already gotten that high percentage rent, you know five days into the month versus the percentage of tenants that are Old School mailing you in a check.
Yeah, it's a very granular question. I'll take it even further some tennis pay early. You know, you probably have June rent for some of our tenants but Kevin to the 100 basis-point. Do you know the answer to that? I don't know the incident but I would say I would say most maybe ninety percent of the tenants pay ACH and then the rest of their pay with checks, but yeah, we've received a lot of checks and there's like Mike said there's a couple of checks them, you know that we haven't received and it's probably cuz the mail is slow and cuz they they you know, some of the checks that we have received are not 10:00 instead of ask for the firmament and having that they they see no wrong no effect to their business. So it's probably just maybe the mail being slow. Maybe there's a check sitting out there right now on the in the office that you know, we don't get a chance to come into the office as much as we used to so sometimes take a little while to see those checks. What we will do is we'll update our presentation at has two slides the second one speaks to rent collection and just watch that. Yep.
The point it was $93, and now it's over 95, and we'll see where it ends up. So so Bezos and Fred Smith aren't paying by check what you're saying. That's correct. Okay, and then just lastly for me mentioned most of this with Jeremy's question, but just to be clear there weren't any purchases are saved in the Securities portfolio in in the quarter or thus far in this quarter other than the reinvestment of the dividends. That's correct the other than the reinvesting the dividend, and there was one small preferred. Hold off got redeemed, but those really changes. Okay. Thanks guys. Appreciate it. Thank you.
Our next question comes from Craig's que sera of B Riley FBR, please go ahead.
Hey, good morning, guys. It's in the news at FedEx has requested to cut rents and half at some of the retail stores beginning in June. I'm curious about sort of your discussions with them. I know that you know, these things are are essential but just sort of any color on those discussions would be would be useful and kind of where their heads sure. Absolutely. No discussions about deferment of rent wage FedEx. In fact, just the opposite. It's all about how to accommodate the incredible demand flowing through our buildings. So it's really apples and oranges to compare Kinkos retail centers that by government mandate are forced to be closed versus essential businesses that are seeing greater than peak season demand at the moment. So two different sectors two different types of real estate and two completely different situations.
Okay, that's what I what I figured. You know, I'd like to talk about the the the Home Depot that that got added to the pipeline. Can you tell us when that was negotiated was that you know, were you in discussion and kind of like that together, you know mid March or was that kind of worked on earlier in the quarter?
Yeah, that was all pre pandemic. Okay, and and I guess as you think about that, I know you mentioned that a lot of fires had probably fallen out. Can you talk about any changes or ships off? Maybe with the merchant Builders are showing you today or the last month or so. Yeah price Discovery is uncertain, you know, and and everybody's out there trying to find out what the normal is regarding cap rates and uh, I think the sellers want to wait and see how everything shakes out and we're certainly bidding a premium to prepend Emmett cap and the lenders have set interest rate floor above pre pandemic pricing and and that Force come down a little bit already. So so it's it's very uncertain and a lot of people are in a wait-and-see mode.
Got it one more for me. I mean just kind of keeping in in mind your general comments on on buyers and potential buyers out there. Do you you get a sense that there's been you know any sort of a percentage drop dead tires. I mean are you think maybe half have been knocked out more than that less than that. I just kind of trying to handicap that but just listening to some of the other industrial recalls. I hear them say, you know, they're not going forward and bidding on deals and tracking out a deals so clearly the the buyer pool has been curtailed and and the anecdotes proof I have a fat is is people I never transact with calling me up to see if I'm interested in deals and I get plenty of deals from my usual sources and thus far I have no need to go down these new avenues. We all our transactions are directly with Merchants Builders, not through the brokerage Community, but
Times like this. Everyone's our friends suddenly.
Do you think you would answer that potentially, you know accelerate your acquisition pipeline. If a broker deal did come to you and was you know, kind of fit all the boxes of being a long term life investment-grade property Etc.
Yeah, you know we're we're kind of hoping that would happen. There's certainly Now's the Time to to be aggressive and buy but historically every portfolio we've seen, you know just doesn't show me check our boxes. It's very rare that you'll see a portfolio of our caliber properties. But you know, this is precisely why we have the ATM program, you know, so that we could not find Opportunities. Should they arise I do think with FedEx an Amazon we will be able to continue with on the trajectory. We've historically been on and perhaps even at a greater Pace with with those two names because they're just seeing demand to an extent that they just cannot even.
Supply the demand so so there will be from those two customers increased deal flow and certainly trying to offset that with Home Depot and other service credits.
Okay, great. Thank you. Thank you.
Our next question comes from Sarah of JPMorgan, please go ahead morning just on for my mother. Just a quick question on a funding that off line. I know you guys mentioned the debt Capital cost. But how can we think about also supplementing that with some Equity issuance when you reach a price that you're home and showing it?
Kevin you want to take that. Yeah sure. So, you know before the pandemic happened we we raised about thirty-seven thirty-eight million dollars in and put in a preferred stock at a wage price of above for about $25.12. So luckily, you know, we filled up the tank, you know pre pandemic you can see on our balance sheet. That's like thirty-five million dollars in cash. We had 225 million dollar line of credit with nothing drawn down on that we have available to us and we have the full capacity to do so based on our unencumbered assets. But yeah, it depends off and like you said we did three of the three of the four Acquisitions already. We have financing 65% LTV. They're all fifteen years down sized and Loans weighted average interest rate of a little over 3% So explain exactly how much over 3% or 3.03% Sorry ma'am.
And I and I try not to get too granular, but I was I was trying to be so so I think we're we're we're we're fully, you know stock to to Fun Pack line.
Okay. Thank you.
Thank you.
Our next question comes from Michael Carroll of RBC Capital markets, please. Go ahead.
This is Jason on for Mike. I had a question on some of the deferrals granted. So does the twenty-three bits were represent the final amount of bird of the two hundred basis points or their portion of that that's still under review.
Well, I wouldn't say final you know you every day you read the newspaper. You don't know which way the wind is going to be going so so I would not say final we hope it's final but wage, you know months could become quarters and quarters could become years, but we will have to see it's just a very low immaterial number. So that's the good news, but I guess
Yeah, so have you guys gone through the full $200 amount two hundred basis points requested and that was the amount that was deferred from that. Correct? Correct? Okay, and then have you guys seen a continuing flow of further defer requests or have those started to slow down as we entered? Yeah, that's a good question know that has come to a standstill. So yeah, there was a point where you know, we followed all the other reads and and we were curious what would happen there. But no it kind of peaked weeks ago and and this week no requests at all.
Got it. Okay, and then have tenants and more active pursuing renewal discussions. I know a few of the other industrial names have talked about retention potential taking higher. So I'm wondering how you guys think about this when you look at the twenty twenty-one expirations.
Yeah, one tenant did ask for to open up renewal discussions early, which is something we usually don't do but we are talking to them about one of those found in extends. But Rich, that would be at a higher rent. If I remember correctly, correct? Yeah.
Any others that one? Okay, and then one quick housekeeping question, so you mentioned that you had five expirations and then obviously you've completed up for renewals and you have the one asset the Kellogg asset that you're looking to sell. So could you just remind me in the supplement? It looks like you still have one expiration coming due. Could you just remind me what the situation there is?
Could you not ringing a bell? Do you have any more information on that expiration?
Yeah, it looks like it's the 98,000 square-foot asset. Let's see. It's the Auto North America in Augusta, Georgia.
Yes.
Okay. Oh, I know what that is. Okay, so that has it was their old building. It's a little complicated but here's what happened. They had moved into a brand new building and the lease is a lot of term left and and it's it's a great asset and everything's fine. The old asset they asked if they could use it instead of rip it down. They're required to take it down. And we said sure and then it was a very short amount of time. They we gave them authorization to use it but then they wanted to use it for a whole nother year. So we charge them for that year, but now it's time to rip it down. So so that's something that is a temporary structure and we got rent from it and we looked at as well over a hundred percent occupancy on that asset for a year, but now we got to lose that ninety thousand square foot structure.
Yeah, it's not not a bad deal at all. So, all right. Thank you guys. Thank you.
Our next question comes from very Oxford of d a Davidson, please. Go ahead great. Thanks guys. You had alluded to when you were talking in her comments off the ATM not really looking to Usenet right now. How do you feel about the the program? And would you change that?
What would the current stock price we we've both the ATM? Okay. The chair and and the the ship we we used to Grant waivers and raised as much as eight million dollars a month and we're not granting waivers. So so all it is is dividend reinvestment funds coming in right now and it's a function of pricing, you know at a higher price when we feel it's more creative and and it's a function of how big the pipeline is then we open these things back up and the other thing would be the same with the preferred ATM. The preferred worked really well. We we raised over four hundred and thirty million dollars at and that's permanent Capital never matures and 6% may seem high in the current environment. But you know, the monetary policy is all in there throwing the kitchen sink and all the appliances at the pandemic issue and we'll have to see when dead
we get through this deflationary. What what inflation looks like but but on the other hand if if we were end up protracted low interest rate environment that
Perpetual instrument is redeemable in September of 21 and if we could refinance that with a lower cost of capital we will do so so so suck a lot of options that are disposable a lot of sources of capital Jean Kevin you want to add to that?
The basically the the the dripping zip work. Well with ATM is a new developments worked. Well, so well capitalized company and we have sausage new capital and what we've been trying to tell everyone on this call is the demand for warehouse space is really extreme. We're going into Iraq. We were 85% of consumer buying was blue retail outlets and 15% on the internet and all of a sudden they've shut down the 85% and the wage is that it needed to accomplish this point in existence and the people who sell on the internet are very anxious to build additional warehouses and we think they're going to deal with the people dealt with the twenty thirty years and that we're going to need a lot of capital and we're ways that Capital when we get these opportunities.
Great. Thanks. Like one more question. When you look I know you don't have a lot of assets out on on the west coast. When you look at your East Coast assets that are bumping up against the ports. Are there any concern that? They're from a slowing of you know, Port container traffic et cetera know it's too short term a worry long-term. We will get past this we will get the economy growing again the population growing again. Those are great assets. In fact, I'd be concerned if I was in a highly congested area with a different property type of thing people are going to be less desirous of living on top of each other and and wanting to move to more rural areas warmer climates more business-friendly environment. And so I I really like the way our our portfolio is positioned for demographic Trends going forward.
Great. Thanks guys. Thank you, Berry.
This concludes our question-and-answer session. I would like to turn the conference back over to Becky for any closing remarks. Thank you operator. I would like to thank everyone for joining us on this call and am continuing support interest in Monmouth. As always. We are available for any follow-up questions. We will be presenting. It narrates Conference next month, which will be a virtual online conference this year. We hope that you will participate as well. We look forward to reporting back to you after our third quarter. Stay healthy everyone and thank you.
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