UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ___________________ to ____________________ Commission File Number: 001-33177 MONMOUTH REAL ESTATE INVESTMENT CORPORATION (Exact name of registrant as specified in its charter) Maryland 22-1897375 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 Crawfords Corner Road, Suite 1405, Holmdel, NJ 07733 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: 732-577-9996 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock MNR New York Stock Exchange 6.125% Series C Cumulative Redeemable Preferred Stock MNR-PC New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates of the registrant at March 31, 2021 was $1.7 billion (based on the $17.69 closing price per share of the registrant’s common stock on the New York Stock Exchange on March 31, 2021). There were 98,339,416 shares of common stock outstanding as of November 1, 2021. TABLE OF CONTENTS Item No. Page No. Part I 1 Business. 3 1A Risk Factors. 10 1B Unresolved Staff Comments. 19 2 Properties. 20 3 Legal Proceedings. 27 4 Mine Safety Disclosures. 27 Part II 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 28 6 [Reserved] 29 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations. 30 7A Quantitative and Qualitative Disclosures About Market Risk. 53 8 Financial Statements and Supplementary Data. 54 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 55 9A Controls and Procedures. 55 9B Other Information. 56 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 56 Part III 10 Directors, Executive Officers and Corporate Governance. 57 11 Executive Compensation. 57 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 57 13 Certain Relationships and Related Transactions, and Director Independence. 57 14 Principal Accountant Fees and Services. 57 Part IV 15 Exhibit and Financial Statement Schedules. 58 Signatures 120 2 Table of Contents PART I ITEM 1 – BUSINESS General Development of the Business In this 10-K, “we”, “us”, “our”, “MREIC” or “the Company”, refers to Monmouth Real Estate Investment Corporation, together with its predecessors and subsidiaries, unless the context requires otherwise. We are a Maryland corporation that qualifies as a real estate investment trust (REIT) under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the Code). Our investment focus is to own well-located, modern, single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. We were founded in 1968 and have been publicly owned since that time, making us one of the oldest public equity REITs in the world. We intend to maintain our qualification as a REIT in the future. As a REIT, with limited exceptions, we will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that we distribute to our shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. We are subject to franchise taxes in several of the states in which we own properties. In December 2017, as part of the Tax Cuts and Jobs Act of 2017 (the TCJA), Code Section 199A was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, an individual taxpayer and estates and trusts may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or qualified dividend income. We were established in 1968 as a New Jersey Business Trust (NJBT). In 1990, the NJBT merged into a newly formed Delaware corporation. On May 15, 2003, we changed our state of incorporation from Delaware to Maryland by merging with and into a Maryland corporation. As previously announced, on November 5, 2021, we entered into a definitive merger agreement with Industrial Logistics Properties Trust, a Maryland real estate investment trust (“ILPT”), under which, on the terms and subject to the conditions set forth in the merger agreement, ILPT will acquire us in an all-cash transaction, with our common stockholders receiving $21.00 in cash for each outstanding share of our common stock in connection with consummation of the transaction. ILPT’s acquisition of us is subject to obtaining the requisite approval of our common stockholders and the satisfaction of other customary closing conditions. Upon closing of the merger with ILPT, holders of our outstanding 6.125% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) will receive the amount of $25 per share plus any accrued and unpaid dividends. We plan to continue to pay our regular quarterly common stock dividend and our Series C Cumulative Redeemable Preferred Stock dividend for each full quarterly dividend period completed prior to the closing of the transaction. This transaction with ILPT represents the culmination of the publicly announced comprehensive strategic alternatives review processes conducted by our Board of Directors during 2021. Our Board re-initiated its strategic alternatives review process in September 2021 after a previous agreement for a merger that we entered into with another party, following a strategic alternatives review process earlier this year, did not receive the requisite approval of our stockholders. 3 Table of Contents Description of Business Our primary business is the ownership and management of industrial real estate properties. Our investment focus is to own well-located, modern, single- tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. At September 30, 2021, we held investments in 122 properties totaling 24.9 million square feet with an overall occupancy rate of 99.7% (See Item 2 for a detailed description of the properties). As of the fiscal yearend, our weighted average lease expiration was 7.0 years, our annualized average base rent per occupied square foot was $6.61 and the weighted average building age, based on the square footage of our buildings, was 10.2 years. These properties are located in 32 states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. All of these properties are 100% owned by us, directly or through wholly-owned subsidiaries, with the exception of one property in New Jersey in which we own a majority interest. All of our investment properties are leased on a net basis except for an industrial park in Monaca (Pittsburgh), Pennsylvania and our only non-industrial asset, which is a shopping center, located in Somerset, New Jersey. Our investments are primarily located in strategic locations and, in many cases our buildings are highly automated in order to serve the omni-channel distribution networks that have become essential today. Approximately 83% of our revenue is derived from investment-grade tenants, or their subsidiaries as defined by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to S&P Global Ratings and Moody’s are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Our portfolio of modern, net-leased industrial properties continues to provide shareholders with reliable and predictable income streams. Our resilient high occupancy rates and rent collection results highlight the mission-critical nature of our assets and underscore the essential need for our tenants’ operations. Furthermore, because our weighted average lease term is 7.0 years and our weighted average fixed rate mortgage debt maturity is 10.9 years, we expect our cash flow to remain resilient over long periods of time. Throughout the COVID-19 Pandemic, our overall occupancy rate has been over 99% and is currently 99.7%. Our base rent collections remained strong, averaging 99.9% throughout the COVID-19 Pandemic and we expect future months to be consistent with this trend. US industrial real estate market conditions are as strong as they have ever been with record high asking rents, a robust development pipeline, and an all- time high occupancy rate of 96%. Companies are leasing space at record levels to handle the large increase in ecommerce sales as well as the need for safety stock to counter supply chain disruptions. Construction costs are rising dramatically due to the long lead times for sourcing materials. The amount of new construction for US industrial real estate has been increasing for several years as more industrial space is needed to handle direct-to-consumer distribution. It is estimated that ecommerce sales require three times the amount of warehouse space relative to brick and mortar retail sales. These new buildings are often highly automated and have much larger truck courts and parking requirements. Because modern industrial buildings are built to handle both wholesale distribution as well as direct to consumer distribution, they are known as omni-channel facilities. The West coast ports are continuing to experience severe bottlenecks in processing imports and as a result much container traffic is being diverted towards the Gulf and East coast ports. Given our geographic footprint, this trend is a very favorable one for us. For further discussion of potential impact of competitive conditions on our business, see Item 1A: Risk Factors below. During fiscal 2021, we purchased four industrial properties totaling 1.6 million square feet situated on 316.2 acres resulting in a very expansive land to building ratio of 8.8 to 1. All four properties are leased to investment-grade tenants or their subsidiaries, with net-leased terms ranging from 15 to 20 years, resulting in a weighted average lease maturity of 17.1 years. Three of the four properties, consisting of 903,000 square feet, or 58% of the total square footage of the four properties, are leased to FedEx Ground Package System, Inc., a subsidiary of FedEx Corporation (FDX). The aggregate purchase price for the four properties was $258.4 million. These four properties are located in the following Metropolitan Statistical Areas (MSAs): Columbus, OH, Atlanta, GA, Burlington, VT and Knoxville, TN. These four properties are expected to generate annualized rental income over the life of their leases of $15.2 million. In connection with two of the four properties acquired during the 2021 fiscal year, we entered into one 17 year, fully-amortizing mortgage loan and one 15 year, fully-amortizing mortgage loan. In connection with the remaining two properties acquired during the 2021 fiscal year, we entered into commitments for two, 15 year, fully- amortizing mortgage loans, which have not yet closed. These four fully-amortizing loans have a weighted average term of 15.7 years. The principal amount of the four mortgage loans originally totaled $161.8 million with fixed interest rates ranging from 2.50% to 3.25%, resulting in a weighted average fixed interest rate of 2.89%. 4 Table of Contents During fiscal 2021, we completed the first phase of a two-phase parking expansion project for FedEx Ground Package System, Inc. at our property located in Olathe (Kansas City), KS. The first phase of this parking expansion project was completed for a total cost of $3.4 million, resulting in an initial increase in annual rent effective November 5, 2020 of approximately $340,000 from approximately $2.1 million, or $6.83 per square foot, to approximately $2.5 million, or $7.91 per square foot. Furthermore, annual rent increased by 2.1% on June 1, 2021 and will continue to increase 2.1% every five years, resulting in an annualized rent from November 5, 2021 through the remaining term of the lease of approximately $2.6 million, or $8.15 per square foot. We recently began construction on the second phase of this parking expansion project at this location, which upon completion will further increase the rental rate and extend the lease term. In addition, effective June 4, 2021, we completed a parking lot expansion for UPS at our property located in Halfmoon (Albany), NY for a cost of approximately $835,000, resulting in an initial increase in annual rent effective on the date of completion of approximately $52,000 from approximately $510,000, or $6.80 per square foot, to approximately $562,000, or $7.50 per square foot. Furthermore, annual rent will continue to increase each year by 2.0% resulting in an annualized rent from June 4, 2021 through the remaining term of the lease of approximately $622,000, or $8.29 per square foot. Due to the proliferation of ecommerce sales and last mile deliveries, it is important to take into account the large amounts of real estate utilized for trailer, van, and car parking at many of our properties in determining how our in-place rental rates compare to market rental rates for properties being used in a similar manner. Rents per square foot on properties that may be nearby, but have only limited acreage devoted to parking, are poor comparisons as they cannot accommodate the same tenant needs. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The purchase price was $30.2 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40%, which has not yet closed. Annual rental revenue over the remaining term of the lease averages $1.7 million. In addition to the $30.2 million property purchased in October 2021, we have entered into agreements to purchase three new build-to-suit, industrial buildings that are currently being developed in Alabama, Georgia and Texas, totaling 1.1 million square feet. These future acquisitions have net-leased terms ranging from 10 to 15 years with a weighted average lease term of 12.6 years. The total purchase price for these three properties is $126.8 million. All three properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). Two of these three properties, consisting of an aggregate of 563,000 square feet, or 52% of the total leasable area, are leased to FedEx Ground Package System, Inc. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing all three of these transactions during fiscal 2022. We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are nine parking expansion projects underway, which we expect to cost approximately $42.6 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at eight additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently. We may have additional acquisitions and expansions in fiscal 2022 and fiscal 2023, and the funds for these acquisitions are expected to come from funds generated from operations, mortgages, draws on our unsecured line of credit facility, cash on hand, sales of marketable securities, other bank borrowings, proceeds from the Dividend Reinvestment and Stock Purchase Plan (DRIP), proceeds from the sale of common stock in a possible future at-the-market public offering (similar to our previous common stock at-the-market offering) and proceeds from private placements and other public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made. On January 14, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share representing an annualized dividend rate of $0.72 per share. This increase was the third dividend increase in the past five years, representing a total increase of 20%. We have maintained or increased our common stock cash dividend for 30 consecutive years. We are also one of the few REITs that maintained its dividend throughout the Global Financial Crisis. On October 1, 2021, our Board of Directors approved a cash dividend on our common stock of $0.18 per share, to be paid on December 15, 2021, to common shareholders of record at the close of business on November 15, 2021, which represents an annualized common dividend rate of $0.72 per share. We intend to pay these distributions from cash flows from operations. 5 Table of Contents Our common stock dividend policy is dependent upon our earnings, capital requirements, financial condition, availability and cost of bank financing and other factors considered relevant by the Board of Directors. It is our intention to continue making comparable quarterly distributions in the future and to grow our distributions over time. Currently, we derive our income primarily from real estate rental operations. Rental and Reimbursement Revenue (excluding Lease Termination Income in fiscal 2021, 2020 and 2019 of $377,000, $-0-, and $-0-, respectively) was $182.8 million, $167.8 million and $154.8 million for the years ended September 30, 2021, 2020 and 2019, respectively. Total undepreciated assets (which is our total assets excluding accumulated depreciation) were $2.6 billion and $2.2 billion as of September 30, 2021 and 2020, respectively. As of September 30, 2021, we had 24.9 million leasable square feet, of which 11.6 million square feet, or 47%, consisting of 65 separate stand-alone leases, were leased to FDX and its subsidiaries (5% to FDX and 42% to FDX subsidiaries). These properties are located in 27 different states. As of September 30, 2021, the 65 separate stand-alone leases that are leased to FDX and FDX subsidiaries had a weighted average lease maturity of 7.5 years. As of September 30, 2021, in addition to FDX and its subsidiaries, the only other tenants that leased 5% or more of our total square footage were subsidiaries of Amazon.com, Inc. (Amazon), which are parties to five separate stand-alone leases for properties located in four different states, containing 1.5 million total square feet, comprising 6% of our total leasable square feet. None of our properties are subject to a master lease or any cross-collateralization agreements. Our Rental and Reimbursement Revenue from FDX and its subsidiaries for the fiscal years ended September 30, 2021, 2020 and 2019, respectively, totaled $104.3 million, $96.4 million and $93.3 million, or calculated as a percentage of total rent and reimbursement revenues were, 57% (5% from FDX and 52% from FDX subsidiaries), 58% (5% from FDX and 53% from FDX subsidiaries) and 60% (5% from FDX and 55% from FDX subsidiaries). In addition to FDX and its subsidiaries, the only tenants to comprise 5% or more of our total Rental and Reimbursement Revenue were subsidiaries of Amazon, which represented 6% of our Rental and Reimbursement Revenue for the fiscal years ended September 30, 2021 and 2020. Rental and Reimbursement Revenue from subsidiaries of Amazon for the fiscal year ended September 30, 2019 was less than 5% of our Rental and Reimbursement Revenue. FDX and Amazon are publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. FDX and Amazon are rated “BBB” and “AA”, respectively by S&P Global Ratings (www.standardandpoors.com) and are rated “Baa2” and “A1”, respectively by Moody’s (www.moodys.com), which are both considered “Investment Grade” ratings. The references in this report to the SEC’s website, S&P Global Ratings’ website and Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of FDX, Amazon, S&P Global Ratings or Moody’s on such websites. Our weighted average lease expiration was 7.0 years and 7.1 years as of September 30, 2021 and 2020, respectively, and our average annualized rent per occupied square foot as of September 30, 2021 and 2020 was $6.61 and $6.36, respectively. Our overall occupancy rate as of September 30, 2021 and 2020 was 99.7% and 99.4%, respectively. Our weighted average lease expiration has been 7.0 years or greater for over seven consecutive years. Our overall occupancy rate has been 98.9% or above for over six consecutive years. We compete with other investors in real estate for attractive investment opportunities. These investors include other equity real estate investment trusts, limited partnerships, syndications and private investors, among others. Competition in the market areas in which we operate is significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties. We have built long-term relationships within our tenant base as well as within the merchant builder community. These relationships have historically provided us with investment opportunities that fit our investment policy. 6 Table of Contents Information about our Executive Officers The following table sets forth information with respect to our executive officers as of September 30, 2021: Name Age Position Eugene W. Landy 87 Chairman of the Board and Founder Michael P. Landy 59 President and Chief Executive Officer Kevin S. Miller 51 Chief Financial and Accounting Officer Michael D. Prashad 36 General Counsel Richard P. Molke 36 Vice President of Asset Management Human Capital Resources As of September 30, 2021, we had 14 full-time employees. Women represent 57% of our employees with 37.5% holding management level/leadership roles. Employees are offered great flexibility to meet personal and family needs. We endeavor to maintain workplaces that are free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law. We conduct training to prevent harassment and discrimination and monitor employee conduct year-round. Recruitment, hiring, development, training, compensation and advancement at the Company are based on the individual’s qualifications, performance, skills and experience. Our employees are fairly compensated, without regard to gender, race and ethnicity, and routinely recognized for outstanding performance. Our compensation program is designed to attract and retain talent. We continually assess and strive to enhance employee satisfaction and engagement. Our employees, many of whom have a long tenure with the Company, frequently express satisfaction with management. Our employees are offered regular opportunities to participate in professional development programs. Investment and Other Policies Our investment policy is to concentrate our investments in well-located, modern, single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. Our strategy is to obtain a favorable yield spread between the income from the net-leased industrial properties and interest costs. In addition, we believe that investments in well-located, modern industrial properties provide a potential for long-term capital appreciation. There is the risk that, upon expiration of leases, the properties will become vacant or will be re-leased at lower rents. The results obtained from re-leasing the properties will depend on the market for industrial properties at that time. In fiscal 2021, approximately 5% of our gross leasable area, representing ten leases totaling 1.2 million square feet, was set to expire. All ten of these leases have been renewed, resulting in a 100% retention rate for a weighted average term of 4.2 years. These ten lease renewals resulted in a U.S. GAAP straight- line weighted average lease rate of $4.77 per square foot. The renewed weighted average initial cash rent per square foot is $4.66. This compares to the former weighted average rent of $4.49 per square foot on a U.S. GAAP straight-line basis and the former weighted average cash rent of $4.64 per square foot, resulting in an increase in the weighted average lease rate of 6.2% on a U.S. GAAP straight-line basis and an increase in the weighted average lease rate of 0.4% on a cash basis. We seek to invest in well-located, modern, single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long- term net leases. In management’s opinion, the recently acquired facilities meet these criteria. We have a concentration of properties leased to FDX and FDX subsidiaries and to subsidiaries of Amazon. This is a risk that shareholders should consider. FDX and Amazon are publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. FDX and Amazon are rated “BBB” and “AA”, respectively by S&P Global Ratings (www.standardandpoors.com) and are rated “Baa2” and “A1”, respectively by Moody’s (www.moodys.com), which are both considered “Investment Grade” ratings. The references in this report to the SEC’s website, S&P Global Ratings’ website and Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of FDX, Amazon, S&P Global Ratings or Moody’s on such websites. 7 Table of Contents We have considered issuing securities for property; however, this has not occurred to date. We may repurchase or reacquire our shares from time to time if, in the opinion of the Board of Directors, such acquisition is in our best interest. On September 14, 2021, our Board of Directors reaffirmed our Common Stock Repurchase Program (the “Program”) that authorizes us to purchase up to $50.0 million of shares of our common stock. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice. During fiscal 2020, we repurchased 400,000 shares of our common stock for $4.3 million at an average price of $10.69 per share. These were the only repurchases made under the Program thus far. Property Management With the exception of two properties, all of our 122 properties are self-managed by us. For the properties we self-manage, we paid fees directly to local property management subagents of $518,000, $482,000 and $468,000 for fiscal years ended September 30, 2021, 2020 and 2019, respectively. Governmental Regulations Our properties are subject to various federal, state and local regulatory laws and requirements, including, but not limited to, the Americans with Disabilities Act, zoning regulations, building codes and land use laws, and building, occupancy and other permit requirements. Noncompliance could result in the imposition of governmental fines or the award of damages to private litigants. While we believe that we are currently in material compliance with these regulatory requirements, the requirements may change or new requirements may be imposed that could require significant unanticipated expenditures by us. Additionally, local zoning and land use laws, environmental statutes and other governmental requirements may restrict, or negatively impact, our property operations, or expansion, rehabilitation and reconstruction activities and such regulations may prevent us from taking advantage of economic opportunities. Future changes in federal, state or local tax regulations applicable to REITs, real property or income derived from our real estate, which may be retroactive, could impact the financial performance, operations, and value of our properties and the Company. Tax Regulation We have elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year which ended September 30, 1968. Our qualification and taxation as a REIT depends upon our ability to meet on a continuing basis, through actual annual operating results, distribution levels and diversity of stock ownership, the various qualification tests and organizational requirements imposed under the Code, as discussed below. We believe that we are organized and have operated in such a manner as to qualify under the Code for taxation as a REIT since our inception, and we intend to continue to operate in such a manner. To maintain our qualification as a REIT, two separate percentage tests relating to the source of our gross income must be satisfied annually. First, at least 75% of our gross income (excluding gross income from prohibited transactions) for each taxable year generally must be derived directly or indirectly from investments relating to real property (including dividends paid by other REITs, mortgages on real property, “rents from real property,” gain, and, in certain circumstances, interest) or from certain types of temporary investments. Second, at least 95% of our gross income (excluding gross income from prohibited transactions) for each taxable year must be derived from such real property investments described above, dividends, interest and gain from the sale or disposition of stock or securities, or from any combination of the foregoing. Rents received by us will qualify as “rents from real property” in satisfying the above gross income tests only if several conditions are met. First, the amount of rent generally must not be based in whole or in part on the income or profits of any person. However, amounts received or accrued generally will not be excluded from “rents from real property” solely by reason of being based on a fixed percentage or percentages of gross receipts or sales. Second, rents received from a tenant will not qualify as “rents from real property” if we, or a direct or indirect owner of 10% or more of our stock, actually or constructively own 10% or more of such tenant. Third, if rent attributable to personal property that is leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as “rents from real property.” This 15% test is based on relative fair market values of the real and personal property. Generally, for rents to qualify as “rents from real property” for the purposes of the gross income tests, we are only allowed to provide services that are both “usually or customarily rendered” in connection with the rental of real property and not otherwise considered “rendered to the occupant.” Further, for the rent paid pursuant to our leases to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. We structure our leases to generate qualifying income. 8 Table of Contents In addition to the income tests discussed above, to maintain our qualification as a REIT, at the close of each quarter of our taxable year, we must satisfy seven tests relating to the nature of our assets. We limit our investments to assets that will allow us to meet these requirements: ● At least 75% of the value of our total assets must be represented by “real estate assets”, cash, cash items and government securities, as such terms are defined in the Code. ● Not more than 25% of the value of our total assets may be represented by securities, other than those in the 75% asset class. ● Except for certain investments in REITs, taxable REIT subsidiaries (TRSs) and other securities in the 75% asset class, the value of any one issuer’s securities owned by us may not exceed 5% of the value of our total assets. ● Except for certain investments in REITs, TRSs and other securities in the 75% asset class, we may not own more than 10% of the total voting power of any one issuer’s outstanding securities. ● Except for certain investments in REITs, TRSs and other securities in the 75% asset class, we may not own more than 10% of the total value of the outstanding securities of any one issuer, other than securities that qualify for the debt safe harbors. ● The aggregate value of all securities of TRSs held by us may not exceed 20% of the value of our gross assets. ● No more than 25% of the value of our total assets may consist of debt instruments issued by “publicly offered REITs” (i.e., a REIT that is required to file annual and periodic reports with the SEC under the Securities Exchange Act of 1934) to the extent such debt instruments are not secured by real property or interests in real property. Finally, in order to qualify as a REIT, we must, among other requirements, distribute, each year, to our shareholders at least 90 percent of our taxable income, excluding net capital gains. To the extent that we satisfy the 90 percent distribution requirement, but distribute less than 100 percent of our taxable income, we will be subject to federal corporate income tax on our undistributed income and may incur a 4 percent nondeductible excise tax on the amount not distributed. As a result, we distribute substantially all of our taxable income in each year, and must seek other sources of capital to fund our operations and growth. Environmental Matters Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. Although generally our tenants are primarily responsible for any environmental damages and claims related to the leased premises, in the event of the bankruptcy or inability of a tenant of such premises to satisfy any obligations with respect to such environmental liability, we may be required to satisfy such obligations. In addition, as the owner of such properties, we may be held directly liable for any such damages or claims irrespective of the provisions of any lease. From time to time, in connection with managing the properties or upon acquisition of a property, we authorize the preparation of Phase I and, when necessary, Phase II environmental reports with respect to our properties. Based upon such environmental reports and our ongoing review of our properties, as of the date of this Annual Report, we are not aware of any environmental condition with respect to any of our properties which we believe would be reasonably likely to have a material adverse effect on our financial condition and/or results of operations. There can be no assurance, however, that (1) the discovery of environmental conditions, the existence or severity of which were previously unknown; (2) changes in law; (3) the conduct of tenants; or (4) activities relating to properties in the vicinity of our properties, will not expose us to material liability in the future. Contact Information Additional information about us can be found on our website which is located at www.mreic.reit. Information contained on or hyperlinked from our Website is not incorporated by reference into and should not be considered part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission (SEC). We make available, free of charge, on or through our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 9 Table of Contents ITEM 1A – RISK FACTORS The following risk factors address the material risks concerning our business. If any of the risks discussed in this report were to occur, our business, prospects, financial condition, results of operation and our ability to service our debt and make distributions to our shareholders could be materially and adversely affected and the market price per share of our stock could decline significantly. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” Risks Relating to our Proposed Merger with ILPT ILPT’s acquisition of us pursuant to the Merger Agreement is subject to various closing conditions and other risks which may cause the merger to be delayed or not completed at all or have other adverse consequences. Our proposed merger with ILPT is subject to various closing conditions that must be satisfied or waived to complete the merger, including approval by the holders of two-thirds of our outstanding common stock. There can be no assurance that these conditions will be satisfied or waived or that the merger will be completed in a timely manner or at all. Failure to satisfy or obtain waivers of any closing conditions may jeopardize or delay the completion of the merger and result in additional expenditures of money and resources. There is no assurance that our stockholders will approve the merger with ILPT by the affirmative vote of holders of two-thirds of our outstanding common stock, as required by Maryland law and our charter. If the merger is not completed for any reason, the price of our Common Stock may decline to the extent that the current market price reflects an assumption that the merger will be consummated and our stockholders will not receive any payment for their shares in connection with the merger. Legal proceedings instituted against us and others relating to the Merger Agreement with ILPT also could delay or prevent the merger from becoming effective within the agreed upon timeframe. In addition, we or ILPT may elect to terminate the Merger Agreement in certain circumstances, and the parties can mutually decide to terminate the Merger Agreement at any time prior to the consummation of the merger, either before or after stockholder approval. Further, uncertainty among our employees about their future roles after the completion of the proposed merger may impair our ability to attract, retain and motivate key personnel, and the proposed merger may disrupt our business relationships with our existing and potential tenants, suppliers, financing sources and other business partners, who may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than us. Any adverse consequence of the merger could be exacerbated by any delays in completion of the merger or termination of the Merger Agreement. Termination of the Merger Agreement could materially adversely affect our business operations and financial results, which in turn would materially and adversely affect the price of our common stock. We have incurred, and will continue to incur, significant transaction and related costs in connection with the proposed merger, our Board of Directors’ review of strategic alternatives, and related matters. We have incurred and expect to continue to incur substantial costs associated with our strategic review processes, the proposed merger with ILPT and our previous merger agreement with Equity Commonwealth, which was terminated after it did not receive the requisite approval of our stockholders. Such costs include the payment of certain fees and expenses incurred in connection with the proposed merger with ILPT and the terminated merger agreement with Equity Commonwealth, including legal and other professional advisory fees as well as the reimbursement of approximately $10 million of transaction expenses incurred by Equity Commonwealth and, in the event our common stockholders do not approve the merger agreement with ILPT and as a result the merger agreement is terminated, a similar reimbursement of up to $10 million of ILPT’s expenses. We have also incurred significant expenses in connection with litigation and potential litigation involving one of our shareholders, Blackwells Capital LLC, and our former general counsel, and in settling such litigation and potential litigation in November 2021. Additional unanticipated costs also may be incurred. Under the Merger Agreement with ILPT, we are subject to restrictions on our business activities. The Merger Agreement contains numerous restrictions on our business activities while the merger is pending, including, among other things, restrictions on our ability to acquire other businesses and assets, dispose of our assets, make investments, enter into certain contracts, repurchase or issue securities, pay dividends, make capital expenditures, amend our organizational documents, incur indebtedness and settle litigation. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, which may as a result materially adversely affect our business, results of operations and financial condition. Real Estate Industry Risks Our business and financial results are affected by local real estate conditions in areas where we own properties. We may be affected adversely by general economic conditions and local real estate conditions. For example, an oversupply of industrial properties in a local area or a decline in the attractiveness of our properties to tenants and potential tenants could have a negative effect on us. Other factors that may affect general economic conditions or local real estate conditions include but are not limited to: ● population and demographic trends; ● employment and personal income trends; ● zoning, use and other regulatory restrictions; ● income tax laws; ● changes in interest rates and availability and costs of financing; and ● competition from other available real estate. We may be unable to compete with our larger competitors and other alternatives available to tenants or potential tenants of our properties. The real estate business is highly competitive. We compete for properties with other real estate investors and purchasers, including other real estate investment trusts, limited partnerships, syndications and private investors, some of whom may have greater financial resources, revenues and geographical diversity than we have. Furthermore, we compete for tenants with other property owners. All of our industrial properties are subject to significant local competition. We also compete with a wide variety of institutions and other investors for capital funds necessary to support our investment activities and asset growth. To the extent that we are unable to effectively compete in the marketplace, our business may be adversely affected. We are subject to significant regulation that inhibits our activities and may increase our costs. Local zoning and use laws, environmental statutes and other governmental requirements may restrict expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to modify our properties at a substantial cost and noncompliance could result in the imposition of fines or an award of damages to private litigants. Future legislation may impose additional requirements. We may incur additional costs to comply with any future requirements. Our investments are concentrated in the industrial distribution sector and our business would be adversely affected by an economic downturn in that sector. Our investments in real estate assets are primarily concentrated in the industrial distribution sector. This concentration may expose us to the risk of economic downturns in this sector to a greater extent than if our business activities included a more significant portion of other sectors of the real estate industry. 10 Table of Contents Risks Associated with Our Properties We may be unable to renew or extend leases or re-let space as leases expire. While we seek to invest in well-located, modern, single-tenant, industrial buildings, leased to investment-grade tenants or their subsidiaries on long-term net leases, a number of our properties are subject to short-term leases. When a lease expires, a tenant may elect not to renew or extend it. We may not be able to re-let the property on similar terms, if we are able to re-let the property at all. The terms of renewal, extension or re-lease (including the cost of required renovations and/or concessions to tenants) may be less favorable to us than the prior lease. If we are unable to re-let all or a substantial portion of our properties, or if the rental rates upon such re-letting are significantly lower than expected rates, our cash generated before debt repayments and capital expenditures and our ability to make expected distributions, may be adversely affected. We have established an annual budget for renovation and re-letting expenses that we believe is reasonable in light of each property’s operating history and local market characteristics. However, this budget may not be sufficient to cover these expenses. Our business is substantially dependent on certain tenants. FDX, together with its subsidiaries, is our largest tenant, consisting of 65 separate stand- alone leases located in 27 different states as of September 30, 2021. As of September 30, 2021, we had 24.9 million square feet of property, of which 11.6 million square feet, or 47%, were leased to FDX and its subsidiaries (5% from FDX and 42% from FDX subsidiaries). As of September 30, 2021, in addition to FDX and its subsidiaries, the only tenants that leased 5% or more of our total square footage were subsidiaries of Amazon, which are parties to five separate stand-alone leases for properties located in four different states, containing 1.5 million total square feet, comprising 6% of our total leasable square feet. Rental and reimbursement revenue from FDX and its subsidiaries was 57% (5% from FDX and 52% from FDX subsidiaries) of total rental and reimbursement revenue for fiscal 2021. In addition to FDX and its subsidiaries, the only tenants to comprise 5% or more of our total Rental and Reimbursement Revenue were subsidiaries of Amazon, which represented 6% of our Rental and Reimbursement Revenue for the fiscal year ended September 30, 2021. None of our properties are subject to a master lease or any cross-collateralization agreements. As a result of this concentration with FDX and its subsidiaries and with subsidiaries of Amazon, our business, financial condition and results of operations, including the amount of cash available for distribution to our stockholders, could be adversely affected if we are unable to do business with them or if they reduced their business with us or if they were to become unable to make lease payments because of a downturn in their business or otherwise. FDX and Amazon are publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. We are subject to risks involved in single-tenant leases. We focus our acquisition activities on real properties that are net-leased to single-tenants. Therefore, the financial failure of, or other default by, a single-tenant under its lease is likely to cause a significant reduction in the operating cash flow generated by the property leased to that tenant and might decrease the value of that property. In addition, we will be responsible for 100% of the operating costs following a vacancy at a single-tenant building. We may be affected negatively by tenant financial difficulties and leasing delays. At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may result in a decline in the demand for space at our industrial properties. As a result, our tenants may delay lease commencement, fail to make rental payments when due, or declare bankruptcy. Any such event could result in the termination of that tenant’s lease and losses to us. We receive a substantial portion of our income as rents under long-term leases. If tenants are unable to comply with the terms of their leases because of rising costs or falling revenues, we may deem it advisable to modify lease terms to allow tenants to pay a lower rental rate or a smaller share of operating costs, taxes and insurance. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to the tenant. We also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes bankrupt, the federal bankruptcy code will apply and, in some instances, may restrict the amount and recoverability of our claims against the tenant. A tenant’s default on its obligations to us for any reason could adversely affect our financial condition and the cash we have available for distribution. We may be unable to sell properties when appropriate because real estate investments are illiquid. Real estate investments generally cannot be sold quickly and, therefore, will tend to limit our ability to vary our property portfolio promptly in response to changes in economic or other conditions. In addition, the Code may limit our ability to sell our properties. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service debt and make distributions to our shareholders. 11 Table of Contents Environmental liabilities could affect our profitability. We face possible environmental liabilities. Environmental laws today can impose liability on a previous owner or operator of a property that owned or operated the property at a time when hazardous or toxic substances were disposed on, or released from, the property. A conveyance of the property, therefore, does not relieve the owner or operator from liability. As a current or former owner and operator of real estate, we may be required by law to investigate and clean up hazardous substances released at or from the properties we currently own or operate or have in the past owned or operated. We may also be liable to the government or to third parties for property damage, investigation costs and cleanup costs. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate as collateral. We are not aware of any environmental liabilities relating to our investment properties which would have a material adverse effect on our business, assets, or results of operations. However, we cannot assure you that environmental liabilities will not arise in the future and that such liabilities will not have a material adverse effect on our business, assets or results of operation. Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties. We compete with other owners and operators of real estate, some of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire. As a result, our financial condition, cash flow and cash available for distribution, the market price of our preferred and common stock and our ability to satisfy our debt service obligations could be materially and adversely affected. We may be unable to acquire properties on advantageous terms or acquisitions may not perform as we expect. We have acquired individual properties and intend to continue to do so. However, we may be unable to acquire any of the properties that we may identify as potential acquisition opportunities in the future. Our acquisition activities and their success are subject to the following risks: ● when we are able to locate a desired property, competition from other real estate investors may significantly increase the purchase price; ● acquired properties may fail to perform as expected; ● the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates; ● acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures; ● we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected; and ● we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, to the seller. As a result, if a claim were asserted against us based upon ownership of those properties, we might have to pay substantial sums to resolve it, which could adversely affect our cash flow and financial condition. 12 Table of Contents Financing Risks We face inherent risks associated with our debt incurrence. We finance a portion of our investments in properties and marketable securities through the incurrence of debt. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. In addition, debt creates other risks, including: ● rising interest rates on our variable rate debt; ● inability to repay or refinance existing debt as it matures, which may result in forced disposition of assets on disadvantageous terms; ● one or more lenders under our $225 million unsecured line of credit and our $75 million term loan could refuse to fund their financing commitment to us or could fail, and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all; ● refinancing terms that are less favorable than the terms of existing debt; and ● inability to meet required payments of principal and/or interest. We mortgage many of our properties, which subjects us to the risk of foreclosure in the event of non-payment. We mortgage many of our properties to secure payment of indebtedness and, if we are unable to meet mortgage payments, the property could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure of one or more of our properties could adversely affect our financial condition, results of operations, cash flow, and ability to service debt and make distributions and the market price of our preferred and common stock. We face risks related to “balloon payments” and refinancings. Certain mortgages will have significant outstanding principal balances on their maturity dates, commonly known as “balloon payments.” There can be no assurance that we will have the funds available to fund the balloon payment or that we will be able to refinance the debt on favorable terms or at all. To the extent we cannot either pay off or refinance this debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which could have an adverse impact on our financial performance and ability to service debt and make distributions. We face risks associated with our dependence on external sources of capital. In order to qualify as a REIT, we are required each year to distribute to our shareholders at least 90% of our REIT taxable income, and we are subject to tax on our income to the extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs from cash retained from operations. As a result, to fund capital needs, we rely on third-party sources of capital, which we may not be able to obtain on favorable terms, if at all. Our access to third-party sources of capital depends upon a number of factors, including (i) general market conditions; (ii) the market’s perception of our growth potential; (iii) our current and potential future earnings and cash distributions; and (iv) the market price of our capital stock. Additional debt financing may substantially increase our debt-to-total capitalization ratio. Additional equity issuances may dilute the holdings of our current shareholders. We may become more highly leveraged, resulting in increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions. We have incurred, and may continue to incur, indebtedness in furtherance of our activities. Our governing documents do not limit the amount of indebtedness we may incur. Accordingly, our Board of Directors may authorize us to incur additional debt. We could therefore become more highly leveraged, resulting in an increased risk of default on our obligations and an increase in debt service requirements which could adversely affect our financial condition and results of operations and our ability to pay distributions to shareholders. Fluctuations in interest rates could materially affect our financial results. Because a portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense. If the United States Federal Reserve increases short-term interest rates, this may have a significant upward impact on shorter-term interest rates, including the interest rates that our variable rate debt is based upon. Potential future increases in interest rates and credit spreads may increase our interest expense and affect our ability to obtain fixed rate debt at favorable interest rates and therefore negatively affect our financial condition and results of operations, and reduce our access to the debt or equity capital markets. 13 Table of Contents The interest rate on our unsecured line of credit facility is based on the London Interbank Offered Rate (“LIBOR”) or Bank of Montreal’s (BMO’s) prime lending rate. All indications are that the LIBOR reference rate will be phased out completely by June 30, 2023. At that point in time, our unsecured line of credit facility will no longer have the LIBOR reference rate available and the reference rate will need to be replaced or we will be required to use BMO’s prime lending rate as a reference rate, which historically has resulted in higher effective interest rates than the LIBOR reference rate. We have very good working relationships with our lenders and all indications we have received from our lenders is that their goal is to have a replacement reference rate for our unsecured line of credit facility. However, because this is the first time a reference rate for our unsecured line of credit facility will stop being published, we cannot be sure how a replacement rate event will conclude. Until we have more clarity from our lenders on how they plan on dealing with a replacement rate event, we cannot be certain of the impact to us. Covenants in our loan documents could limit our flexibility and adversely affect our financial condition. The terms of our various credit agreements and other indebtedness require us to comply with a number of customary financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations. If we were to default under credit agreements or other debt instruments, our financial condition could be adversely affected. Risks Related to our Status as a REIT If our leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT. To qualify as a REIT, we must, among other things, satisfy two gross income tests, under which specified percentages of our gross income must be passive income, such as rent. For the rent paid pursuant to our leases to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. The determination of whether a lease is a true lease depends upon an analysis of all the surrounding facts and circumstances. We believe that our leases will be respected as true leases for federal income tax purposes. However, there can be no assurance that the Internal Revenue Service (IRS) will agree with this view. If the leases are not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs, and we could lose our REIT status. Failure to make required distributions would subject us to additional tax. In order to qualify as a REIT, we must, among other requirements, distribute, each year, to our shareholders at least 90 percent of our taxable income, excluding net capital gains. To the extent that we satisfy the 90 percent distribution requirement, but distribute less than 100 percent of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4 percent nondeductible excise tax on the amount, if any, by which our distributions (or deemed distributions) and the amounts of income retained on which we have paid corporate income tax in any year are less than the sum of: ● 85 percent of our ordinary income for that year; ● 95 percent of our capital gain net earnings for that year; and ● 100 percent of our undistributed taxable income from prior years. To the extent we pay out in excess of 100 percent of our taxable income for any tax year, we may be able to carry forward such excess to subsequent years to reduce our required distributions for purposes of the 4 percent excise tax in such subsequent years. We intend to pay out our income to our shareholders in a manner intended to satisfy the 90 percent distribution requirement. Differences in timing between the recognition of income and the related cash receipts, the effects of non-deductible capital expenditures, the creation of reserves or the effect of required debt amortization payments could require us to borrow money or sell assets (potentially during unfavorable market conditions) to pay out enough of our taxable income to satisfy the 90 percent distribution requirement and to avoid corporate income tax. We may not have sufficient cash available from operations to pay distributions, and, therefore, distributions may be made from borrowings. The actual amount and timing of distributions will be determined by our Board of Directors in its discretion and typically will depend on the amount of cash available for distribution, which will depend on items such as current and projected cash requirements, limitations on distributions imposed by law or our financing arrangements and tax considerations. As a result, we may not have sufficient cash available from operations to pay distributions as required to maintain our status as a REIT. Therefore, we may need to borrow funds to make sufficient cash distributions in order to maintain our status as a REIT, which may cause us to incur additional interest expense as a result of an increase in borrowed funds for the purpose of paying distributions. 14 Table of Contents We may be required to pay a penalty tax upon the sale of a property. The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property, other than foreclosure property, held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100 percent penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of real estate or other property constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. It is our intent that we and our subsidiaries will hold the interests in the real estate for investment with a view to long-term appreciation, engage in the business of acquiring and owning real estate, and make occasional sales as are consistent with our investment objectives. We do not intend to engage in prohibited transactions. We cannot assure you, however, that we will only make sales that satisfy the requirements of the safe harbors or that the IRS will not successfully assert that one or more of such sales are prohibited transactions. The 100% tax will not apply to gains from the sale of property that is held through a taxable REIT subsidiary or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular U.S. federal income tax rates. There is a risk of changes in the tax law applicable to real estate investment trusts. Because the IRS, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any of such legislative actions may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us and/or our investors. The enacted Tax Cuts and Jobs Act of 2017, or the TCJA, as amended by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their shareholders. Changes made by the TCJA and the CARES Act that could affect us and our shareholders include: ● temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026; ● permanently eliminating the progressive corporate tax rate structure, with a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%; ● permitting a deduction for certain pass-through business income, including dividends received by our shareholders from us that are not designated by us as capital gain dividends or qualified dividend income, which will generally allow individuals, trusts, and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026; ● reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%; ● limiting our deduction for net operating losses to 80% of REIT taxable income (prior to the application of the dividends paid deduction) for taxable years beginning after December 31, 2020; ● generally limiting the deduction for net business interest expense in excess of a specified percentage (50% for taxable years beginning in 2019 and 2020 and 30% for subsequent taxable years) of a business’s adjusted taxable income except for taxpayers that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system for certain property); and ● eliminating the corporate alternative minimum tax. 15 Table of Contents You are urged to consult with your tax advisor with respect to the status of legislative, regulatory, judicial or administrative developments and proposals and their potential effect on an investment in our securities. To qualify as a REIT, we must comply with certain highly technical and complex requirements. We cannot be certain we have complied, and will always be able to comply, with the requirements to qualify as a REIT because there are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect our ability to continue to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the federal income tax consequences of qualification. We believe that we have qualified as a REIT since our inception and intend to continue to qualify as a REIT. However, we cannot assure you that we are qualified or will remain qualified. We may be unable to comply with the strict income distribution requirement applicable to REITs. As noted above, to maintain qualification as a REIT under the Code, a REIT must annually distribute to its shareholders at least 90% of its REIT taxable income, excluding the dividends paid deduction and net capital gains. This requirement limits our ability to accumulate capital. We may not have sufficient cash or other liquid assets to meet the 90% distribution requirements. Difficulties in meeting the 90% distribution requirement might arise due to competing demands for our funds or to timing differences between tax reporting and cash receipts and disbursements, because income may have to be reported before cash is received, because expenses may have to be paid before a deduction is allowed, because deductions may be disallowed or limited or because the IRS may make a determination that adjusts reported income. In those situations, we might be required to borrow funds or sell properties on adverse terms in order to meet the 90% distribution requirement and interest and penalties could apply which could adversely affect our financial condition. If we fail to satisfy the 90% distribution requirement, we would cease to be taxed as a REIT. Notwithstanding our status as a REIT, we are subject to various federal, state and local taxes on our income and property. For example, we will be taxed at regular corporate rates on any undistributed taxable income, including undistributed net capital gains; provided, however, that properly designated undistributed capital gains will effectively avoid taxation at the shareholder level. We may be subject to other federal income taxes and may also have to pay some state income or franchise taxes because not all states treat REITs in the same manner as they are treated for federal income tax purposes. In addition, any taxable REIT subsidiary that we may form will be subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders. Other Risks We may not be able to access adequate cash to fund our business. Our business requires access to adequate cash to finance our operations, distributions, capital expenditures, debt service obligations, development and redevelopment costs and property acquisition costs, if any. We expect to generate the cash to be used for these purposes primarily with operating cash flow, borrowings under secured and unsecured term loans, proceeds from sales of strategically identified assets and, when market conditions permit, through the issuance of debt and equity securities from time to time. We may not be able to generate sufficient cash to fund our business, particularly if we are unable to renew or extend leases, lease vacant space or re-lease space as leases expire according to expectations. We are dependent on key personnel. Our executive and other senior officers have a significant role in our success. Our ability to retain our management group or to attract suitable replacements should any members of the management group leave is dependent on the competitive nature of the employment market. The loss of services from key members of the management group or a limitation in their availability could adversely affect our financial condition and cash flow. Further, such a loss could be negatively perceived in the capital markets. We may amend our business policies without shareholder approval. Our Board of Directors determines our growth, investment, financing, capitalization, borrowing, operations and distributions policies. In addition, our charter provides that our Board of Directors may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. Although our Board of Directors has no present intention to amend or reverse any of these policies, they may be amended or revised without notice to shareholders. Accordingly, shareholders may not have control over changes in our policies. We cannot assure you that changes in our policies will serve fully the interests of all shareholders. 16 Table of Contents The market value of our preferred and common stock could decrease based on our performance and market perception and conditions. The market value of our preferred and common stock may be based primarily upon the market’s perception of our growth potential and current and future cash dividends, and may be secondarily based upon the real estate market value of our underlying assets. The market price of our preferred and common stock is influenced by their respective distributions relative to market interest rates. Rising interest rates may lead potential buyers of our stock to expect a higher distribution rate, which could adversely affect the market price of our stock. In addition, rising interest rates could result in increased expense, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions. There are restrictions on the ownership and transfer of our capital stock. To maintain our qualification as a REIT under the Code, no more than 50% in value of our outstanding capital stock may be owned, actually or by attribution, by five or fewer individuals, as defined in the Code to also include certain entities, during the last half of a taxable year. Accordingly, our charter contains provisions restricting the ownership and transfer of our capital stock. These restrictions may discourage a tender offer or other transaction, or a change in management or of control of us that might involve a premium price for our common stock or preferred stock or that our shareholders otherwise believe to be in their best interests, and may result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares. Our earnings are dependent, in part, upon the performance of our investment portfolio. As permitted by the Code, we opportunistically invest in marketable securities of other REITs. We intend to limit the size of this portfolio to no more than approximately 5% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of our fiscal year ended September 30, 2019. This rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. To the extent that the fair value of those investments decline or those investments do not provide an attractive return, our earnings and cash flow could be adversely affected. As mentioned above, beginning with our fiscal year ended September 30, 2019, all changes in the fair value of the equity securities of other REITs that we own, whether realized or unrealized, were recognized as gains or losses in our consolidated statement of income. As a result, fluctuations in the fair value of those investments will impact our earnings even if we have not sold the underlying investments. 17 Table of Contents If our proposed merger with ILPT is not consummated, we will remain subject to restrictions that may impede our ability to effect a future change in control. Certain provisions contained in our charter and bylaws and certain provisions of Maryland law may have the effect of discouraging a third party from making an acquisition proposal for us and thereby inhibit a change in control. These provisions include the following: ● Our charter provides for three classes of directors with the term of office of one class expiring each year, commonly referred to as a “staggered board.” By preventing common shareholders from voting on the election of more than one class of directors at any annual meeting of shareholders, this provision may have the effect of keeping the current members of our Board of Directors in control for a longer period of time than shareholders may desire. ● Our charter generally limits any stockholder from acquiring more than 9.8% (in value or in number of shares, whichever is more restrictive) of our outstanding equity stock (defined as all of our classes of capital stock, except our excess stock). While this provision is intended to assist us in qualifying as a REIT for federal income tax purposes, the ownership limit may also limit the opportunity for shareholders to receive a premium for their shares of common stock that might otherwise exist if an investor was attempting to assemble a block of shares in excess of 9.8% of the outstanding shares of equity stock or otherwise affect a change in control. ● The request of shareholders entitled to cast a majority of the votes entitled to be cast at such meeting is necessary for shareholders to call a special meeting. We also require advance notice from shareholders for the nomination of directors or proposals of business to be considered at a meeting of shareholders. ● Our Board of Directors may authorize and cause us to issue securities without shareholder approval. Under our charter, our Board of Directors has the power to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as the Board of Directors may determine. ● “Business combination” provisions that provide that, unless exempted, a Maryland corporation may not engage in certain business combinations, including mergers, dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested shareholder” or an affiliate of an interested shareholder for five years after the most recent date on which the interested shareholder became an interested shareholder, and thereafter unless specified criteria are met. An interested shareholder is defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question. In our charter, we have expressly elected that the Maryland Business Combination Act not govern or apply to any transaction with a related company, UMH Properties, Inc. (UMH), a Maryland corporation. ● The duties of directors of a Maryland corporation do not require them to, among other things (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any shareholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act to exempt any person or transaction from the requirements of those provisions, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the shareholders in an acquisition. We cannot assure you that we will be able to pay distributions regularly. Our ability to pay distributions in the future is dependent on our ability to operate profitably and to generate cash from our operations and the operations of our subsidiaries and is subject to limitations under our financing arrangements and Maryland law. Under the Maryland General Corporation Law, a Maryland corporation generally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as the debts became due in the usual course of business, or the corporation’s total assets would be less than the sum of its total liabilities plus, unless the charter permits otherwise, the amount that would be needed if the corporation were to be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution. Accordingly, we cannot guarantee that we will be able to pay distributions on a regular quarterly basis in the future. Dividends on our capital stock do not qualify for the reduced tax rates available for some dividends. Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Although these rules do not adversely affect our taxation or the dividends payable by us, to the extent that the preferential rates continue to apply to regular corporate qualified dividends, investors who are individuals, trusts and estates may perceive an investment in us to be relatively less attractive than an investment in the stock of a non-REIT corporation that pays dividends, which could materially and adversely affect the value of the shares of, and per share trading price of, our capital stock. It should be noted that the TCJA provides for a deduction from income for individuals, trusts and estates up to 20% of certain REIT dividends, which reduces the effective tax rate on such dividends below the effective tax rate on interest, though the deduction is generally not as favorable as the preferential rate on qualified dividends. The deduction for certain REIT dividends, unlike the favorable rate for qualified dividends, expires for taxable years beginning after December 31, 2025. 18 Table of Contents General Risk Factors Coverage under our existing insurance policies may be inadequate to cover losses. Weather conditions and natural disasters such as hurricanes, tornadoes, earthquakes, floods, droughts, fires and other environmental conditions can harm our business operations. We generally maintain insurance policies related to our business, including casualty, general liability and other policies, covering our business operations, employees and assets. However, we would be required to bear all losses that are not adequately covered by insurance. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including losses due to riots or acts of war. If an uninsured loss or a loss in excess of insured limits were to occur with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties and, in the case of debt, which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Although we believe that our insurance programs are adequate, we cannot assure you that we will not incur losses in excess of our insurance coverage, or that we will be able to obtain insurance in the future at acceptable levels and reasonable costs. Future terrorist attacks and military conflicts could have a material adverse effect on general economic conditions, consumer confidence and market liquidity. Among other things, it is possible that interest rates may be affected by these events. An increase in interest rates may increase our costs of borrowing, leading to a reduction in our earnings. Terrorist acts could also result in significant damages to, or loss of, our properties. We and our tenants may be unable to obtain adequate insurance coverage on acceptable economic terms for losses resulting from acts of terrorism. Our lenders may require that we carry terrorism insurance even if we do not believe this insurance is necessary or cost effective. We may also be prohibited under the applicable lease from passing all or a portion of the cost of such insurance through to the tenant. Should an act of terrorism result in an uninsured loss or a loss in excess of insured limits, we could lose capital invested in a property, as well as the anticipated future revenues from a property, while remaining obligated for any mortgage indebtedness or other financial obligations related to the property. Any loss of these types could adversely affect our financial condition. Disruptions in the financial markets could affect our ability to obtain financing on reasonable terms and have other adverse effects on us and the market price of our capital stock. Over the last several years, the United States stock and credit markets have experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks and debt securities to fluctuate substantially and the spreads on prospective debt financing to widen considerably. Continued uncertainty in the stock and credit markets may negatively impact our ability to access additional financing at reasonable terms, which may negatively affect our ability to acquire properties and otherwise pursue our investment strategy. A prolonged downturn in the stock or credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our investment strategy accordingly. These types of events in the stock and credit markets may make it more difficult or costly for us to raise capital through the issuance of the common stock, preferred stock or debt securities. The potential disruptions in the financial markets may have a material adverse effect on the market value of the common stock and preferred stock and the return we receive on our properties and investments, as well as other unknown adverse effects on us or the economy in general. We are subject to risks arising from litigation. We may become involved in litigation. Litigation can be costly, and the results of litigation are often difficult to predict. We may not have adequate insurance coverage or contractual protection to cover costs and liability in the event we are sued, and to the extent we resort to litigation to enforce our rights, we may incur significant costs and ultimately be unsuccessful or unable to recover amounts we believe are owed to us. We may have little or no control of the timing of litigation, which presents challenges to our strategic planning. We are subject to risks relating to cybersecurity. An information security or operational technology incident, including a cybersecurity breach, could have a material adverse impact on our business or reputation. As part of our regular review of potential risks, we have an Information Technology (“IT”) Manager who works with our IT service providers to identify and mitigate any such risks. We have established a Cybersecurity Subcommittee of our Board’s Audit Committee to review and provide high level guidance on cybersecurity related issues of importance to the Company. We purchase cyber liability insurance in amounts deemed reasonable by our insurance advisors. We face various risks and uncertainties related to public health crises, including the recent and ongoing global outbreak of the novel coronavirus (COVID-19). The COVID-19 Pandemic and its impacts are uncertain and hard to measure, but may have a material adverse effect on us. We face various risks and uncertainties related to public health crises, including ongoing global COVID-19 Pandemic, which has disrupted financial markets and significantly impacted worldwide economic activity to date and is likely to continue to do so. The future effects of the evolving impact of the COVID-19 Pandemic as well as mandatory and voluntary actions taken to mitigate the public health impact of the Pandemic may have a material adverse effect on our financial condition. The COVID-19 Pandemic and social and governmental responses to the Pandemic have caused, and are likely to continue to cause, severe economic, market and other disruptions worldwide. Although the COVID-19 Pandemic and related societal and government responses have not, to date, had a material impact on our business or financial results, the extent to which COVID-19 and related actions may, in the future, impact our operations cannot be predicted with any degree of confidence. As a result, we cannot at this time predict the impact of the COVID-19 Pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects. ITEM 1B – UNRESOLVED STAFF COMMENTS None. 19 Table of Contents ITEM 2 - PROPERTIES We operate as a REIT. Our portfolio is primarily comprised of real estate holdings, some of which have been long-term holdings carried on our financial statements at depreciated cost. We believe that their current market values exceed both the original cost and the depreciated cost. The following table sets forth certain information concerning our real estate investments as of September 30, 2021: Mortgage Balance State City (MSA, if applicable) (Tenant) Fiscal Year Acquisition Type Square Footage 9/30/2021 (in thousands) AL Huntsville (FDX Ground) 2005 Industrial 88,890 $ -0- AL Mobile (Amazon) 2018 Industrial 362,942 15,609 AZ Tolleson (Phoenix) (Coca-Cola) 2003 Industrial 288,045 1,103 CO Colorado Springs (FDX Ground) 2016 Industrial 225,362 13,469 CO Denver (FDX Ground) 2005 Industrial 69,865 -0- CT Newington (Hartford) (Hartford HealthCare) 2001 Industrial 54,812 -0- FL Cocoa (FDX Ground) 2008 Industrial 144,138 -0- FL Davenport (Orlando) (FDX Ground) 2016 Industrial 310,922 19,243 FL Daytona Beach (B. Braun) 2018 Industrial 399,440 16,170 FL Ft. Myers (FDX Ground) 2017 Industrial 213,672 10,873 FL Homestead (Miami) (FDX Ground) 2017 Industrial 237,756 19,193 FL Jacksonville (FDX) 1999 Industrial 95,883 -0- FL Jacksonville (FDX Ground) 2015 Industrial 304,859 12,587 FL Lakeland (FDX) 2007 Industrial 32,105 -0- FL Orlando (FDX) 2008 Industrial 110,621 -0- FL Punta Gorda (FDX) 2007 Industrial 34,624 -0- FL Tampa (FDX Ground) 2004 Industrial 174,975 -0- FL Tampa (FDX) 2006 Industrial 95,662 -0- FL Tampa (Tampa Bay Grand Prix) 2005 Industrial 68,385 -0- GA Augusta (FDX Ground) 2005 Industrial 59,358 -0- GA Augusta (FDX) 2007 Industrial 30,184 -0- GA Braselton (Atlanta) (FDX Ground) 2018 Industrial 373,750 33,730 GA Griffin (Atlanta) (Rinnai) 2006 Industrial 218,120 -0- GA Locust Grove (Atlanta) (Home Depot) 2021 Industrial 657,518 55,307 GA Savannah (Shaw) 2018 Industrial 831,764 26,273 GA Savannah (FDX Ground) 2019 Industrial 126,520 15,091 IA Urbandale (Des Moines) (Foundation Building Materials) 1994 Industrial 36,270 -0- IL Burr Ridge (Chicago) (Sherwin-Williams) 1998 Industrial 12,500 -0- IL Elgin (Chicago) (Joseph T. Ryerson and Son) 2002 Industrial 89,123 -0- IL Granite City (St. Louis, MO) (Anheuser-Busch) 2002 Industrial 184,800 -0- IL Montgomery (Chicago) (Home Depot) 2005 Industrial 171,230 -0- IL Rockford (Raytheon Technologies Corporation) 2015 Industrial 38,833 -0- IL Rockford (Sherwin-Williams) 2011 Industrial 66,387 -0- IL Sauget (St. Louis, MO) (FDX Ground) 2015 Industrial 198,729 6,659 IL Schaumburg (Chicago) (FDX) 1997 Industrial 73,500 -0- IL Wheeling (Chicago) (FDX Ground) 2003 Industrial 123,000 -0- IN Greenwood (Indianapolis) (ULTA) 2015 Industrial 671,354 15,855 IN Indianapolis (FDX Ground) 2014 Industrial 327,822 7,366 IN Greenwood (Indianapolis) (Amazon) 2020 Industrial 615,747 48,802 IN Lafayette (Toyota) 2019 Industrial 350,418 15,234 KS Edwardsville (Kansas City) (Carlstar Group) 2003 Industrial 179,280 -0- KS Edwardsville (Kansas City) (International Paper) 2014 Industrial 280,019 6,804 KS Olathe (Kansas City) (FDX Ground) 2016 Industrial 313,763 16,217 KS Topeka (Coca-Cola) 2009 Industrial 40,000 -0- KY Buckner (Louisville) (Treehouse) 2014 Industrial 558,509 12,993 KY Frankfort (Lexington) (Jim Beam) 2015 Industrial 599,840 13,483 KY Louisville (Snap-on) 2016 Industrial 137,500 5,267 LA Covington (New Orleans) (FDX Ground) 2016 Industrial 175,315 8,917 MD Beltsville (Washington, DC) (FDX Ground) 2001 Industrial 148,881 -0- MI Livonia (Detroit) (FDX Ground) 2013 Industrial 172,668 4,267 MI Orion (FDX Ground) 2007 Industrial 245,633 -0- MI Romulus (Detroit) (FDX) 1998 Industrial 71,933 -0- MI Walker (Grand Rapids) (FDX Ground) 2017 Industrial 343,483 16,027 MN Stewartville (Rochester) (FDX Ground) (1) 2013 Industrial 60,370 1,292 MO Kansas City (Bunzl) 2015 Industrial 158,417 -0- MO Liberty (Kansas City) (Dakota Bodies) 1998 Industrial 96,687 -0- MO O’Fallon (St. Louis) (Pittsburgh Glass Works) 1995 Industrial 102,135 -0- MO St. Joseph (Woodstream/Altec) 2001 Industrial 382,880 -0- MS Olive Branch (Memphis, TN) (Anda) 2012 Industrial 234,660 5,558 MS Olive Branch (Memphis, TN) (Milwaukee Tool) 2013 Industrial 861,889 16,095 20 Table of Contents Mortgage Balance State City (MSA) Fiscal Year Acquisition Type Square Footage 9/30/2021 (in thousands) MS Richland (Jackson) (FDX) 1994 Industrial 36,000 $ -0- MS Ridgeland (Jackson) (Graybar) 1993 Industrial 26,340 -0- NC Concord (Charlotte) (FDX Ground) 2016 Industrial 330,717 14,197 NC Concord (Charlotte) (FDX Ground II) 2017 Industrial 354,482 20,587 NC Fayetteville (Victory Packaging) 1997 Industrial 148,000 -0- NC Whitsett (Greensboro) (FDX Ground) 2020 Industrial 286,281 28,277 NC Winston-Salem (Style Crest) 2002 Industrial 106,507 -0- NE Omaha (FDX) 1999 Industrial 89,115 -0- NJ Somerset (Various Tenants) (2) 1970 Shopping Center 64,220 -0- NJ Trenton (FDX Ground) 2019 Industrial 347,145 47,039 NY Cheektowaga (Buffalo) (Sonwil) 2007 Industrial 104,981 -0- NY Halfmoon (Albany) (UPS) 2012 Industrial 75,000 -0- NY Hamburg (Buffalo) (FDX Ground) 2017 Industrial 338,584 17,411 OH Bedford Heights (Cleveland) (FDX) 2007 Industrial 82,269 -0- OH Cincinnati (Keurig Dr Pepper) 2015 Industrial 63,840 -0- OH Lancaster (Columbus) (Magna) 2020 Industrial 152,995 8,311 OH Kenton (International Paper) 2017 Industrial 298,472 9,592 OH Lebanon (Cincinnati) (Siemens Real Estate) 2012 Industrial 51,130 -0- OH Monroe (Cincinnati) (UGN) 2015 Industrial 387,000 11,453 OH Plain City (Columbus) (FDX Ground) 2021 Industrial 500,268 45,322 OH Richfield (Cleveland) (FDX Ground) 2006 Industrial 131,152 -0- OH Stow (Cooper Tire) 2017 Industrial 219,765 10,106 OH Streetsboro (Cleveland) (Best Buy) 2012 Industrial 368,060 7,332 OH West Chester Twp. (Cincinnati) (FDX Ground) 2000 Industrial 103,818 -0- OK Oklahoma City (Amazon) 2018 Industrial 300,000 16,501 OK Oklahoma City (Amazon II) 2020 Industrial 120,780 9,272 OK Oklahoma City (Bunzl) 2017 Industrial 110,361 4,243 OK Oklahoma City (FDX Ground) 2012 Industrial 158,340 1,767 OK Tulsa (Keurig Dr Pepper) 2014 Industrial 46,240 1,267 PA Altoona (FDX Ground) (1) 2014 Industrial 122,522 1,987 PA Imperial (Pittsburgh) (GE) 2016 Industrial 125,860 8,734 PA Monaca (Pittsburgh) (NF&M) 1973 Industrial 255,658 -0- SC Aiken (Augusta, GA) (Autoneum) 2017 Industrial 315,560 12,003 SC Charleston (FDX) 2018 Industrial 121,683 11,444 SC Charleston (FDX Ground) 2018 Industrial 265,318 25,171 SC Ft. Mill (Charlotte, NC) (FDX Ground) 2010 Industrial 176,939 -0- SC Hanahan (Charleston) (SAIC) 2005 Industrial 302,400 -0- SC Hanahan (Charleston) (Amazon) 2005 Industrial 91,776 -0- TN Chattanooga (FDX) 2007 Industrial 60,637 -0- TN Kodak (Knoxville) (FDX Ground) 2021 Industrial 259,053 -0- TN Lebanon (Nashville) (Cracker Barrel) 2011 Industrial 381,240 -0- TN Memphis (FDX Trade Networks) 2010 Industrial 449,900 2,364 TN Shelby County (Land) 2007 Land N/A -0- TX Carrollton (Dallas) (Carrier Global Corporation) 2010 Industrial 184,317 3,781 TX Corpus Christi (FDX Ground) 2012 Industrial 46,253 -0- TX Edinburg (FDX Ground) 2011 Industrial 164,207 -0- TX El Paso (FDX Ground) 2007 Industrial 144,199 -0- TX Ft. Worth (Dallas) (FDX Ground) 2015 Industrial 312,923 16,364 TX Houston (National Oilwell) 2010 Industrial 91,295 -0- TX Lindale (Tyler) (FDX Ground) 2015 Industrial 163,383 4,393 TX Mesquite (Dallas) (FDX Ground) 2017 Industrial 351,874 25,461 TX Spring (Houston) (FDX Ground) 2014 Industrial 181,176 5,931 TX Waco (FDX Ground) 2012 Industrial 150,710 3,280 UT Ogden (Salt Lake City) (FDX) 2020 Industrial 69,734 7,805 VA Charlottesville (FDX) 1999 Industrial 48,064 -0- VA Mechanicsville (Richmond) (FDX) 2001 Industrial 112,799 -0- VA Richmond (Locke Supply) 2004 Industrial 60,000 -0- VA Roanoke (CHEP USA) 2007 Industrial 83,000 -0- VA Roanoke (FDX Ground) 2013 Industrial 103,580 2,866 VT Burlington (FDX Ground) 2021 Industrial 143,972 -0- WA Burlington (Seattle/Everett) (FDX Ground) 2016 Industrial 210,445 14,264 WI Cudahy (Milwaukee) (FDX Ground) 2001 Industrial 139,564 -0- WI Green Bay (FDX Ground) (1) 2014 Industrial 99,102 1,613 24,924,752 $ 839,622 (1) One loan is secured by the properties located in Green Bay, WI, Stewartville, MN and Altoona, PA. (2) We own a 67% controlling equity interest. 21 Table of Contents The following table sets forth certain information concerning the principal tenants and leases for our properties shown above as of September 30, 2021: State City (MSA) Tenant Annualized Rent (in thousands) Lease Expiration AL Huntsville FedEx Ground Package System, Inc. $ 605 07/31/26 AL Mobile Amazon.com Services, Inc. (Amazon.com, Inc.) 2,065 11/30/28 AZ Tolleson (Phoenix) Western Container Corp. (Coca-Cola) 1,409 04/30/27 CO Colorado Springs FedEx Ground Package System, Inc. 1,832 01/31/26 CO Denver FedEx Ground Package System, Inc. 609 10/31/25 CT Newington (Hartford) Hartford HealthCare Corporation 307 04/30/31 FL Cocoa FedEx Ground Package System, Inc. 1,112 09/30/24 FL Davenport (Orlando) FedEx Ground Package System, Inc. 2,625 04/30/31 FL Daytona Beach B. Braun Medical Inc. 2,330 02/28/33 FL Ft. Myers FedEx Ground Package System, Inc. 1,418 08/31/27 FL Homestead (Miami) FedEx Ground Package System, Inc. 2,282 03/31/32 FL Jacksonville FedEx Corporation 536 05/31/29 FL Jacksonville FedEx Ground Package System, Inc. 1,998 12/31/29 FL Lakeland FedEx Corporation 155 11/30/27 FL Orlando FedEx Corporation 666 11/30/27 FL Punta Gorda FedEx Corporation 284 06/30/27 FL Tampa FedEx Ground Package System, Inc. 1,624 07/31/26 FL Tampa FedEx Corporation 603 11/30/27 FL Tampa Tampa Bay Grand Prix 369 09/30/27 GA Augusta FedEx Ground Package System, Inc. 513 06/30/23 (1) GA Augusta FedEx Corporation 121 11/30/22 GA Braselton (Atlanta) FedEx Ground Package System, Inc. 3,801 02/28/33 GA Griffin (Atlanta) Rinnai America Corporation 913 12/31/22 (1) GA Locust Grove (Atlanta) Home Depot U.S.A., Inc. 5,458 11/30/40 GA Savannah Shaw Industries, Inc. 3,563 09/30/27 GA Savannah FedEx Ground Package System, Inc. 1,765 10/31/28 IA Urbandale (Des Moines) Foundation Building Materials, LLC 179 12/31/27 (2) IL Burr Ridge (Chicago) Sherwin-Williams Company 162 10/31/26 (1) IL Elgin (Chicago) Joseph T. Ryerson and Son, Inc. 519 01/31/25 IL Granite City (St. Louis, MO) Anheuser-Busch, Inc. 954 03/31/22 (3) IL Montgomery (Chicago) Home Depot U.S.A., Inc. 1,079 12/31/22 IL Rockford Collins Aerospace Systems (Raytheon Technologies Corp) 368 06/30/27 (4) IL Rockford Sherwin-Williams Company 486 12/31/23 IL Sauget (St. Louis, MO) FedEx Ground Package System, Inc. 1,036 05/31/29 IL Schaumburg (Chicago) FedEx Corporation 478 03/31/27 IL Wheeling (Chicago) FedEx Ground Package System, Inc. 1,272 05/31/27 IN Greenwood (Indianapolis) ULTA, Inc. 2,782 07/31/25 IN Indianapolis FedEx Ground Package System, Inc. 1,717 10/31/27 IN Greenwood (Indianapolis) Amazon.com.indc, LLC (Amazon.com, Inc.) 4,991 08/31/34 IN Lafayette Toyota Tsusho America, Inc. 1,722 06/30/29 KS Edwardsville (Kansas City) Carlstar Group, LLC 771 07/31/23 KS Edwardsville (Kansas City) International Paper Company 1,382 08/31/23 KS Olathe (Kansas City) FedEx Ground Package System, Inc. 2,553 05/31/31 KS Topeka Heartland Coca-Cola Bottling Co., LLC (Coca-Cola) 292 09/30/26 (1) KY Buckner (Louisville) TreeHouse Private Brands, Inc. 2,267 10/31/33 KY Frankfort (Lexington) Jim Beam Brands Company (Beam Suntory) 2,112 01/31/25 KY Louisville Challenger Lifts, Inc. (Snap-on Inc.) 858 06/07/26 LA Covington (New Orleans) FedEx Ground Package System, Inc. 1,274 06/30/25 MD Beltsville (Washington, DC) FedEx Ground Package System, Inc. 1,455 07/31/28 MI Livonia (Detroit) FedEx Ground Package System, Inc. 1,194 03/31/22 MI Orion FedEx Ground Package System, Inc. 1,908 06/30/23 MI Romulus (Detroit) FedEx Corporation 421 05/31/26 (1) MI Walker (Grand Rapids) FedEx Ground Package System, Inc. 2,106 01/31/32 MN Stewartville (Rochester) FedEx Ground Package System, Inc. 372 05/31/23 MO Kansas City Bunzl Distribution Midcentral, Inc. 714 09/30/26 (1) MO Liberty (Kansas City) Dakota Bodies, LLC 416 04/30/26 MO O’Fallon (St. Louis) Pittsburgh Glass Works, LLC, a Division of VITRO 508 06/30/26 (1) (5) MO St. Joseph Woodstream Corporation 987 09/30/26 (1) (6) MO St. Joseph Altec Industries, Inc. 378 02/28/23 (6) MS Olive Branch (Memphis, TN) Anda Pharmaceuticals, Inc. 1,220 07/31/22 MS Olive Branch (Memphis, TN) Milwaukee Electric Tool Corporation 3,098 07/31/28 MS Richland (Jackson) FedEx Corporation 120 03/31/24 MS Ridgeland (Jackson) Graybar Electric Company 122 07/31/25 NC Concord (Charlotte) FedEx Ground Package System, Inc. 2,237 07/31/25 NC Concord (Charlotte) FedEx Ground Package System, Inc. 2,537 05/31/32 NC Fayetteville Victory Packaging, L.P. 504 02/28/25 (1) NC Whitsett (Greensboro) FedEx Ground Package System, Inc. 3,002 04/30/35 NC Winston-Salem Style Crest, Inc. 433 03/31/26 (1) NE Omaha FedEx Corporation 446 10/31/23 NJ Somerset Various Tenants at Retail Shopping Center 616 Various (7) 22 Table of Contents State City (MSA) Tenant Annualized Rent (in thousands) Lease Expiration NJ Trenton FedEx Ground Package System, Inc. $ 5,328 06/30/32 NY Cheektowaga (Buffalo) Sonwil Distribution Center, Inc. 630 01/31/22 (8) NY Halfmoon (Albany) United Parcel Service, Inc. 595 03/31/31 (9) NY Hamburg (Buffalo) FedEx Ground Package System, Inc. 2,329 03/31/31 OH Bedford Heights (Cleveland) FedEx Corporation 438 08/31/28 OH Cincinnati The American Bottling Company (Keurig Dr Pepper) 488 09/30/29 OH Lancaster (Columbus) Magna Seating of America, Inc. 1,201 01/31/30 OH Kenton International Paper Company 1,281 08/31/27 OH Lebanon (Cincinnati) Siemens Real Estate 464 04/30/24 OH Monroe (Cincinnati) UGN, Inc. 2,107 02/28/34 OH Plain City (Columbus) FedEx Ground Package System, Inc. 4,569 09/30/35 OH Richfield (Cleveland) FedEx Ground Package System, Inc. 1,493 09/30/24 OH Stow Mickey Thompson (Cooper Tire) 1,537 08/31/27 OH Streetsboro (Cleveland) Best Buy Warehousing Logistics, Inc. 1,725 01/31/22 OH West Chester Twp. (Cincinnati) FedEx Ground Package System, Inc. 560 08/31/23 OK Oklahoma City Amazon.com Services, Inc. (Amazon.com, Inc.) 1,948 10/31/27 OK Oklahoma City Amazon.com Services, LLC (Amazon.com, Inc.) 935 08/31/30 OK Oklahoma City Bunzl Distribution Oklahoma, Inc. 743 08/31/24 OK Oklahoma City FedEx Ground Package System, Inc. 1,048 07/31/25 OK Tulsa The American Bottling Company (Keurig Dr Pepper) 269 02/28/24 PA Altoona FedEx Ground Package System, Inc. 651 08/31/23 PA Imperial (Pittsburgh) General Electric Company 1,329 12/31/30 PA Monaca (Pittsburgh) NF&M International, Inc. 795 03/31/25 SC Aiken (Augusta, GA) Autoneum North America, Inc. 1,746 04/30/32 SC Charleston FedEx Corporation 1,314 08/31/32 SC Charleston FedEx Ground Package System, Inc. 2,713 06/30/33 SC Ft. Mill (Charlotte, NC) FedEx Ground Package System, Inc. 1,598 08/31/28 SC Hanahan (Charleston) Science Applications International Corporation 1,708 10/31/23 SC Hanahan (Charleston) Amazon Services, Inc. (Amazon.com, Inc.) 803 06/30/29 TN Chattanooga FedEx Corporation 319 10/31/22 TN Kodak (Knoxville) FedEx Ground Package System, Inc. 1,979 05/31/36 TN Lebanon (Nashville) CBOCS Distribution, Inc. (Cracker Barrel) 1,490 06/30/24 TN Memphis FedEx Trade Networks 1,394 05/31/29 TN Shelby County N/A- Land -0- N/A TX Carrollton (Dallas) Carrier Enterprise, LLC (Carrier Global Corporation) 1,160 01/31/24 TX Corpus Christi FedEx Ground Package System, Inc. 454 08/31/26 (1) TX Edinburg FedEx Ground Package System, Inc. 1,097 09/30/26 TX El Paso FedEx Ground Package System, Inc. 1,345 09/30/23 TX Ft. Worth (Dallas) FedEx Ground Package System, Inc. 2,394 04/30/30 TX Houston National Oilwell Varco, Inc. 801 09/30/29 (1) TX Lindale (Tyler) FedEx Ground Package System, Inc. 725 06/30/24 TX Mesquite (Dallas) FedEx Ground Package System, Inc. 3,209 03/31/32 TX Spring (Houston) FedEx Ground Package System, Inc. 1,581 09/30/24 TX Waco FedEx Ground Package System, Inc. 1,078 08/31/25 UT Ogden (Salt Lake City) FedEx Corporation 772 03/31/35 VA Charlottesville FedEx Corporation 329 08/31/27 VA Mechanicsville (Richmond) FedEx Corporation 541 04/30/23 VA Richmond Locke Supply Co. 340 04/30/32 VA Roanoke CHEP USA, Inc. 509 02/28/25 VA Roanoke FedEx Ground Package System, Inc. 755 04/30/23 VT Burlington FedEx Ground Package System, Inc. 3,233 05/31/36 WA Burlington (Seattle/Everett) FedEx Ground Package System, Inc. 1,962 08/31/30 WI Cudahy (Milwaukee) FedEx Ground Package System, Inc. 827 06/30/27 WI Green Bay FedEx Ground Package System, Inc. 468 05/31/23 $ 164,118 (1) Renewal or extension has been executed. See fiscal 2021 and fiscal 2022 renewal and extension chart. (2) The lease has a one-time early termination option which may be exercised on 12/31/25, on the condition that we are provided with six months’ notice and the tenant pays us a $95,000 termination fee. (3) Lease was set to expire 11/30/21 and was renewed for four months through 3/31/22 at 150% of the prior rental rate. (4) The lease has an early termination option which may be exercised after 6/30/22, on the condition that we are provided with six months’ notice and the tenant pays us a $1.1 million termination fee. (5) The lease has an early termination option which may be exercised after 6/30/24, on the condition that we are provided with six months’ notice and the tenant pays us a $262,000 termination fee. (6) Property is leased to two tenants. (7) We own a 67% controlling equity interest. Estimated annual rent reflects our proportionate share of the total rent. (8) Not reflected in the table above. The current tenant is not renewing its lease. We entered into a seven year lease agreement effective 2/1/22 with United Parcel Service, Inc. (UPS) for this space. The lease with UPS provides for initial annual rent of $683,000 with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $725,000 over the life of the lease. This results in an increase in the average lease rate of 15.1% on a U.S. GAAP straight-line basis and an increase of 8.3% on a cash basis. (9) Effective 10/1/20, we entered into a lease termination agreement with RGH Enterprises, Inc. (Cardinal Health) for this 75,000 square foot facility, whereby we received a termination fee in the amount of $377,000 representing approximately 50% of the then remaining rent due under the lease. We simultaneously entered into 10.4 year lease agreement with UPS which became effective 11/1/20. The new lease agreement provided for five months of free rent, after which, initial annual rent was $510,000, with 2.0% annual increases thereafter, resulting in a straight-line annualized rent of $541,000 over the life of the lease which matures 3/31/31. 23 Table of Contents As of September 30, 2021, all but one of our industrial properties were 100% occupied, resulting in a 99.7% overall occupancy rate. Our weighted average lease expiration was 7.0 years and 7.1 years as of September 30, 2021 and 2020, respectively. Our weighted average lease expiration has been 7.0 years or greater for over seven consecutive years. Our overall occupancy rates as of the years ended September 30, 2021, 2020, 2019, 2018 and 2017 were 99.7%, 99.4%, 98.9%, 99.6% and 99.3%, respectively. The weighted average effective annualized rent per square foot for the years ended September 30, 2021, 2020, 2019, 2018 and 2017 was $6.61, $6.36, $6.20, $6.01 and $5.93, respectively. Our overall occupancy rate has been 98.9% or above for over six consecutive years. Completed expansions have resulted in increased rents over the fiscal years ended September 30, 2020 and 2021 Ecommerce has been a major catalyst driving increased demand for the industrial property type. The shift from traditional brick and mortar retail shopping to ordering goods on-line has resulted in record occupancy rates for industrial real estate throughout the U.S. Due to this increased demand, we have been experiencing an increase in expansion activity at our existing properties. During fiscal 2021, we completed the first phase of a two-phase parking expansion project for FedEx Ground Package System, Inc. at our property located in Olathe (Kansas City), KS. The first phase of this parking expansion project was completed for a total cost of $3.4 million, resulting in an initial increase in annual rent effective November 5, 2020 of approximately $340,000 from approximately $2.1 million, or $6.83 per square foot, to approximately $2.5 million, or $7.91 per square foot. Furthermore, annual rent increased by 2.1% on June 1, 2021 and will continue to increase 2.1% every five years, resulting in an annualized rent from November 5, 2021 through the remaining term of the lease of approximately $2.6 million, or $8.15 per square foot. We recently began construction on the second phase of this parking expansion project at this location, which upon completion will further increase the rental rate and extend the lease term. In addition, effective June 4, 2021, we completed a parking lot expansion for UPS at our property located in Halfmoon (Albany), NY for a cost of approximately $835,000, resulting in an initial increase in annual rent effective on the date of completion of approximately $52,000 from approximately $510,000, or $6.80 per square foot, to approximately $562,000, or $7.50 per square foot. Furthermore, annual rent will continue to increase each year by 2.0% resulting in an annualized rent from June 4, 2021 through the remaining term of the lease of approximately $622,000, or $8.29 per square foot. We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are nine parking expansion projects underway, which we expect to cost approximately $42.6 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at eight additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently. Due to the proliferation of ecommerce sales and last mile deliveries, it is important to take into account the large amounts of real estate utilized for trailer, van, and car parking at many of our properties in determining how our in-place rental rates compare to market rental rates for properties being used in a similar manner. Rents per square foot on properties that may be nearby, but have only limited acreage devoted to parking, are poor comparisons as they cannot accommodate the same tenant needs. Fiscal 2021 Renewals In fiscal 2021, approximately 5% of our gross leasable area, representing ten leases totaling 1.2 million square feet, was set to expire. All ten of these leases have been renewed, resulting in a 100% retention rate for a weighted average term of 4.2 years, at a rental rate increase of 6.2% on a U.S. GAAP basis and an increase of 0.4% on a cash basis. 24 Table of Contents We have incurred or we expect to incur leasing commission costs of $621,000 in connection with six of these lease renewals and we have incurred or we expect to incur tenant improvement costs of $756,000 in connection with five of these lease renewals. The table below summarizes the terms of the leases that were renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal terms. Property Tenant Square Feet Former U.S. GAAP Straight- Line Rent PSF Former Cash Rent PSF Former Lease Expiration Renewal U.S GAAP Straight- Line Rent PSF Renewal Initial Cash Rent PSF Renewal Lease Expiration Renewal Term (years) Tenant Improvement Cost PSF over Renewal Term (1) Leasing Commission Cost PSF over Renewal Term (1) Griffin (Atlanta), GA Rinnai America Corporation 218,120 $ 3.81 $ 3.93 12/31/20 $ 4.22 $ 4.22 12/31/22 2.0 $ -0- $ 0.13 Fayetteville, NC Victory Packaging, L.P. 148,000 3.33 3.50 2/28/21 3.40 3.25 2/28/25 4.0 -0- 0.20 Winston-Salem, NC Style Crest, Inc. 106,507 3.39 3.77 3/31/21 4.10 3.90 3/31/26 5.0 0.30 -0- Romulus, MI FedEx Corporation 71,933 5.15 5.15 5/31/21 5.95 5.95 5/31/26 5.0 0.56 0.12 Augusta, GA FedEx Ground 59,358 8.64 8.64 6/30/21 8.64 8.64 6/30/23 2.0 -0- -0- O’Fallon, MO Pittsburgh Glass Works, LLC 102,135 4.37 4.44 6/30/21 5.05 4.88 6/30/26 5.0 0.20 -0- Corpus Christi, TX FedEx Ground 46,253 9.03 9.42 8/31/21 9.89 9.89 8/31/26 5.0 -0- -0- Kansas City, MO Bunzl Distribution 158,417 4.65 4.86 9/30/21 4.44 4.26 9/30/26 5.0 -0- 0.27 St. Joseph, MO Woodstream Corporation 256,000 3.57 3.70 9/30/21 3.89 3.75 9/30/26 5.0 0.14 0.12 Topeka, KS Coca-Cola Bottling Co., LLC 40,000 8.30 8.30 9/30/21 7.10 6.75 9/30/26 5.0 0.60 0.21 Total 1,206,723 Weighted Average $ 4.49 $ 4.64 $ 4.77 $ 4.66 4.2 $ 0.15 $ 0.12 (1) Amount calculated based on the total cost divided by the square feet, divided by the renewal term. These ten lease renewals have a U.S. GAAP straight-line lease rate of $4.77 per square foot. The renewed initial cash rent per square foot is $4.66. This compares to the former rent of $4.49 per square foot on a U.S. GAAP straight-line basis and the former cash rent of $4.64 per square foot, resulting in an increase of 6.2% on a U.S. GAAP straight-line basis and an increase of 0.4% on a cash basis. Effective October 1, 2020, we entered into a lease termination agreement with RGH Enterprises, Inc. (Cardinal Health) for our 75,000 square foot facility located in Halfmoon (Albany), NY whereby we received a termination fee in the amount of $377,000, representing approximately 50% of the then remaining rent due under the lease, which was set to expire on November 30, 2021. We simultaneously entered into a 10.4 year lease agreement with United Parcel Service, Inc. (UPS) which became effective November 1, 2020. The lease agreement with UPS provides for five months of free rent, after which, on April 1, 2021, initial annual rent of $510,000, representing $6.80 per square foot, commenced, with 2.0% annual increases thereafter, resulting in a straight-line annualized rent of $541,000, representing $7.21 per square foot over the life of the lease, which expires March 31, 2031. This compares to the former U.S. GAAP straight-line rent of $574,000, representing $7.65 per square foot, and former cash rent of $8.19 per square foot, resulting in a decrease of $33,000, representing a 5.8% decrease on a U.S. GAAP straight-line basis and a decrease of 17.0% on a cash basis. The new 10.4 year lease agreement with UPS provides for an additional 9.3 years of lease term versus the old lease with Cardinal Health. In addition, effective June 4, 2021, we completed a parking lot expansion at this location for a cost of $835,000 resulting in an initial increase in annual rent effective on the date of completion of $52,000 from $510,000, or $6.80 per square foot, to $562,000, or $7.50 per square foot. Furthermore, annual rent will continue to increase each year by 2.0% resulting in an annualized rent from June 4, 2021 through the remaining term of the lease of $622,000, or $8.29 per square foot. Effective December 15, 2020, we entered into a 10.3 year lease with Hartford HealthCare Corporation for our previously vacant 55,000 square foot facility located in Newington (Hartford), CT. The new lease has free rent for the first four months, after which initial annual rent will be $288,000, representing $5.25 per square foot with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $307,000, representing $5.60 per square foot over the life of the lease. Hartford HealthCare Corporation is rated “investment-grade” as defined by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). 25 Table of Contents Fiscal 2022 Renewals In fiscal 2022, existing leases with respect to approximately 5% of our gross leasable area, representing seven leases totaling 1.2 million square feet, were scheduled to expire. Two of these seven leases were renewed thus far, for a weighted average term of 6.8 years, at a rental rate increase of 6.5% on a GAAP basis and flat on a cash basis. These two lease renewals represent 104,000 square feet, or 9% of the square footage scheduled to expire in fiscal 2022. We have incurred or we expect to incur leasing commission costs of $220,000 in connection with one of these lease renewals and we have incurred or we expect to incur tenant improvement costs of $50,000 in connection with the other lease renewal. The table below summarizes the terms of the two leases that were renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal terms. Property Tenant Square Feet Former U.S. GAAP Straight- Line Rent PSF Former Cash Rent PSF Former Lease Expiration Renewal U.S GAAP Straight- Line Rent PSF Renewal Initial Cash Rent PSF Renewal Lease Expiration Renewal Term (years) Tenant Improvement Cost PSF over Renewal Term (1) Leasing Commission Cost PSF over Renewal Term (1) Houston, TX National Oilwell Varco 91,925 $ 8.26 $ 8.44 9/30/22 $ 8.88 $ 8.44 9/30/29 7.0 $ -0- $ 0.34 Burr Ridge, IL Sherwin-Williams 12,500 12.80 12.94 10/31/21 12.99 12.94 10/31/26 5.0 0.80 -0- Total 104,425 Weighted Average $ 8.80 $ 8.98 $ 9.37 $ 8.98 6.8 $ 0.07 $ 0.31 (1) Amount calculated based on the total cost divided by the square feet, divided by the renewal term. These two lease renewals have a U.S. GAAP straight-line lease rate of $9.37 per square foot. The renewed initial cash rent per square foot is $8.98. This compares to the former rent of $8.80 per square foot on a U.S. GAAP straight-line basis and the former cash rent of $8.98 per square foot, resulting in an increase of 6.5% on a U.S. GAAP straight-line basis and flat on a cash basis. Our 105,000 square foot facility located in Cheektowaga (Buffalo), NY is leased to Sonwil Distribution Center, Inc. through January 31, 2022. This tenant informed us that they will not be renewing their lease. We recently entered into a new seven-year lease agreement for this facility with UPS which becomes effective February 1, 2022 through January 31, 2029. The lease with UPS provides for initial annual rent of $683,000, representing $6.50 per square foot with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $725,000, representing $6.90 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent and former cash rent of $6.00 per square foot, resulting in an increase in the average lease rate of 15.0% on a U.S. GAAP straight-line basis and an increase of 8.3% on a cash basis. This lease to UPS, along with the two lease renewals in the table above, results in a weighted average term of 6.9 years, at a rental rate increase of 10.0% on a GAAP basis and an increase of 3.3% on a cash basis. These three leases represent 209,000 square feet, or 18% of the expiring square footage for fiscal 2022. Also not included in the table above is our 185,000 square foot facility located in Granite City (St. Louis, MO), IL that is leased to Anheuser-Busch through November 30, 2021. Anheuser-Busch renewed for only four months, until March 31, 2022, after which it is expected that they will be moving out. The four month extension provides for rent at an annualized rate of 150% of its current rent resulting in an annualized rent of $1.3 million, representing $7.04 per square foot. This compares to the former U.S. GAAP straight-line rent of $4.36 and former cash rent of $4.70 per square foot. 26 Table of Contents The following table presents certain information as of September 30, 2021, with respect to our leases expiring over the future fiscal years ending September 30th: Expiration of Fiscal Year Ending September 30th Property Count Total Area Expiring (square feet) Annualized Rent (in thousands) Percent of Gross Annualized Rent Vacant (1) 1 83,886 $ -0- 0% Shopping Center (2) 1 61,190 616 0% 2022 5 1,065,169 5,723 4% 2023 16 2,117,731 12,076 7% 2024 13 1,887,039 11,797 7% 2025 11 2,607,541 12,980 8% 2026 14 1,738,731 10,850 7% 2027 13 2,390,188 13,297 8% 2028 10 2,172,458 11,857 7% 2029 9 1,831,303 10,610 7% 2030 5 1,102,002 8,490 5% 2031 6 1,218,941 9,738 6% 2032 8 2,131,983 18,862 12% 2033 3 1,038,508 8,844 5% 2034 3 1,561,256 9,365 6% 2035 3 856,283 8,343 5% 2036 2 403,025 5,212 3% 2041 1 657,518 5,458 3% Total (3) 122 24,924,752 $ 164,118 100% (1) “Vacant” represents 81,000 square feet at our 256,000 square foot industrial park located in Monaca (Pittsburgh), PA and not included in the Property Count but included in the square feet is 3,000 square feet at our 64,000 square foot Shopping Center located in Somerset, NJ. (2) “Shopping Center” represents a multi-tenanted property which has lease expirations ranging from month-to-month to fiscal yearend “2030”. (3) The property located in Monaca (Pittsburgh), PA is included in “Vacant” and is included in “2025” for its lease with NF&M International and therefore is counted as one property in the property count total. The property located in St. Joseph, MO is included in “2026” for its tenant, Woodstream Corporation and is also included in “2023” for its tenant, Altec Industries, Inc., both of which occupy one property and therefore is counted as one property in the property count total. ITEM 3 – LEGAL PROCEEDINGS Litigation Relating to our Terminated Merger Agreement with Equity Commonwealth We and the members of our Board of Directors are defendants in a class action lawsuit that was commenced in the Circuit Court for Baltimore City, Maryland in August 2021, prior to termination of our merger agreement with EQC, and which currently remains pending. The lawsuit alleges that our directors violated their legal duties in connection with the proposed EQC merger and seeks injunctive relief and damages. We believe that the claims asserted in this lawsuit are without merit and that in any event the claims are now moot in light of the termination of the merger agreement. We intend to seek to have this lawsuit dismissed. However, litigation is inherently uncertain and there can be no assurance we will be successful in obtaining a dismissal. Four other lawsuits that had been brought with respect to the proposed merger with EQC after the transaction was announced have since been voluntarily dismissed by the plaintiffs in light of the termination of the EQC merger agreement. Former Litigation with Blackwells Capital and Allison Nagelberg On November 4, 2021, we entered into a Release and Settlement Agreement with our former general counsel, Allison Nagelberg, and Blackwells Capital LLC (“Blackwells”) resolving legal proceedings that we had commenced against Ms. Nagelberg and Blackwells in the Superior Court of New Jersey relating to, among other things, Ms. Nagelberg having been named as a nominee of Blackwells for election to our Board of Directors at our 2021 annual meeting, and also resolving Ms. Nagelberg’s counterclaim against us seeking indemnification and advancement of expenses. In connection with the settlement, the parties exchanged mutual releases, whereby, among other things, Blackwells agreed to release claims, including those it had previously demanded that we assert against the members of our Board for alleged breach of their legal duties relating to the Board’s rejection of an unsolicited acquisition offer that we received from Blackwells in December 2020 and subsequent actions taken by the Board in connection with its review of strategic alternatives earlier this year. Simultaneous with the Release and Settlement Agreement, we and Blackwells entered into a Cooperation Agreement that, among other things, resolved a potential proxy contest to elect directors at the 2021 Annual Meeting. Under the Cooperation Agreement, Blackwells also agreed, among other things, to withdraw its slate of proposed nominees and various shareholder proposals for consideration at the 2021 Annual Meeting and committed to vote all its shares of our common stock at the 2021 Annual Meeting in favor of all of the Board’s director nominees and in support of all Board-recommended proposals, including voting in favor of the Merger Agreement with ILPT. Blackwells also agreed to comply with certain additional standstill, voting and affirmative solicitation commitments and terms. The estimated costs associated with the Release and Settlement Agreement and the Cooperation Agreement and the related litigation and potential litigation have been reflected in the accompanying Consolidated Financial Statements. ITEM 4 – MINE SAFETY DISCLOSURES None. 27 Table of Contents PART II ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Since June 1, 2010, the common stock of Monmouth Real Estate Investment Corporation, $0.01 par value per share (common stock), has been traded on the New York Stock Exchange (NYSE), under the symbol “MNR.” Previously, the common stock was traded on the NASDAQ Global Select Market. Shareholder Information As of November 1, 2021, 1,191 shareholders of record held shares of our common stock. Dividends On January 14, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share representing an annualized dividend rate of $0.72 per share. This increase was the third dividend increase in the past five years, representing a total increase of 20%. We have maintained or increased our common stock cash dividend for 30 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis. We currently expect that comparable cash dividends will continue to be paid in the future. Recent Sales of Unregistered Securities None. Purchases of Equity Securities On September 14, 2021, our Board of Directors reaffirmed our Common Stock Repurchase Program (the “Program”) that authorizes us to purchase up to $50.0 million of shares of our common stock. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice. During fiscal 2020, we repurchased 400,000 shares of our common stock for $4.3 million at an average price of $10.69 per share. These were the only repurchases made under the Program thus far. 28 Table of Contents Comparative Stock Performance The following line graph compares the total return of our common stock for the last five fiscal years to the FTSE Nareit Composite Index (US), published by the National Association of Real Estate Investment Trusts (Nareit), and the S&P 500 Index for the same period. The graph assumes a $100 investment in our common stock and in each of the indexes listed below on September 30, 2016 and the reinvestment of all dividends. The total return reflects stock price appreciation and dividend reinvestment for all three comparative indices. The information has been obtained from sources believed to be reliable, but neither its accuracy nor its completeness is guaranteed. Our stock performance shown in the graph below is not indicative of future stock performance. ITEM 6 – [RESERVED] 29 Table of Contents ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statement Regarding Forward-Looking Statements Statements contained in this Form 10-K that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements provide our current expectations or forecasts of future events. In particular, statements relating to our liquidity and capital resources, portfolio performance and results of operations contain forward-looking statements. Furthermore, all of the statements regarding future financial performance are forward-looking statements. We are including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Securities Act and Exchange Act for any such forward-looking statements. We caution investors that any forward-looking statements presented in this Form 10-K are based on management’s belief and assumptions made by, and information currently available to, management. Forward-looking statements can be identified by their use of forward-looking words, such as “may,” “will,” “anticipate,” “expect,” “believe,” “intend,” “plan,” “should,” “seek” or comparable terms, or the negative use of those words, but the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements include statements about our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are described below and under the headings “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These and other risks, uncertainties and factors could cause our actual results to differ materially from those included in any forward-looking statements we make. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and we do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from our expectations include, among others: ● the ability of our tenants to make payments under their respective leases; ● our reliance on certain major tenants; ● our ability to re-lease properties that are currently vacant or that become vacant; ● our ability to obtain suitable tenants for our properties; ● changes in real estate market conditions, economic conditions in the industrial sector, the markets in which our properties are located and general economic conditions; ● the inherent risks associated with owning real estate, including local real estate market conditions, governing laws and regulations and illiquidity of real estate investments; ● our ability to acquire, finance and sell properties on attractive terms; ● our ability to repay debt financing obligations; ● our ability to refinance amounts outstanding under our debt obligations at maturity on terms favorable to us, or at all; ● the loss of any member of our management team; ● our ability to comply with debt covenants; ● our ability to integrate acquired properties and operations into existing operations; ● continued availability of proceeds from issuances of our debt or equity securities; 30 Table of Contents ● the availability of other debt and equity financing alternatives; ● changes in interest rates, including the replacement of the LIBOR reference rate, under our current credit facility and under any additional variable rate debt arrangements that we may enter into in the future; ● our ability to successfully implement our selective acquisition strategy; ● our ability to maintain internal controls and procedures to ensure all transactions are accounted for properly, all relevant disclosures and filings are timely made in accordance with all rules and regulations, and any potential fraud or embezzlement is thwarted or detected; ● changes in federal or state tax rules or regulations that could have adverse tax consequences; ● declines in the market prices of our investment securities; ● the effect of COVID-19 on our business and general economic conditions; ● our ability to qualify as a REIT for federal income tax purposes; ● inability to complete the proposed merger with ILPT because, among other reasons, one or more conditions to the closing of the proposed transaction may not be satisfied or waived; ● uncertainty as to the timing of completion of the proposed merger; ● potential adverse effects or changes to relationships with our tenants, employees, service providers or other parties conducting business with us resulting from the announcement or completion of the proposed merger; ● the outcome of any legal proceedings that may be instituted against the parties and others related to the merger agreement; ● possible disruptions from the proposed merger that could harm our business, including current plans and operations; ● unexpected costs, charges or expenses resulting from the proposed merger; and ● the possibility that the benefits anticipated from the proposed merger will not be realized or will not be realized within the expected time period. You should not place undue reliance on these forward-looking statements, as events described or implied in such statements may not occur. Although we have entered into the merger agreement with ILPT, there can be no assurance that the merger and other transactions contemplated by the merger agreement will be completed. We undertake no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. Merger Agreement with ILPT As previously announced, on November 5, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Industrial Logistics Properties Trust, a Maryland real estate investment trust (“ILPT”), and Maple Delaware Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of ILPT (“Merger Sub”). Pursuant to the Merger Agreement, subject to the terms and conditions set forth in the Merger Agreement, we would be acquired by ILPT in an all-cash transaction for $21 per common share, payable in cash (representing an aggregate equity value of approximately $2.1 billion). The Merger Agreement provides, among other things, that we will be merged with and into Merger Sub (the “Merger”), with Merger Sub continuing as the surviving entity and as a wholly owned subsidiary of ILPT. Following the Merger, our common stock would no longer be traded on the New York Stock Exchange. 31 Table of Contents The Merger Agreement provides that each share of our common stock, par value $0.01 per share (“Common Stock”) outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares of Common Stock owned by ILPT, Merger Sub or any wholly owned subsidiary of us or ILPT) will, at the Effective Time, automatically be cancelled and converted into the right to receive $21.00 in cash (the “Common Stock Merger Consideration”), without interest and subject to applicable withholding taxes. Pursuant to the Merger Agreement, as of the Effective Time, (i) each outstanding stock option will become fully vested and be converted into the right to receive an amount in cash equal to the product of (A) the excess, if any, of the Common Stock Merger Consideration over the applicable exercise price of such option, multiplied by (B) the number of shares subject to such option, subject to applicable withholding taxes, and (ii) each restricted stock award and restricted stock unit award that is outstanding immediately prior to the Effective Time will become fully vested and be converted into the right to receive the Common Stock Merger Consideration in respect of each underlying share of Common Stock, subject to applicable withholding taxes. Upon closing of the merger with ILPT, holders of our outstanding 6.125% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) will receive the amount of $25 per share plus any accrued and unpaid dividends. We plan to continue to pay our regular quarterly common stock dividend and our Series C Cumulative Redeemable Preferred Stock dividend for each full quarterly dividend period completed prior to the closing of the transaction. ILPT’s acquisition of us is subject to obtaining the requisite approval of our common stockholders and the satisfaction of other customary closing conditions. The obligation of the parties to complete the Merger is subject to customary closing conditions, including the approval of the Merger Agreement by holders of at least two-thirds of our outstanding shares of Common Stock entitled to vote thereon (the “Company Stockholder Approval”) (ii) the absence of any law, order or injunction of a court or governmental entity of competent jurisdiction prohibiting the consummation of the Merger, (iii) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain qualifications), (iv) the performance in all material respects by the parties of their respective obligations under the Merger Agreement that are required to be performed at or prior to the Effective Time and (v) the absence of a Company Material Adverse Effect (as defined in the Merger Agreement) occurring after the date of the Merger Agreement. We have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (i) to conduct its business in all material respects in the ordinary course during the period between the execution of the Merger Agreement and the closing of the Merger, and not to engage in specified types of transactions during this period, subject to certain exceptions and (ii) to convene a meeting of its stockholders for the purpose of obtaining the Company Stockholder Approval. The Merger Agreement contains customary no-shop restrictions that limit the ability of us and our representatives to solicit alternative acquisition proposals from third parties, subject to customary “fiduciary out” provisions. Our Merger Agreement with ILPT represents the culmination of the publicly announced comprehensive strategic alternatives review processes conducted by our Board of Directors this year. Our Board re-initiated its strategic alternatives review process in September 2021 after a previous agreement for a merger that we entered into with another party, following a strategic alternatives review process earlier this year, did not receive the requisite approval of our stockholders and was terminated. The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere herein. Overview Monmouth Real Estate Investment Corporation, founded in 1968, is one of the oldest public equity REITs in the world. We are a self-administered and self-managed REIT that seeks to invest in well-located, modern, single- tenant industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net-leases. During the fiscal year 2021, we purchased four new built-to-suit, net-leased, industrial properties, located in the following MSA’s: Columbus, OH, Atlanta, GA, Burlington, VT and Knoxville, TN, totaling approximately 1.6 million square feet on 316.2 acres, for an aggregate purchase price of $258.4 million. These four properties are expected to generate annualized rental income over the life of their leases of $15.2 million. In connection with two of the four properties acquired during the 2021 fiscal year, we entered into one 17 year fully-amortizing mortgage loan and one 15 year fully-amortizing mortgage loan. In connection with the remaining two properties acquired during the 2021 fiscal year, we entered into commitments for two 15 year fully- amortizing mortgage loans. These four fully-amortizing loans have a weighted average term of 15.7 years. The principal amount of the four mortgage loans originally totaled $161.8 million with fixed interest rates ranging from 2.50% to 3.25%, resulting in a weighted average fixed interest rate of 2.89%. At September 30, 2021, we held investments in 122 properties totaling 24.9 million square feet with a weighted average building age, based on the square footage of our buildings, of 10.2 years. These properties are located in 32 states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. All of these properties are 100% owned by us, directly or through wholly- owned subsidiaries, with the exception of one property in which we own a 67% majority interest in and is our only non-industrial asset, which is a shopping center in Somerset, NJ. All of our investment properties are leased on a net basis except for an industrial park in Monaca (Pittsburgh), PA and our only non-industrial asset. 32 Table of Contents Our weighted average lease expiration was 7.0 years and 7.1 years as of September 30, 2021 and 2020, respectively, and our average annualized rent per occupied square foot as of September 30, 2021 and 2020 was $6.61 and $6.36, respectively. At September 30, 2021 and 2020, our overall occupancy rate was 99.7% and 99.4%, respectively. Our weighted average lease expiration has been 7.0 years or greater for over seven consecutive years. Our overall occupancy rate has been 98.9% or above for over six consecutive years. We have a concentration of properties leased to FedEx Corporation (FDX). As of September 30, 2021, we had 24.9 million leasable square feet, of which 11.6 million square feet, or 47%, consisting of 65 separate stand-alone leases, were leased to FDX and its subsidiaries (5% to FDX and 42% to FDX subsidiaries). These properties are located in 27 different states. As of September 30, 2021, the 65 separate stand-alone leases that are leased to FDX and FDX subsidiaries had a weighted average lease maturity of 7.5 years. As of September 30, 2021, in addition to FDX and its subsidiaries, the only tenants that leased 5% or more of our total square footage were subsidiaries of Amazon, which are parties to five separate stand-alone leases for properties located in four different states, containing 1.5 million total square feet, comprising 6% of our total leasable square feet. Our Rental and Reimbursement Revenue from FDX and its subsidiaries for the fiscal year ended September 30, 2021 totaled $104.3 million, or as a percentage of total rent and reimbursement revenues were, 57% (5% from FDX and 52% from FDX subsidiaries). In addition to FDX and its subsidiaries, the only tenants to comprise 5% or more of our total Rental and Reimbursement Revenue were subsidiaries of Amazon, which represented 6% of our Rental and Reimbursement Revenue for the fiscal year ended September 30, 2021. None of our properties are subject to a master lease or any cross-collateralization agreements. FDX and Amazon are publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. FDX and Amazon are rated “BBB” and “AA”, respectively by S&P Global Ratings (www.standardandpoors.com) and are rated “Baa2” and “A1”, respectively by Moody’s (www.moodys.com), which are both considered “Investment Grade” ratings. The references in this report to the SEC’s website, S&P Global Ratings’ website and Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of FDX, Amazon, S&P Global Ratings or Moody’s on such websites. Our revenue primarily consists of rental and reimbursement revenue from the ownership of industrial rental property. Rental and Reimbursement Revenue increased $14.9 million, or 9%, for the year ended September 30, 2021, as compared to the year ended September 30, 2020. The increase was due mainly to the revenue relating to the property acquisitions made during fiscal 2021 and 2020. Total expenses (excluding other income and expense) increased $42.4 million, or 49%, for the year ended September 30, 2021 as compared to the year ended September 30, 2020. The increase was due mainly to the Non-recurring Strategic Alternatives & Proxy Costs of $35.9 million and depreciation expense which increased $4.8 million for the year ended September 30, 2021 as compared to the year ended September 30, 2020. Our Net Income (Loss) Attributable to Common Shareholders increased $93.4 million, or 192%, for the fiscal year ended September 30, 2021 as compared to the fiscal year ended September 30, 2020 and decreased $59.6 million, or 541%, for the fiscal year ended September 30, 2020 as compared to the fiscal year ended September 30, 2019. The increase in our Net Income (Loss) Attributable to Common Shareholders from the fiscal year ended September 30, 2020 to the fiscal year ended September 30, 2021 was primarily due to the Unrealized Holding Gain Arising During the Period of $50.2 million offset by Non-recurring Strategic Alternatives & Proxy Costs of $35.9 million. The decrease in our Net Income (Loss) Attributable to Common Shareholders from the fiscal year ended September 30, 2019 to the fiscal year ended September 30, 2020 was primarily due to an increase in unrealized gains and losses resulting from our securities investments. During the fiscal year ended September 30, 2020 and 2019, we recognized $77.4 million and $24.7 million of unrealized losses, respectively. 33 Table of Contents We evaluate our financial performance using Net Operating Income (NOI) from property operations, which we believe is a useful indicator of our operating performance. NOI is a non-GAAP financial measure that we define as Net Income (Loss) Attributable to Common Shareholders plus Net Income (Loss) Attributable to Non-Controlling Interest, Preferred Dividend Expense, General and Administrative Expenses, Non-recurring Strategic Alternatives & Proxy Costs, Non-recurring Severance Expense, Depreciation, Amortization of Capitalized Lease Costs and Intangible Assets, Interest Expense, including Amortization of Financing Costs, Unrealized Holding (Gains) Losses Arising During the Periods, less Realized Gain on Sale of Securities Transactions, Realized Gain on Sale of Real Estate Investment, Dividend Income and Lease Termination Income. The components of NOI are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities, and repairs and maintenance. Other REITs may use different methodologies to calculate NOI and, accordingly, our NOI may not be comparable to certain other REITs. The following is a reconciliation of our Net Income (Loss) Attributable to Common Shareholders to our NOI for the fiscal years ended September 30, 2021, 2020 and 2019 (in thousands): 2021 2020 2019 Net Income (Loss) Attributable to Common Shareholders $ 44,764 $ (48,617) $ 11,026 Plus: Net Income (Loss) Attributable to Non-Controlling Interest 2,996 (31) 152 Plus: Preferred Dividend Expense 33,419 26,474 18,774 Plus: General and Administrative Expenses 9,353 8,932 9,081 Plus: Non-recurring Strategic Alternatives & Proxy Costs 35,920 -0- -0- Plus: Non-recurring Severance Expense -0- 786 -0- Plus: Depreciation 51,478 46,670 43,020 Plus: Amortization of Capitalized Lease Costs and Intangible Assets 3,586 3,180 2,870 Plus: Interest Expense, including Amortization of Financing Costs 37,880 36,376 36,912 Plus: Unrealized Holding (Gains) Losses Arising During the Periods (50,239) 77,380 24,680 Less: Realized Gain on Sale of Securities Transactions (2,248) 0 0 Less: Realized Gain on Sale of Real Estate Investment (6,376) 0 0 Less: Dividend Income (6,182) (10,445) (15,168) Less: Lease Termination Income (377) 0 0 Net Operating Income – NOI $ 153,974 $ 140,705 $ 131,347 The components of our NOI for the fiscal years ended September 30, 2021, 2020 and 2019 are as follows (in thousands): 2021 2020 2019 Rental Revenue $ 155,044 $ 141,583 $ 132,524 Reimbursement Revenue 27,712 26,234 22,297 Total Rental and Reimbursement Revenue 182,756 167,817 154,821 Real Estate Taxes (21,798) (20,193) (17,010) Operating Expense (6,984) (6,919) (6,464) NOI $ 153,974 $ 140,705 $ 131,347 NOI increased $13.3 million, or 9%, for the fiscal year ended September 30, 2021 as compared to the fiscal year ended September 30, 2020 and increased $9.4 million, or 7%, for the fiscal year ended September 30, 2020 as compared to the fiscal year ended September 30, 2019. The increase from fiscal year 2020 to 2021 was due to the additional income related to four industrial properties purchased during fiscal 2021 and the purchase of five industrial properties during fiscal 2020. The increase from fiscal year 2019 to 2020 was due to the additional income related to five industrial properties purchased during fiscal 2020 and the purchase of three industrial properties during fiscal 2019. 34 Table of Contents We evaluate our financial performance using earnings before interest, taxes, depreciation and amortization for real estate (Adjusted EBITDA) from property operations, which we believe is a useful indicator of our operating performance. Adjusted EBITDA is a non-GAAP financial measure that we define as Net Income (Loss) Attributable to Common Shareholders plus, Preferred Dividend Expense, Interest Expense, including Amortization of Financing Costs, Depreciation, Amortization of Capitalized Lease Costs and Intangible Assets, Unrealized Holding (Gains) Losses Arising During the Periods, and Non-recurring Strategic Alternatives & Proxy Costs less Gain on Sale of Securities Transactions and Gain on Sale of Real Estate Investments and our portion of these items related to our consolidated investment that we have a non-controlling interest in. Other REITs may use different methodologies to calculate Adjusted EBITDA and, accordingly, our Adjusted EBITDA may not be comparable to certain other REITs. The following is a reconciliation of our Net Income (Loss) Attributable to Common Shareholders to our Adjusted EBITDA for the fiscal years ended September 30, 2021, 2020 and 2019 (in thousands): 2021 2020 2019 Net Income (Loss) Attributable to Common Shareholders $ 44,764 $ (48,617) $ 11,026 Plus: Preferred Dividend Expense 33,419 26,474 18,774 Plus: Interest Expense, including Amortization of Financing Costs 37,880 36,376 36,912 Plus: Depreciation and Amortization 55,064 49,850 45,890 Plus: Net Amortization of Acquired Above and Below Market Lease Revenue 103 103 103 Plus: Unrealized Holding (Gains) Losses Arising During the Periods (50,239) 77,380 24,680 Plus: Non-recurring Strategic Alternatives & Proxy Costs 35,920 0 0 Less: Realized Gain on Sale of Securities Transactions (2,248) 0 0 Less: Realized Gain on Sale of Real Estate Investments (A) (3,252) 0 0 Adjusted EBITDA $ 151,411 $ 141,566 $ 137,385 (A) Represents our portion of the net realized gain from the sale of our property that we owned a 51% interest in. Adjusted EBITDA increased $9.8 million, or 7%, for the fiscal year ended September 30, 2021 as compared to the fiscal year ended September 30, 2020 and increased $4.2 million, or 3%, for the fiscal year ended September 30, 2020 as compared to the fiscal year ended September 30, 2019. The increase from fiscal year 2020 to 2021 was due to the additional income related to four industrial properties purchased during fiscal 2021 and the purchase of five industrial properties during fiscal 2020. The increase from fiscal year 2019 to 2020 was due to the additional income related to five industrial properties purchased during fiscal 2020 and the purchase of three industrial properties during fiscal 2019. For the fiscal years ended September 30, 2021, 2020 and 2019, gross revenue, which includes Rental Revenue, Reimbursement Revenue and Dividend Income, totaled $188.9 million, $178.3 million and $170.0 million, respectively. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The purchase price was $30.2 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40%, which has not yet closed. Annual rental revenue over the remaining term of the lease averages $1.7 million. In addition to the $30.2 million property purchased in October 2021, as described above, we have entered into agreements to purchase three, new build-to- suit, industrial buildings that are currently being developed in Alabama, Georgia and Texas, totaling 1.1 million square feet. These future acquisitions have net- leased terms ranging from 10 to 15 years with a weighted average lease term of 12.6 years. The total purchase price for these three properties is $126.8 million. All three properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). Two of these three properties, consisting of an aggregate of 563,000 square feet, or 52% of the total leasable area, are leased to FedEx Ground Package System, Inc. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing all three of these transactions during fiscal 2022. 35 Table of Contents We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are nine parking expansion projects underway, which we expect to cost approximately $42.6 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at eight additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently. Due to the proliferation of ecommerce sales and last mile deliveries, it is important to take into account the large amounts of real estate utilized for trailer, van, and car parking at many of our properties in determining how our in-place rental rates compare to market rental rates for properties being used in a similar manner. Rents per square foot on properties that may be nearby, but have only limited acreage devoted to parking, are poor comparisons as they cannot accommodate the same tenant needs. During the three fiscal years ended September 30, 2021, 2020 and 2019, we completed a total of three property expansions, consisting of one building expansion and two parking lot expansions. The building expansion resulted in 155,000 additional square feet. Total costs for all three property expansions were $12.9 million and resulted in total increased annual rent of $1.2 million. One of these completed expansions resulted in new ten-year lease extensions and one resulted in a new fifteen-year lease extension. The weighted average lease extension for these three property expansions is 12.7 years. For fiscal years 2021, 2020 and 2019, Gross Revenues also include Dividend Income. We hold a portfolio of marketable securities of other REITs with a fair value of $143.5 million as of September 30, 2021, representing 5.6% of our undepreciated assets (which is our total assets excluding accumulated depreciation). We intend to limit the size of this portfolio to no more than approximately 5% of our undepreciated assets. Our REIT securities portfolio provides us with diversification, income, and is a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. We normally hold REIT securities long-term and have the ability and intent to hold these securities to recovery. We had $48.6 million in Cash and Cash Equivalents and $143.5 million in REIT securities as of September 30, 2021. We believe that funds generated from operations, mortgages, draws on our unsecured line of credit facility, cash on hand, sales of marketable securities, other bank borrowings, proceeds from our dividend reinvestment plan (DRIP), and proceeds from private placements and public offerings of additional common or preferred stock or other securities, will provide sufficient funds to adequately meet our obligations over the next several years. As previously announced, in January 2021, when our Board of Directors first decided to explore strategic alternatives, the Board also determined to temporarily suspend our DRIP, and our Preferred Stock at-the-market offering program (Preferred Stock ATM Program) and Common Stock at-the-market offering program (Common Stock ATM Program). Because our exploration of strategic alternative process is ongoing, our DRIP currently remains suspended. Our Preferred Stock and Common Stock ATM Programs expired by their terms during August 2021. US industrial real estate market conditions are as strong as they have ever been with record high asking rents, a robust development pipeline, and an all- time high occupancy rate of 96%. Companies are leasing space at record levels to handle the large increase in ecommerce sales as well as the need for safety stock to counter supply chain disruptions. Construction costs are rising dramatically due to the long lead times for sourcing materials. The amount of new construction for US industrial real estate has been increasing for several years as more industrial space is needed to handle direct-to-consumer distribution. It is estimated that ecommerce sales require three times the amount of warehouse space relative to brick and mortar retail sales. These new buildings are often highly automated and have much larger truck courts and parking requirements. Because modern industrial buildings are built to handle both wholesale distribution as well as direct to consumer distribution, they are known as omni-channel facilities. The West coast ports are continuing to experience severe bottlenecks in processing imports and as a result much container traffic is being diverted towards the Gulf and East coast ports. Given our geographic footprint, this trend is a very favorable one for us. 36 Table of Contents Our portfolio of modern, net-leased industrial properties, continues to provide shareholders with reliable and predictable income streams. We expect these favorable trends for the industrial real estate sector to be a leading demand driver for the foreseeable future, as consumers continue to embrace the added efficiencies of on-line consumption. The strong financial position of our tenants, together with the long duration of our leases, provides for high quality, reliable income streams throughout the business cycle. We intend to continue to increase our real estate investments in fiscal 2022 and 2023 through acquisitions and expansions of our properties. The growth of our real estate portfolio depends on the availability of suitable properties which meet our investment criteria and appropriate financing. Competition in the market areas in which we operate is significant and affects acquisitions, occupancy levels, rental rates and operating expenses of certain properties. See PART I, Item 1 – Business and Item 1A – Risk Factors for a more complete discussion of the economic and industry-wide factors relevant to us and the opportunities and challenges, and risks on which we are focused. Significant Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operation are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions. Significant accounting policies are defined as those that involve significant judgment and potentially could result in materially different results under different assumptions and conditions. We believe the following significant accounting policies are affected by our more significant judgments and estimates used in the preparation of our consolidated financial statements. For a detailed description of these and other accounting policies, see Note 1 in the Notes to our Consolidated Financial Statements included in this Form 10-K. Real Estate Investments We apply Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant & Equipment (ASC 360-10) to measure impairment in real estate investments. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that an other than temporary impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded. We account for our property acquisitions as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized to real estate investments as part of the purchase price. In addition, acquisitions that do not meet the definition of a business combination are accounted for as asset acquisitions whereby the consideration incurred is allocated to the individual assets acquired on a relative fair value basis. We conducted a comprehensive review of all real estate asset classes in accordance with ASC 360-10, which indicates that asset values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. 37 Table of Contents The following are examples of such events or changes in circumstances that would indicate to us that there may be an impairment of a property: ● A non-renewal of a lease and subsequent move-out by the tenant; ● A renewal of a lease at a significantly lower rent than a previous lease; ● A significant decrease in the market value of a property; ● A significant adverse change in the extent or manner in which a property is being used or in its physical condition; ● A significant adverse change in legal factors or in the business climate that could affect the value of a property, including an adverse action or assessment by a regulator; ● An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a property; ● A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a property; or ● A current expectation that, more likely than not, a property will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The process entails the analysis of property for instances where the net book value exceeds the estimated fair value. In accordance with ASC 360-10, an impairment loss shall be recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. We utilize the experience and knowledge of our internal valuation team to derive certain assumptions used to determine an operating property’s cash flow. Such assumptions include re-leasing and renewal probabilities upon future lease expirations, vacancy factors, rental growth rates, and capital expenditures. As part of our review of our property portfolio, we evaluated our industrial properties with vacancy at September 30, 2021, which consists of 81,000 square feet, representing 0.3% of our total rentable square feet. The discounted cash flows expected from a potential lease applicable to the vacant portion of these properties exceeded its historical net cost basis. We consider, on a quarterly basis, whether the marketed rent (advertised) or the market rent has decreased or if any additional indicators are present which would indicate a significant decrease in net cash flows. We may obtain an independent appraisal to assist in evaluating a potential impairment for a property if it has been vacant for several years. We have also considered the properties which had lease renewals at rental rates lower than the previous rental rates and noted that the sum of the new discounted cash flows expected for the renewed leases exceeded these properties’ historical net cost basis. We reviewed our operating properties in light of the requirements of ASC 360-10 and determined that, as of September 30, 2021, the undiscounted cash flows over the holding period for these properties were in excess of their carrying values and, therefore, no impairment charges were required. Securities Available for Sale Investments in non-real estate assets consist primarily of marketable securities. We intend to limit the size of this portfolio to no more than approximately 5% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. The value of the marketable securities was $143.5 million as of September 30, 2021, representing 5.6% of our undepreciated assets. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of the 2019 fiscal year. This rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. We individually review and evaluate our marketable securities for impairment on a quarterly basis, or when events or circumstances occur. We consider, among other things, credit aspects of the issuer, amount of decline in fair value over cost and length of time in a continuous loss position. 38 Table of Contents We classify our securities among three categories: held-to-maturity, trading, and available-for-sale. Our securities at September 30, 2021 and 2020 are all classified as available-for-sale and are carried at fair value based on quoted market prices. Gains or losses on the sale of securities are calculated based on the average cost method and are accounted for on a trade date basis. Revenue Recognition and Estimates Rental revenue from tenants with leases having scheduled rental increases are recognized on a straight-line basis over the term of the lease. Tenant recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred. The reimbursements are recognized and presented gross, as we are generally, the primary obligor and, with respect to purchasing goods and services from third-party suppliers, have discretion in selecting the supplier and bear the associated credit risk. These occupancy charges are recognized as earned. In addition, an estimate is made with respect to whether a provision for allowance for doubtful tenant and other receivables is necessary. The allowance for doubtful accounts reflects management’s estimate of the amounts of the recorded tenant and other receivables at the balance sheet date that will not be realized from cash receipts in subsequent periods. If cash receipts in subsequent periods vary from our estimates, or if our tenants’ financial condition deteriorates as a result of operating difficulties, additional changes to the allowance may be required. Lease Termination Income Lease Termination Income is recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease agreement with us. We did not recognize any lease termination fees during fiscal 2020. During fiscal 2021, effective October 1, 2020, we entered into a lease termination agreement with RGH Enterprises, Inc. (Cardinal Health) for our 75,000 square foot facility located in Halfmoon (Albany), NY whereby we received a termination fee in the amount of $377,000 representing approximately 50% of the then remaining rent due under the lease, which was set to expire on November 30, 2021. We simultaneously entered into a 10.4 year lease agreement with United Parcel Service, Inc. (UPS) which became effective November 1, 2020. The lease agreement with UPS provides for five months of free rent, after which, on April 1, 2021, initial annual rent of $510,000, representing $6.80 per square foot, commenced, with 2.0% annual increases thereafter, resulting in a straight-line annualized rent of $541,000, representing $7.21 per square foot over the life of the lease, which expires March 31, 2031. This compares to the former U.S. GAAP straight-line rent of $574,000, representing $7.65 per square foot, and former cash rent of $8.19 per square foot, resulting in a decrease of $33,000, representing a 5.8% decrease on a U.S. GAAP straight-line basis and a decrease of 17.0% on a cash basis. The new 10.4 year lease agreement with UPS provides for an additional 9.3 years of lease term versus the old lease with Cardinal Health. In addition, effective June 4, 2021, we completed a parking lot expansion at this location for a cost of approximately $835,000 resulting in an initial increase in annual rent effective on the date of completion of approximately $52,000 from approximately $510,000, or $6.80 per square foot, to approximately $562,000, or $7.50 per square foot. Furthermore, annual rent will continue to increase each year by 2.0% resulting in an annualized rent from June 4, 2021 through the remaining term of the lease of approximately $622,000, or $8.29 per square foot. Only three of our 122 properties have leases that contain an early termination provision. These three properties contain 177,000 total rentable square feet, representing less than 1% of our total rentable square feet. Our leases with early termination provisions are our 36,000 square foot location in Urbandale (Des Moines), IA, our 39,000 square foot location in Rockford, IL and our 102,000 square foot location in O’Fallon (St. Louis), MO. Each lease termination provision contains certain requirements that must be met in order to exercise each termination provision. These requirements include: the date termination can be exercised, the time frame that notice must be given by the tenant to us and the termination fee that would be required to be paid by the tenant to us. The total potential termination fees that would be payable to us from the three tenants with leases that have a termination provision amounts to $1.5 million. 39 Table of Contents Results of Operations Occupancy and Rent per Occupied Square Foot Fiscal 2021 Renewals In fiscal 2021, approximately 5% of our gross leasable area, representing ten leases totaling 1.2 million square feet, was set to expire. All ten of these leases have been renewed, resulting in a 100% retention rate for a weighted average term of 4.2 years, at a rental rate increase of 6.2% on a U.S. GAAP basis and an increase of 0.4% on a cash basis. We have incurred or we expect to incur leasing commission costs of $621,000 in connection with six of these lease renewals and we have incurred or we expect to incur tenant improvement costs of $756,000 in connection with five of these lease renewals. The table below summarizes the terms of the leases that were renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal terms. Property Tenant Square Feet Former U.S. GAAP Straight- Line Rent PSF Former Cash Rent PSF Former Lease Expiration Renewal U.S GAAP Straight- Line Rent PSF Renewal Initial Cash Rent PSF Renewal Lease Expiration Renewal Term (years) Tenant Improvement Cost PSF over Renewal Term (1) Leasing Commission Cost PSF over Renewal Term (1) Griffin (Atlanta), GA Rinnai America Corporation 218,120 $ 3.81 $ 3.93 12/31/20 $ 4.22 $ 4.22 12/31/22 2.0 $ -0- $ 0.13 Fayetteville, NC Victory Packaging, L.P. 148,000 3.33 3.50 2/28/21 3.40 3.25 2/28/25 4.0 -0- 0.20 Winston- Salem, NC Style Crest, Inc. 106,507 3.39 3.77 3/31/21 4.10 3.90 3/31/26 5.0 0.30 -0- Romulus, MI FedEx Corporation 71,933 5.15 5.15 5/31/21 5.95 5.95 5/31/26 5.0 0.56 0.12 Augusta, GA FedEx Ground 59,358 8.64 8.64 6/30/21 8.64 8.64 6/30/23 2.0 -0- -0- O’Fallon, MO Pittsburgh Glass Works, LLC 102,135 4.37 4.44 6/30/21 5.05 4.88 6/30/26 5.0 0.20 -0- Corpus Christi, TX FedEx Ground 46,253 9.03 9.42 8/31/21 9.89 9.89 8/31/26 5.0 -0- -0- Kansas City, MO Bunzl Distribution 158,417 4.65 4.86 9/30/21 4.44 4.26 9/30/26 5.0 -0- 0.27 St. Joseph, MO Woodstream Corporation 256,000 3.57 3.70 9/30/21 3.89 3.75 9/30/26 5.0 0.14 0.12 Topeka, KS Coca-Cola Bottling Co., LLC 40,000 8.30 8.30 9/30/21 7.10 6.75 9/30/26 5.0 0.60 0.21 Total 1,206,723 Weighted Average $ 4.49 $ 4.64 $ 4.77 $ 4.66 4.2 $ 0.15 $ 0.12 (1) Amount calculated based on the total cost divided by the square feet, divided by the renewal term. These ten lease renewals have a U.S. GAAP straight-line lease rate of $4.77 per square foot. The renewed initial cash rent per square foot is $4.66. This compares to the former rent of $4.49 per square foot on a U.S. GAAP straight-line basis and the former cash rent of $4.64 per square foot, resulting in an increase of 6.2% on a U.S. GAAP straight-line basis and an increase of 0.4% on a cash basis. Effective December 15, 2020, we entered into a 10.3 year lease with Hartford HealthCare Corporation for our previously vacant 55,000 square foot facility located in Newington (Hartford), CT. The new lease has free rent for the first four months, after which initial annual rent will be $288,000, representing $5.25 per square foot with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $307,000, representing $5.60 per square foot over the life of the lease. Hartford HealthCare Corporation is rated “investment-grade” as defined by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). 40 Table of Contents Fiscal 2022 Renewals In fiscal 2022, existing leases with respect to approximately 5% of our gross leasable area, representing seven leases totaling 1.2 million square feet, were scheduled to expire. Two of these seven leases were renewed thus far, for a weighted average term of 6.8 years, at a rental rate increase of 6.5% on a GAAP basis and flat on a cash basis. These two lease renewals represent 104,000 square feet, or 9% of the square footage scheduled to expire in fiscal 2022. We have incurred or we expect to incur leasing commission costs of $220,000 in connection with one of these lease renewals and we have incurred or we expect to incur tenant improvement costs of $50,000 in connection with the other lease renewal. The table below summarizes the terms of the two leases that were renewed. In addition, the table below includes both the tenant improvement costs and the leasing commission costs, which are presented on a per square foot (PSF) basis averaged annually over the renewal terms. Property Tenant Square Feet Former U.S. GAAP Straight- Line Rent PSF Former Cash Rent PSF Former Lease Expiration Renewal U.S GAAP Straight- Line Rent PSF Renewal Initial Cash Rent PSF Renewal Lease Expiration Renewal Term (years) Tenant Improvement Cost PSF over Renewal Term (1) Leasing Commission Cost PSF over Renewal Term (1) Houston, TX National Oilwell Varco 91,925 $ 8.26 $ 8.44 9/30/22 $ 8.88 $ 8.44 9/30/29 7.0 $ -0- $ 0.34 Burr Ridge, IL Sherwin- Williams 12,500 12.80 12.94 10/31/21 12.99 12.94 10/31/26 5.0 0.80 -0- Total 104,425 Weighted Average $ 8.80 $ 8.98 $ 9.37 $ 8.98 6.8 $ 0.07 $ 0.31 (1) Amount calculated based on the total cost divided by the square feet, divided by the renewal term. These two lease renewals have a U.S. GAAP straight-line lease rate of $9.37 per square foot. The renewed initial cash rent per square foot is $8.98. This compares to the former rent of $8.80 per square foot on a U.S. GAAP straight-line basis and the former cash rent of $8.98 per square foot, resulting in an increase of 6.5% on a U.S. GAAP straight-line basis and flat on a cash basis. Our 105,000 square foot facility located in Cheektowaga (Buffalo), NY is leased to Sonwil Distribution Center, Inc. through January 31, 2022. This tenant informed us that they will not be renewing their lease. We recently entered into a new seven-year lease agreement for this facility with UPS which becomes effective February 1, 2022 through January 31, 2029. The lease with UPS provides for initial annual rent of $683,000, representing $6.50 per square foot with 2.0% annual increases thereafter, resulting in a U.S. GAAP straight-line annualized rent of $725,000, representing $6.90 per square foot over the life of the lease. This compares to the former U.S. GAAP straight-line rent and former cash rent of $6.00 per square foot, resulting in an increase in the average lease rate of 15.0% on a U.S. GAAP straight-line basis and an increase of 8.3% on a cash basis. This lease to UPS, along with the two lease renewals in the table above, results in a weighted average term of 6.9 years, at a rental rate increase of 10.0% on a GAAP basis and an increase of 3.3% on a cash basis. These three leases represent 209,000 square feet, or 18% of the expiring square footage for fiscal 2022. Also not included in the table above is our 185,000 square foot facility located in Granite City (St. Louis, MO), IL that is leased to Anheuser-Busch through November 30, 2021. Anheuser-Busch renewed for only four months, until March 31, 2022, after which it is expected that they will be moving out. The four month extension provides for rent at an annualized rate of 150% of its current rent resulting in an annualized rent of $1.3 million, representing $7.04 per square foot. This compares to the former U.S. GAAP straight-line rent of $4.36 and former cash rent of $4.70 per square foot. Fiscal 2021 Acquisitions On December 17, 2020, we purchased a newly constructed 500,000 square foot industrial building, situated on 100.0 acres, located in the Columbus, OH MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through September 2035. The purchase price was $73.3 million. We obtained a 15 year, fully-amortizing mortgage loan of $47.0 million at a fixed interest rate of 2.95%. Annual rental revenue over the remaining term of the lease averages $4.6 million. 41 Table of Contents On December 24, 2020, we purchased a newly constructed 658,000 square foot industrial building, situated on 130.2 acres, located in the Atlanta, GA MSA. The building is 100% net-leased to Home Depot U.S.A., Inc. for 20 years through November 2040. The purchase price was $95.9 million. We obtained a 17 year, fully-amortizing mortgage loan of $57.0 million at a fixed interest rate of 3.25%. Annual rental revenue over the remaining term of the lease averages $5.5 million. On July 29, 2021, we purchased a newly constructed 144,000 square foot industrial building, situated on 43.4 acres, located in the Burlington, VT MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through May 2036. The property was acquired for a purchase price of $54.8 million. Annual rental revenue over the remaining term of the lease averages $3.2 million. Subsequent to the closing of the purchase, we obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $35.5 million at a fixed interest rate of 2.50%. On August 25, 2021, we purchased a newly constructed 259,000 square foot industrial building, situated on 42.6 acres, located in the Knoxville, TN MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through May 2036. The property was acquired for a purchase price of $34.4 million. Annual rental revenue over the remaining term of the lease averages $2.0 million. Subsequent to the closing of the purchase, we obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $22.3 million at a fixed interest rate of 2.50%. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The property was acquired for a purchase price of $30.2 million. Annual rental revenue over the remaining term of the lease averages $1.7 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40%, which has not yet closed. FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, and Home Depot U.S.A., Inc’s ultimate parent, Home Depot, Inc., are publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. The references in this report to the SEC’s website are not intended to and do not include, or incorporate by reference into this report, the information on the www.sec.gov website. Fiscal 2021 Disposition On April 15, 2021, we sold our 60,400 square foot building located in Carlstadt, NJ which is in the New York, NY MSA, for $13.0 million. Prior to the sale, we owned a 51% interest in this property. Our 51% portion of the sale proceeds resulted in a U.S. GAAP net realized gain applicable to common shareholders of approximately $3.3 million, representing a 159% gain over the depreciated U.S. GAAP basis and a net realized gain over our historic undepreciated cost basis of approximately $2.6 million, representing a 96% net gain over our historic undepreciated cost basis. Comparison of Year Ended September 30, 2021 to Year Ended September 30, 2020 The following tables summarize our rental revenue, reimbursement revenue, real estate taxes, operating expenses, and depreciation expense by category. For the purposes of the following discussion, Same Properties are properties owned as of October 1, 2019 that have not been subsequently expanded or sold. Acquired Properties are properties that were acquired subsequent to September 30, 2019. Nine properties were acquired during fiscal 2021 and fiscal 2020. Acquired Properties include the properties located in Greenwood (Indianapolis), IN; Lancaster (Columbus),OH; Whitsett (Greensboro), NC; Ogden (Salt Lake City), UT and Oklahoma City, OK (all acquired in fiscal 2020) and Plain City (Columbus), OH; Locust Grove (Atlanta), GA; Burlington, VT and Kodak (Knoxville), TN (all acquired in fiscal 2021). Expanded Properties include properties that were expanded subsequent to September 30, 2019. During fiscal 2021 and 2020, there were two property expansions completed at the properties located in Olathe (Kansas City), KS and Halfmoon (Albany), NY. 42 Table of Contents Sold Properties consists of one property we sold during fiscal 2021 which was a 60,400 square foot building located in Carlstadt, NJ which is in the New York, NY MSA, for a gross sales price of $13.0 million. Prior to the sale, we owned a 51% interest in this property. As of September 30, 2021 and 2020, the overall occupancy rate of our total property portfolio was 99.7% and 99.4%, respectively. Rental Revenues ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 132,351 $ 131,882 $ 469 0% Acquired Properties 19,442 6,846 12,596 184% Expanded Properties 3,053 2,685 368 14% Sold Properties 198 170 28 16% Total $ 155,044 $ 141,583 $ 13,461 10% The increase in rental revenues is mainly due to the increase from the newly Acquired Properties. Reimbursement Revenues ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 26,098 $ 25,244 $ 854 3% Acquired Properties 1,022 326 696 213% Expanded Properties 475 477 (2) 0% Sold Properties 117 187 (70) (37)% Total $ 27,712 $ 26,234 $ 1,478 6% Our single-tenant properties are subject to net leases, which require the tenants to absorb the real estate taxes, insurance and the majority of the repairs and maintenance. As such, we are reimbursed by the tenants for these expenses. Therefore, the increase in reimbursement revenues is offset by the increase in Real Estate Taxes and the increase in Operating Expenses, which includes insurance, repairs and maintenance and other operating expenses. The increase in reimbursement revenues from Same Properties is due to the increase in Same Properties real estate taxes and operating expenses reimbursed to us from our tenants. In addition, the increase in reimbursement revenues is also due to the increase from the newly Acquired Properties. For the fiscal years ended September 30, 2021 and 2020, Reimbursement Revenue as a percentage of Real Estate Taxes and Operating Expenses was 96.3% and 96.8%, respectively. Real Estate Taxes ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 20,696 $ 19,408 $ 1,288 7% Acquired Properties 580 209 371 178% Expanded Properties 460 463 (3) (1%) Sold Properties 62 113 (51) (45%) Total $ 21,798 $ 20,193 $ 1,605 8% The increase in real estate taxes is mainly due to the increase in assessment values from Same Properties, which were mostly billed back to the tenants and offset the increase in the Reimbursement Revenues from Same Properties. Additionally, the increase is due to the newly Acquired Properties. Operating Expenses ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 6,517 $ 6,761 $ (244) (4%) Acquired Properties 351 39 312 800% Expanded Properties 50 37 13 35% Sold Properties 66 82 (16) (20%) Total $ 6,984 $ 6,919 $ 65 1% The increase in operating expenses is mainly due to the newly Acquired Properties. 43 Table of Contents Net Operating Income (NOI)* ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 131,236 $ 130,959 $ 277 0% Acquired Properties 19,533 6,924 12,609 182% Expanded Properties 3,018 2,662 356 13% Sold Properties 187 160 27 17% Total $ 153,974 $ 140,705 $ 13,269 9% The increase in NOI is mainly due to the newly Acquired Properties. * The revenue and expense items related to property operations discussed above are components of NOI which are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses. NOI is a non-GAAP performance measure. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Overview” for a reconciliation of our Net Operating Income to our Net Income (Loss) Attributable to Common Shareholders. Depreciation ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 42,958 $ 42,855 $ 103 0% Acquired Properties 7,228 2,611 4,617 177% Expanded Properties 1,010 865 145 17% Sold Properties 52 105 (53) (50%) Corporate Office 230 234 (4) (2%) Total $ 51,478 $ 46,670 $ 4,808 10% The increase in depreciation expense is mainly due to the newly acquired properties. Interest Expense, excluding Amortization of Financing Costs ($ in thousands) 2021 2020 $ Change % Change Same Properties $ 26,215 $ 28,579 $ (2,364) (8%) Acquired Properties 6,085 2,465 3,620 147% Expanded Properties 670 720 (50) (7%) Sold Properties 170 69 101 146% Loans Payable 3,356 3,130 226 7% Total $ 36,496 $ 34,963 $ 1,533 4% The increase in interest expense was mainly due to the increase in Acquired Properties due to two new loans totaling $104.0 million for properties acquired in Plain City (Columbus), OH and Locust Grove (Atlanta), GA. The decrease in Same Properties was mainly due to the reduction in the outstanding fixed rate mortgage balances related to these properties. The outstanding fixed rate mortgage balances related to these properties was reduced due to regularly scheduled principal amortization payments made during fiscal 2021, including the repayment of four mortgage loans for our properties located in Kansas City, MO, Topeka, KS, Carlstadt (New York, NY), NJ and Houston, TX. These four loans were at a weighted average interest rate of 5.35%. The weighted average interest rate on our fixed rate debt decreased from 3.98% as of September 30, 2020 to 3.86% as of September 30, 2021. In addition, the increase in interest expense for Sold Properties is due to a $134,000 prepayment penalty included in interest expense that was incurred when the mortgage was paid off in connection with the sale of the property located in Carlstadt (New York, NY), NJ. The increase in interest expense for Loans Payable is due to a $175.0 million increase in the outstanding Loan Payable balance ($90.0 million was drawn down during the third quarter of fiscal 2021 and $85.0 million was drawn down during the fourth quarter of fiscal 2021) from September 30, 2020 to September 30, 2021 offset by a decrease in the weighted average interest rate from 2.92% as of September 30, 2020 to 1.95% as of September 30, 2021. 44 Table of Contents General and Administrative Expenses General and administrative expenses increased $421,000, or 5%, during fiscal 2021 as compared to fiscal 2020. The increase was primarily due to purchasing a Director & Officer Insurance Policy and an increase in Franchise Taxes. General and administrative expenses, as a percentage of gross revenue, (which includes Rental Revenue, Reimbursement Revenue and Dividend Income), remained flat at 5.0% for fiscal year 2021 and 2020. General and administrative expenses, as a percentage of undepreciated assets (which is our total assets excluding accumulated depreciation), decreased by 7.5% to 37 basis points from 40 basis points for the fiscal years 2021 and 2020, respectively. Non-recurring Strategic Alternatives & Proxy Costs During the fiscal year 2021, we incurred Non-recurring Strategic Alternatives & Proxy Costs of $35.9 million related to the strategic alternatives review process approved by our Board of Directors, our proposed merger with EQC and the related shareholder meeting and proxy processes, the termination of the EQC merger agreement (including reimbursement of certain transaction expenses incurred by EQC), the Release and Settlement Agreement and the Cooperation Agreement with our former general counsel and Blackwells. Dividend Income Many REITs reduced their dividends in 2020 due to the COVID-19 Pandemic. Dividend Income decreased $4.3 million, or 41%, during fiscal 2021 as compared to fiscal 2020. This decrease is due to reduced dividends from our REIT securities portfolio. The REIT securities portfolio’s weighted average yield was approximately 4.5% during fiscal 2021 as compared to 6.4% for fiscal 2020. We held $143.5 million in marketable REIT securities as of September 30, 2021, representing 5.6% of our undepreciated assets. Preferred Dividend Expense Preferred Dividend Expense increased $6.9 million, or 26%, during fiscal 2021 as compared to fiscal 2020. This increase is due to the 3.1 million shares we sold of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program during the first quarter of the fiscal year ended September 30, 2021 at a weighted average price of $24.88 per share which generated net proceeds, after offering expenses, of $76.0 million. Comparison of Year Ended September 30, 2020 to Year Ended September 30, 2019 The following tables summarize our rental revenue, reimbursement revenue, real estate taxes, operating expenses, and depreciation expense by category. For the purposes of the following discussion, Same Properties are properties owned as of October 1, 2018 that have not been subsequently expanded or sold. Acquired Properties are properties that were acquired subsequent to September 30, 2018. Eight properties were acquired during fiscal 2020 and fiscal 2019. Acquired Properties include the properties located in Trenton, NJ; Savannah, GA and Lafayette, IN (all acquired in fiscal 2019) and Greenwood (Indianapolis), IN; Lancaster (Columbus),OH; Whitsett (Greensboro), NC; Ogden (Salt Lake City), UT and Oklahoma City, OK (all acquired in fiscal 2020). Expanded Properties include properties that were expanded subsequent to September 30, 2018. During fiscal 2020 and 2019, there was one property expansion completed at the property located in Monroe (Cincinnati), OH. As of September 30, 2020 and 2019, the overall occupancy rate of our total property portfolio was 99.4% and 98.9%, respectively. Rental Revenues ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 123,882 $ 123,821 $ 61 0% Acquired Properties 15,653 7,073 8,580 121% Expanded Properties 2,048 1,630 418 26% Total $ 141,583 $ 132,524 $ 9,059 7% 45 Table of Contents The increase in rental revenues is mainly due to the increase from the newly Acquired Properties and Expanded Properties. Reimbursement Revenues ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 24,443 $ 21,925 $ 2,518 11% Acquired Properties 1,750 358 1,392 389% Expanded Properties 41 14 27 193% Total $ 26,234 $ 22,297 $ 3,937 18% Our single-tenant properties are subject to net leases, which require the tenants to absorb the real estate taxes, insurance and the majority of the repairs and maintenance. As such, we are reimbursed by the tenants for these expenses. Therefore, the increase in reimbursement revenues is offset by the increase in Real Estate Taxes and the increase in Operating Expenses, which includes insurance, repairs and maintenance and other operating expenses. In addition, the increase in reimbursement revenues is mainly due to the increase from the newly Acquired Properties. The increase in reimbursement revenues from Same Properties is due to the increase in Same Properties real estate taxes and operating expenses reimbursed to us from our tenants. For the fiscal years ended September 30, 2020 and 2019, Reimbursement Revenue as a percentage of Real Estate Taxes and Operating Expenses was 96.8% and 95.0%, respectively. Real Estate Taxes ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 18,571 $ 16,658 $ 1,913 11% Acquired Properties 1,622 352 1,270 361% Expanded Properties -0- -0- -0- 0% Total $ 20,193 $ 17,010 $ 3,183 19% The increase in real estate taxes is mainly due to the increase in assessment values from Same Properties, which were mostly billed back to the tenants and offset the increase in the Reimbursement Revenues from Same Properties. Additionally, the increase is due to the newly Acquired Properties. Operating Expenses ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 6,789 $ 6,402 $ 387 6% Acquired Properties 113 42 71 169% Expanded Properties 17 20 (3) (15%) Total $ 6,919 $ 6,464 $ 455 7% The increase in operating expenses is mainly due to the repair and maintenance at Same Properties, which were mostly billed back to the tenants and offset the increase in the Reimbursement Revenues from Same Properties. Additionally, the increase is due to the newly Acquired Properties. Net Operating Income (NOI)* ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 122,995 $ 122,687 $ 308 0% Acquired Properties 15,668 7,037 8,631 123% Expanded Properties 2,042 1,623 419 26% Total $ 140,705 $ 131,347 $ 9,358 7% The increase in NOI is mainly due to the newly Acquired Properties. * The revenue and expense items related to property operations discussed above are components of NOI which are recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses. NOI is a non-GAAP performance measure. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Overview” for a reconciliation of our Net Operating Income to our Net Income (Loss) Attributable to Common Shareholders. 46 Table of Contents Depreciation ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 40,189 $ 39,554 $ 635 2% Acquired Properties 5,740 2,550 3,190 125% Expanded Properties 508 414 94 23% Corporate Office 233 502 (269) (54%) Total $ 46,670 $ 43,020 $ 3,650 8% The increase in depreciation expense is mainly due to the newly acquired properties. Interest Expense, excluding Amortization of Financing Costs ($ in thousands) 2020 2019 $ Change % Change Same Properties $ 25,313 $ 27,569 ($ 2,256) (8%) Acquired Properties 6,019 2,583 3,436 133% Expanded Properties 501 262 239 91% Loans Payable 3,130 5,245 (2,115) (40%) Total $ 34,963 $ 35,659 $ (696) (2%) The decrease in interest expense was mainly due to the decrease in Same Properties and the decrease in Loans Payable which was partially offset with the increase in Acquired Properties due to the new loans obtained in connection with the acquisition of new properties. The decrease in Same Properties was mainly due to the reduction in the outstanding fixed rate mortgage balances related to these properties. The outstanding fixed rate mortgage balances related to these properties was reduced due to regularly scheduled principal amortization payments made during fiscal 2020, including the repayment of two self-amortizing mortgage loans for our properties located in Augusta, GA and Huntsville, AL. These two loans were at a weighted average interest rate of 5.52%. In addition, the weighted average interest rate on our fixed rate debt decreased from 4.03% as of September 30, 2019 to 3.98% as of September 30, 2020. The decrease in interest expense for Loans Payable is due to a combination of a $20.0 million decrease in the outstanding Loan Payable balance from September 30, 2019 to September 30, 2020 and a decrease in the interest rate from 3.74% as of September 30, 2019 to 2.92% as of September 30, 2020. General and Administrative Expenses General and administrative expenses decreased $149,000, or 2%, during fiscal 2020 as compared to fiscal 2019. The decrease was primarily due to employee headcount reduction and a decrease in travel expenses. General and administrative expenses, as a percentage of gross revenue, (which includes Rental Revenue, Reimbursement Revenue and Dividend Income), decreased by 6% to 5.0% for fiscal year 2020 from 5.3% for fiscal year 2019. General and administrative expenses, as a percentage of undepreciated assets (which is our total assets excluding accumulated depreciation), decreased by 7% to 40 basis points from 43 basis points for the fiscal years 2020 and 2019, respectively. Non-recurring Severance Expense On December 23, 2019, our former General Counsel, announced her retirement effective December 31, 2019. In connection with her severance package, during the first quarter of fiscal 2020, we incurred a one-time, Non-recurring Severance Expense of $786,000. Dividend Income Many REITs reduced their dividends in 2020 due to the COVID-19 Pandemic. Dividend Income decreased $4.7 million, or 31%, during fiscal 2020 as compared to fiscal 2019. This decrease is due to reduced dividends from our REIT securities portfolio. The REIT securities portfolio’s weighted average yield was approximately 6.4% during fiscal 2020 as compared to 8.5% for fiscal 2019. We held $108.8 million in marketable REIT securities as of September 30, 2020, representing 4.9% of our undepreciated assets. 47 Table of Contents Preferred Dividend Expense Preferred Dividend Expense increased $7.7 million, or 41%, during fiscal 2020 as compared to fiscal 2019. This increase is due to the 5.0 million shares we sold of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program during the fiscal year ended September 30, 2020 at a weighted average price of $25.04 per share which generated net proceeds, after offering expenses, of $122.4 million. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements. Liquidity and Capital Resources We operate as a REIT deriving our income primarily from real estate rental operations. Our shareholders’ equity increased $57.1 million from $1.04 billion as of September 30, 2020 to $1.09 billion as of September 30, 2021. Our shareholders’ equity increased due to Net Income Attributable to Common Shareholders of $44.8 million, the issuance of 88,000 shares of common stock for total proceeds of $1.4 million through the DRIP, stock compensation expense of $287,000, exercise of stock options consisting of 189,000 shares for total proceeds of $2.4 million and issuance of 3.1 million shares of our 6.125% Series C Cumulative Redeemable Preferred Stock issued in connection with the Preferred Stock ATM Program for total proceeds, net of offering costs, in the amount of $76.0 million and a net decrease in unrealized loss on change in fair value of our interest rate swap agreement of $2.1 million. These increases were partially offset by payments of cash distributions to common shareholders of $69.8 million. Our ability to generate cash adequate to meet our needs is dependent primarily on income from our real estate investments, as well as our securities portfolio, the sale of real estate investments and securities, refinancing of mortgage debt, leveraging of real estate investments, availability of bank borrowings, proceeds from the DRIP, proceeds from public offerings and private placements of additional common or preferred stock or other securities, and access to the capital markets. Purchases of new properties, payments of expenses related to real estate operations, capital improvement programs, debt service, general and administrative expenses, and distribution requirements place demands on our liquidity. We intend to operate our properties from the cash flows generated by our properties. However, our expenses are affected by various factors, including inflation. Increases in operating expenses are predominantly borne by the tenant. To the extent that these increases cannot be passed on through rent reimbursements, these increases will reduce the amount of available cash flow which can adversely affect the market value of the property. We have used a variety of sources to fund our cash needs in addition to our free cash flow generated from our investments in net-leased industrial properties. In the past, we considered selling marketable securities from our investment portfolio, borrowing on our unsecured line of credit facility or securities margin loans, finance or refinance debt, or raising capital through registered direct placements, and public offerings of common and preferred stock. We believe these sources of funds will provide sufficient funds to adequately meet our obligations over the next few years. As of September 30, 2021, we owned 122 properties, of which 60 are subject to fixed rate mortgages. We have a New Facility consisting of a $225.0 million Revolver and a $75.0 million Term Loan, resulting in the total potential availability under both the Revolver and the Term Loan of $300.0 million. In addition, the Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. Availability the New Facility is limited to 60% of the value of the borrowing base properties. As of September 30, 2021, we have $175.0 million drawn down under the Revolver and we have $75.0 million outstanding under the Term Loan. In addition, as of September 30, 2021, we had $48.6 million in Cash and Cash Equivalents and $143.5 million in marketable securities. We also may use margin loans from time to time for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. At September 30, 2021 and 2020, there were no amounts drawn down under the margin loan. The interest rate charged on the margin loans is the bank’s margin rate is 0.75%. The margin loans are due on demand and are collateralized by our securities portfolio. We must maintain a coverage ratio of approximately 50%. 48 Table of Contents Our focus is on real estate investments. We have historically financed purchases of real estate primarily through long-term, fixed rate, amortizing mortgages. During fiscal 2021, we purchased four industrial properties totaling 1.6 million square feet situated on 316.2 acres resulting in a very expansive land to building ratio of 8.8 to 1. All four properties are leased to investment-grade tenants or their subsidiaries, with net-leased terms ranging from 15 to 20 years, resulting in a weighted average lease maturity of 17.1 years. Three of the four properties, consisting of 903,000 square feet, or 58% of the total square footage of the four properties, are leased to FedEx Ground Package System, Inc., a subsidiary of FedEx Corporation (FDX). The aggregate purchase price for the four properties was $258.4 million. These four properties are located in the following Metropolitan Statistical Areas (MSAs): Columbus, OH, Atlanta, GA, Burlington, VT and Knoxville, TN. These four properties are expected to generate annualized rental income over the life of their leases of $15.2 million. In connection with two of the four properties acquired during the 2021 fiscal year, we entered into one 17 year, fully-amortizing mortgage loan and one 15 year, fully-amortizing mortgage loan. In connection with the remaining two properties acquired during the 2021 fiscal year, we entered into commitments for two, 15 year, fully- amortizing mortgage loans, which have not yet closed. These four fully-amortizing loans have a weighted average term of 15.7 years. The principal amount of the four mortgage loans originally totaled $161.8 million with fixed interest rates ranging from 2.50% to 3.25%, resulting in a weighted average fixed interest rate of 2.89%. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The purchase price was $30.2 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40% which has not yet closed. Annual rental revenue over the remaining term of the lease averages $1.7 million. In addition to the $30.2 million property purchased subsequent to our fiscal yearend, as described above, we have entered into agreements to purchase three, new build-to-suit, industrial buildings that are currently being developed in Alabama, Georgia and Texas, totaling 1.1 million square feet. These future acquisitions have net-leased terms ranging from 10 to 15 years with a weighted average lease term of 12.6 years. The total purchase price for these three properties is $126.8 million. Two of these three properties, consisting of an aggregate of 563,000 square feet, or 52% of the total leasable area, are leased to FedEx Ground Package System, Inc. All three properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing all three of these transactions during fiscal 2022. We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are nine parking expansion projects underway, which we expect to cost approximately $42.6 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at eight additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently. Due to the proliferation of ecommerce sales and last mile deliveries, it is important to take into account the large amounts of real estate utilized for trailer, van, and car parking at many of our properties in determining how our in-place rental rates compare to market rental rates for properties being used in a similar manner. Rents per square foot on properties that may be nearby, but have only limited acreage devoted to parking, are poor comparisons as they cannot accommodate the same tenant needs. We may have additional acquisitions and expansions in fiscal 2022 and fiscal 2023, and the funds for these acquisitions may come from funds generated from operations, mortgages, draws on our unsecured line of credit facility, cash on hand, sale of marketable securities, other bank borrowings, proceeds from the DRIP and proceeds from private placements and public offerings of additional common or preferred stock or other securities. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made. 49 Table of Contents We also invest in marketable securities of other REITs. We limit the size of this portfolio to no more than approximately 5% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. Our REIT securities portfolio provides us with diversification, income, and is a source of potential liquidity when needed. We normally hold REIT securities long-term and have the ability and intent to hold these securities to recovery. During fiscal 2021, our securities portfolio increased $34.7 million, mainly due to the increase in the net unrealized gain of $50.2 million. In addition, during fiscal 2021, our securities portfolio earned dividend income of $6.2 million. In general, we may borrow up to 50% of the value of the marketable securities, which was $143.5 million as of September 30, 2021. As of September 30, 2021, we did not have any borrowings under our margin line. Cash flows provided by operating activities were $84.8 million, $98.9 million and $100.7 million for fiscal years ended September 30, 2021, 2020 and 2019, respectively. The decrease in cash flows provided from operating activities from fiscal 2020 to fiscal 2021 is primarily due to Non-recurring Strategic Alternatives & Proxy Costs of $35.9 million offset from an increase in cash from income generated from acquisitions of properties. The slight decrease in cash flows provided from operating activities from fiscal 2019 to fiscal 2020 is primarily due to a $4.0 million decrease in cash collected from tenant and other receivables due to the timing of billings and a $2.8 million increase in cash used for other assets and capitalized lease costs, mostly offset from an increase in cash from income generated from acquisitions of properties. Cash flows used in investing activities were $237.8 million, $180.7 million and $213.6 million for fiscal years ended September 30, 2021, 2020 and 2019, respectively. The increase in Cash flows used in investing activities from fiscal 2021 as compared to 2020 was mainly due to an increase in Purchase of Real Estate & Intangible assets offset by proceeds from the Sale of Securities Available for Sale. The decrease in Cash flows used in investing activities from fiscal 2020 as compared to 2019 was mainly because we did not have any cash purchases of securities available for sale during fiscal 2020, partially offset by an increase in purchase of real estate. Cash flows provided by financing activities were $178.1 million, $85.2 million and $123.7 million for fiscal years ended September 30, 2021, 2020 and 2019, respectively. Cash flows from financing activities increased in fiscal 2021 as compared to 2020 mainly due to an increase in Net Draws on Loans Payable of $195.0 million offset by a reduction of $46.4 million decrease in proceeds received from the Preferred Stock ATM program, $18.5 million decrease in proceeds received from the DRIP program, $9.9 million increase in common dividends paid, $7.2 million increase in preferred dividends paid and an increase of $15.9 million of principal payments in Fixed Rate Mortgage Notes Payable. Cash flows from financing activities decreased in fiscal 2020 as compared to 2019 mainly due to the proceeds received from a common stock offering of $132.3 million that was completed in fiscal 2019 and a $38.3 million reduction in dividend reinvestments, partially offset by a $71.6 million reduction on the amount of repayments made towards our loans payable and a $64.2 million increase in proceeds received from the Preferred Stock ATM program. In addition, we paid cash dividends (net of reinvestments), of $68.7 million, $58.8 million and $46.9 million for fiscal 2021, 2020 and 2019, respectively. As of September 30, 2021, we had total assets of $2.2 billion and liabilities of $1.1 billion. Our total debt to total market capitalization as of September 30, 2021 and 2020 was 31% and 32%, respectively. Our net debt (net of cash and cash equivalents) to total market capitalization as of September 30, 2021 and 2020 was 30% and 31%, respectively. Our net debt, less securities (net of cash and cash equivalents and net of securities) to total market capitalization as of September 30, 2021 and 2020 was 26% and 27%, respectively. As of September 30, 2021, the weighted average loan maturity of our Mortgage Notes Payable was 10.9 years. We believe that we have the ability to meet our obligations and to generate funds for new investments. We have a DRIP, in which participants can purchase our stock at a price of approximately 95% of market value. Amounts received in connection with the DRIP, (including dividend reinvestments of $1.0 million, $7.6 million and $16.9 million for the fiscal years ended September 30, 2021, 2020 and 2019, respectively) were $1.4 million, $26.4 million and $74.0 million for the fiscal years ended September 30, 2021, 2020 and 2019, respectively. In January 2021, when our Board of Directors unanimously decided to explore strategic alternatives to maximize shareholder value, the Board also determined to temporarily suspend our DRIP program during this process. Because the exploration of strategic alternative process is still ongoing, the DRIP program remains suspended. 50 Table of Contents During fiscal 2021, we paid total distributions to holders of our common stock of $69.8 million, or $0.71 per common share. Of the dividends paid, $1.0 million was reinvested pursuant to the terms of the DRIP. On October 1, 2021, our Board of Directors approved a cash dividend of $0.18 per share, to be paid on December 15, 2021, to common shareholders of record at the close of business on November 15, 2021, which represents an annualized common dividend rate of $0.72 per share. We intend to pay these distributions from cash flows from operations. On January 14, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share. This represents an annualized dividend rate of $0.72 per share. This increase represents the third dividend increase in the past five years, representing a total increase of 20%. We have maintained or increased our common stock cash dividend for 30 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis. During fiscal 2021, we paid $33.0 million in preferred stock dividends and accrued $396,000 of preferred stock dividends. On November 25, 2020, we entered into a Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) with B. Riley FBR., or B. Riley, providing for the offer and sale from time to time of up to $150.0 million of our 6.125% Series C Preferred Stock, which replaced a previous Preferred Stock ATM Program entered into on December 4, 2019 (which itself had replaced an earlier Preferred Stock ATM Program). Sales of shares of our 6.125% Series C Preferred Stock under our Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker, or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through the first of these programs on July 3, 2017. Since inception through September 30, 2021, we sold 13.6 million shares of our 6.125% Series C Preferred Stock under these programs at a weighted average price of $24.91 per share, and generated net proceeds, after offering expenses, of $332.4 million, of which 3.1 million shares were sold during the 2021 fiscal year at a weighted average price of $24.88 per share, generating net proceeds after offering expenses of $76.0 million. No shares were sold pursuant to the Preferred Stock ATM Program since December 31, 2020. Our Preferred Stock ATM Program has since expired. We are required to pay cumulative dividends on our 6.125% Series C Preferred Stock in the amount of $1.53125 per share per year, which is equivalent to 6.125% of the $25.00 liquidation value per share. As of September 30, 2021, we have a total of 22.0 million shares of 6.125% Series C Preferred Stock outstanding, representing an aggregate liquidation preference of $549.6 million. During fiscal 2020, the Company entered in a Common Stock ATM Program. To date, we have not raised any equity though our Common Stock ATM Program and it has since expired. During the year ended September 30, 2021, stock options to purchase 189,000 shares were exercised at a weighted average exercise price of $12.57 per share for total proceeds of $2.4 million. On an ongoing basis, we fund capital expenditures, primarily to maintain our properties. These expenditures may also include expansions as requested by tenants, or various tenant improvements on properties which are re-tenanted. The amounts of these expenditures can vary from year to year depending on the age of the properties, tenant negotiations, market conditions and lease turnover. Our 122 properties, totaling 24.9 million square feet, have a weighted average building age, based on the square footage of our buildings, of 10.2 years. During the three fiscal years ended September 30, 2021, 2020 and 2019, we completed a total of three property expansions, consisting of one building expansion and two parking lot expansions. The building expansion resulted in 155,000 additional square feet. Total costs for all three property expansions were $12.9 million and resulted in total increased annual rent of $1.2 million. One of these completed expansions resulted in new ten-year lease extensions and one resulted in a new fifteen-year lease extension. The weighted average lease extension for these three property expansions is 12.7 years. 51 Table of Contents We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations (FFO), which we believe is a useful indicator of our operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. FFO, as defined by the National Association of Real Estate Investment Trusts (Nareit), represents net income attributable to common shareholders, as defined by accounting principles generally accepted in the United States of America (U.S. GAAP), excluding gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, certain non-cash items such as real estate asset depreciation and amortization, plus our portion of these items related to our consolidated investment that we have a non-controlling interest in. Included in the Nareit FFO White Paper - 2018 Restatement, is an option pertaining to assets incidental to our main business in the calculation of Nareit FFO to make an election to include or exclude mark-to- market changes in the value recognized on these marketable equity securities. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, for all periods presented, we have elected to exclude unrealized gains and losses from our investments in marketable equity securities from our FFO calculation. Nareit created FFO as a non-GAAP supplemental measure of REIT operating performance. Our calculation of Adjusted Funds From Operations (AFFO) differs from Nareit’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period. We define AFFO as FFO, excluding stock based compensation expense, depreciation of corporate office tenant improvements, amortization of deferred financing costs, realized gain on sale of securities transactions, lease termination income, non-recurring strategic alternatives & proxy costs, non-recurring severance expense, effect of non-cash U.S. GAAP straight-line rent adjustments and subtracting recurring capital expenditures, plus our portion of these items related to our consolidated investment that we had a non-controlling interest in. We define recurring capital expenditures as all capital expenditures that are recurring in nature, excluding capital expenditures related to expansions at our current locations or capital expenditures that are incurred in conjunction with obtaining a new lease or a lease renewal. We believe that, as widely recognized measures of performance used by other REITs, FFO and AFFO may be considered by investors as supplemental measures to compare our operating performance to those of other REITs. FFO and AFFO exclude historical cost depreciation as an expense and may facilitate the comparison of REITs which have a different cost basis. However, other REITs may use different methodologies to calculate FFO and AFFO and, accordingly, our FFO and AFFO may not be comparable to all other REITs. The items excluded from FFO and AFFO are significant components in understanding our financial performance. FFO and AFFO are non-GAAP performance measures and (i) do not represent Cash Flow from Operations as defined by U.S. GAAP; (ii) should not be considered as an alternative to Net Income or Net Income Attributable to Common Shareholders as a measure of operating performance or to Cash Flows from Operating, Investing and Financing Activities; and (iii) are not an alternative to Cash Flows from Operating, Investing and Financing Activities as a measure of liquidity. FFO and AFFO, as calculated by us, may not be comparable to similarly titled measures reported by other REITs. The following is a reconciliation of U.S. GAAP Net Income (Loss) Attributable to Common Shareholders to FFO and AFFO for the fiscal years ended September 30th (in thousands): 2021 2020 2019 Net Income (Loss) Attributable to Common Shareholders $ 44,764 $ (48,617) $ 11,026 Less/Plus: Unrealized Holding (Gains) Losses Arising During the Periods (50,239) 77,380 24,680 Plus: Depreciation Expense (Excluding Corporate Office) 51,223 46,385 42,472 Plus: Amortization of Intangible Assets 2,339 2,137 1,986 Plus: Amortization of Capitalized Lease Costs 1,256 1,124 972 Less: Realized Gain on Sale of Real Estate Investment (1) (3,252) -0- -0- FFO Attributable to Common Shareholders (2) 46,091 78,409 81,136 Plus: Depreciation of Corporate Office Capitalized Costs 230 234 502 Plus: Stock Compensation Expense 287 452 784 Plus: Amortization of Financing Costs 1,365 1,410 1,250 Plus: Non-recurring Strategic Alternatives & Proxy Costs 35,920 -0- -0- Plus: Non-recurring Severance Expense -0- 786 -0- Less: Realized Gain on Sale of Securities Transactions (2,248) -0- -0- Less: Lease Termination Income (377) -0- -0- Less: Effect of non-cash U.S. GAAP Straight-line Rent Adjustment (3,010) (1,940) (1,931) Less: Recurring Capital Expenditures (1,289) (2,453) (2,114) AFFO Attributable to Common Shareholders $ 76,969 $ 76,898 $ 79,627 (1) Fiscal 2021 Realized Gain on Sale of Real Estate Investment represents our portion of the net realized gain from the sale of our property that we owned a 51% interest in. (2) FFO Attributable to Common Shareholders for the twelve months ended September 30, 2021 includes Non-recurring Strategic Alternatives & Proxy Costs of $35.9 million. FFO Attributable to Common Shareholders for the twelve months ended September 30, 2021 excluding these Non-recurring Strategic Alternatives & Proxy Costs is $82.0 million. Recent Accounting Pronouncements In April 2020, FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of the COVID-19 Pandemic that allows entities to treat the concession as if it was a part of the existing contract instead of applying lease modification accounting. This guidance is only applicable to the COVID-19 Pandemic related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected this option relating to qualifying rent deferral and rent abatement agreements. For qualifying lease modifications with rent deferrals, this results in no change to our revenue recognition but an increase in the lease receivable balance until the deferred rent has been repaid. For qualifying lease modifications that include rent abatement concessions, this results in a direct reduction of rental income in the current period. We do not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements. 52 Table of Contents ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market-sensitive instruments. The primary market risk to which we believe that we are exposed to is interest rate risk. Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk. We are exposed to interest rate changes primarily as a result of our unsecured line of credit facility, margin loans and long-term debt used to maintain liquidity and fund capital expenditures and acquisitions of our real estate investment portfolio. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve our objectives, we match our assets, which are properties secured by long-term leases, with our liabilities, which are long-term fixed rate loans. As of September 30, 2021, $839.6 million of our long-term debt bears a fixed weighted average interest rate of 3.86%. Therefore, changes in market interest rates affect the fair value of these instruments. As of September 30, 2021, our variable rate debt consists of $75.0 million outstanding on our Term Loan and $175.0 million drawn down under our $225.0 million Revolver. To reduce floating interest rate exposure under our Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of 1.53%. If market rates of interest on our variable rate debt increased or decreased by 1%, then the annual increase or decrease in interest costs on our variable rate debt would be $2.5 million and the increase or decrease in the fair value of our fixed rate debt as of September 30, 2021 would be $37.7 million. The following table sets forth information as of September 30, 2021, concerning our long-term debt obligations, including principal payments by scheduled maturity, weighted average interest rates and estimated fair value (in thousands): Mortgage Notes Payable Loans Payable Weighted Weighted Fiscal Year Average Average Ending September 30, Carrying Value Interest Rate Fair Value Carrying Value Interest Rate Fair Value 2022 $ 16,170 5.11% $ -0- 2023 1,104 3.95% -0- 2024 24,232 3.92% 175,000 1.53% 2025 17,264 5.26% 75,000 2.92% 2026 7,757 3.94% -0- Thereafter 773,095 3.80% -0- Total $ 839,622 3.86% $ 885,893 $ 250,000 1.95% $ 252,230 The $250.0 million Loans Payable in the table above represents our $75.0 million outstanding on our Term Loan and $175.0 drawn down under our Revolver. On November 15, 2019, we entered into a New Facility consisting of a $225.0 million Revolver and a $75.0 million Term Loan, resulting in the total potential availability under both the Revolver and the Term Loan of $300.0 million, which is an additional $100.0 million over the former line of credit facility. In addition, the Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The $225.0 million Revolver matures in January 2024 with two options to extend for additional six-month periods. Availability under the New Facility is limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the former line of credit facility to 6.25%, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the Revolver was lowered by a range of 5 basis points to 35 basis points, depending on our leverage ratio, and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at Bank of Montreal’s (BMO) prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of 1.53%. As of the fiscal yearend and currently, we have $175.0 million drawn down under our Revolver, resulting in $50.0 million being currently available. Including the accordion feature, we have up to $150.0 million potentially available under the Revolver. As of September 30, 2021, Loans Payable represented $75.0 million outstanding under our Term Loan which matures January 2025 and $175.0 million outstanding under our Revolver which matures January 2024. The interest rate for borrowings under the Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. The unrealized loss in fair value of the interest rate swap agreement amounted to $(2.2) million for the year ended September 30, 2021. We also invest in marketable securities of other REITs and we are primarily exposed to market price risk from adverse changes in market rates and conditions. We limit the size of this portfolio to no more than approximately 5% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. All securities are classified as available for sale and are carried at fair value. We also use margin loans from time to time for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. The margin loans are due on demand and are collateralized by our securities portfolio. In general, we may borrow up to 50% of the value of the marketable securities. At September 30, 2021 and 2020, there was no amount drawn down under the margin loan. The interest rate on the margin account is the bank’s margin rate is 0.75%. The value of the marketable securities was $143.5 million as of September 30, 2021, representing 5.6% of our undepreciated assets (which is our total assets excluding accumulated depreciation). 53 Table of Contents ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data listed in Part IV, Item 15 (a) (1) are incorporated herein by reference and filed as part of this report. The following is the Unaudited Selected Quarterly Financial Data: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) THREE MONTHS ENDED (in thousands) FISCAL 2021 12/31/20 3/31/21 6/30/21 9/30/21 Rental and Reimbursement Revenue $ 43,583 $ 46,365 $ 45,993 $ 46,815 Total Expenses 22,159 25,620 32,040 49,300 Unrealized Holding Gains (Losses) Arising During the Periods 19,721 19,186 16,471 (5,139) Other Income (Expense) 12,169 13,634 14,648 (13,286) Net Income (Loss) Attributable to Shareholders 33,916 34,329 25,709 (15,771) Net Income (Loss) Attributable to Shareholders per diluted share $ 0.34 $ 0.35 $ 0.26 $ (0.16) Net Income (Loss) Attributable to Common Shareholders 25,746 25,913 17,292 (24,187) Net Income (Loss) Attributable to Common Shareholders per diluted share $ 0.26 $ 0.26 $ 0.17 $ (0.25) FISCAL 2020 12/31/19 3/31/20 6/30/20 9/30/20 Rental and Reimbursement Revenue $ 41,700 $ 41,707 $ 41,775 $ 42,635 Total Expenses 22,428 21,264 21,459 21,529 Unrealized Holding Gains (Losses) Arising During the Periods (3,635) (83,075) 19,610 (10,280) Other Income (Expense) (9,606) (88,721) 12,979 (17,963) Net Income (Loss) Attributable to Shareholders 9,625 (68,314) 33,458 3,088 Net Income (Loss) Attributable to Shareholders per diluted share $ 0.10 $ (0.70) $ 0.34 $ 0.03 Net Income (Loss) Attributable to Common Shareholders 3,528 (75,078) 26,850 (3,917) Net Income (Loss) Attributable to Common Shareholders per diluted share $ 0.04 $ (0.77) $ 0.27 $ (0.04) 54 Table of Contents ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in, or any disagreements with, our independent registered public accounting firm on accounting principles and practices or financial disclosure during the years ended September 30, 2021 and 2020. ITEM 9A- CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures Management, with the participation of our Chief Executive Officer and our Chief Financial and Accounting Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial and Accounting Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021. (b) Management’s Report on Internal Control Over Financial Reporting Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rules 13a- 15(f) and 15d-15(f) under the Exchange Act). Management assessed our internal control over financial reporting as of September 30, 2021. This assessment was based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of September 30, 2021. PKF O’Connor Davies, LLP, our independent registered public accounting firm, has issued their report on their audit of our internal control over financial reporting, a copy of which is included herein. (c) Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Monmouth Real Estate Investment Corporation Opinion on Internal Control over Financial Reporting We have audited Monmouth Real Estate Investment Corporation’s (the “Company”) internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control–Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 30, 2021 and 2020, and the related consolidated statements of income (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2021, and our report dated November 12, 2021, expressed an unqualified opinion thereon. 55 Table of Contents Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ PKF O’Connor Davies, LLP November 12, 2021 New York, New York (d) Changes in Internal Control over Financial Reporting There have been no changes to our internal controls over financial reporting during our fourth fiscal quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. ITEM 9B – OTHER INFORMATION None. ITEM 9C – DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 56 Table of Contents PART III ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2021 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A and the information included under the caption “Information about our Executive Officers” in Part I hereof, in accordance with General Instruction G(3) to Form 10-K. ITEM 11 - EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2021 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2021 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2021 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated herein by reference to the definitive proxy statement for the Company’s 2021 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A, in accordance with General Instruction G(3) to Form 10-K. 57 Table of Contents PART IV ITEM 15 - EXHIBIT AND FINANCIAL STATEMENT SCHEDULES PAGE(S) (a) (1) The following Financial Statements are filed as part of this report: (i) Report of Independent Registered Public Accounting Firm 63 (ii) Consolidated Balance Sheets as of September 30, 2021 and 2020 64-65 (iii) Consolidated Statements of Income (Loss) for the years ended September 30, 2021, 2020 and 2019 66-67 (iv) Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 2021, 2020 and 2019 68 (v) Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2021, 2020 and 2019 69-70 (vi) Consolidated Statements of Cash Flows for the years ended September 30, 2021, 2020 and 2019 71 (vii) Notes to the Consolidated Financial Statements 72-106 (a) (2) The following Financial Statement Schedule is filed as part of this report: (i) Schedule III - Real Estate and Accumulated Depreciation as of September 30, 2021 107-120 All other schedules are omitted because they are not required, are not applicable, or the required information is set forth in the Consolidated Financial Statements or Notes hereto. 58 Table of Contents ITEM 15 - EXHIBIT AND FINANCIAL STATEMENT SCHEDULES (CONT’D) (a)(3) Exhibits (2) Plan of Acquisition, Reorganization, Arrangement, Liquidation, or Succession 2.1 Agreement and Plan of Merger Among Industrial Logistics Properties Trust, Maple Delaware Merger Sub LLC and Monmouth Real Estate Investment Corporation dated as of November 5, 2021 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K dated November 5, 2021, filed by the Registrant with the Securities and Exchange Commission on November 8, 2021, Registration No. 001-33177). 2.2 Agreement and Plan of Merger Among Equity Commonwealth, EQC Maple Industrial, LLC and Monmouth Real Estate Investment Corporation dated as of May 4, 2021, as amended and restated as of August 15, 2021 (incorporated by reference to Annex A to the Amendment dated August 18, 2021 to the Joint Proxy Statement /Prospectus dated July 23, 2021, filed by the Registrant with the Securities and Exchange Commission on August 18, 2021, Registration No. 001-33177). 2.3 Agreement and Plan of Merger Among Monmouth Capital Corporation, Monmouth Real Estate Investment Corporation, and Route 9 Acquisition, Inc., dated as of March 26, 2007 (incorporated by reference to Annex A to the Proxy Statement filed by the Registrant with the Securities and Exchange Commission on June 8, 2007, Registration No. 001-33177). (3) Articles of Incorporation and By-Laws 3.1 Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Form S-3 filed by the Registrant with the Securities and Exchange Commission on September 1, 2009, Registration No. 333-161668). 3.2 Articles of Amendment, effective April 21, 2010 (incorporated by reference to Exhibit 3 to the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission, on April 19, 2010, Registration No. 001-33177). 3.3 Articles of Amendment, effective March 7, 2011 (incorporated by reference to Exhibit 3 to the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission on March 3, 2011, Registration No. 001-33177). 3.4 Articles of Amendment, effective January 26, 2012 (incorporated by reference to Exhibit 3 to the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission on January 27, 2012, Registration No. 001-33177). 3.5 Articles of Amendment, effective May 27, 2014 (incorporated by reference to Exhibit 5.03 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 28, 2014, Registration No. 001-33177). 3.6 Articles of Amendment, effective December 4, 2019 (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 5, 2019, Registration No. 001-33177). 3.7 Articles Supplementary, effective September 7, 2016 (incorporated by reference to Exhibit 3.9 to the Form 8-A filed by the Registrant with the Securities and Exchange Commission on September 8, 2016, Registration No. 001-33177). 3.8 Certificate of Correction, effective March 7, 2017 (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on March 9, 2017, Registration No. 001-33177). 3.9 Articles Supplementary, effective March 7, 2017 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on March 9, 2017, Registration No. 001-33177). 59 Table of Contents 3.10 Articles Supplementary, effective June 29, 2017 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on June 29, 2017, Registration No. 001-33177). 3.11 Articles Supplementary, effective August 2, 2018 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on August 2, 2018, Registration No. 001-33177). 3.12 Articles Supplementary, effective December 4, 2019 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 5, 2019, Registration No. 001-33177). 3.13 Bylaws of the Company, as amended and restated, dated April 1, 2014 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 1, 2014, Registration No. 001-33177). (4) Instruments Defining the Rights of Security Holders, Including Indentures 4.1 Specimen certificate representing the common stock of the Registrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-Q, filed by the Registrant with the Securities and Exchange Commission on August 5, 2015, Registration No. 001-33177). 4.2 Specimen certificate representing the 6.125% Series C Preferred Stock of the Registrant (incorporated by reference to Exhibit 4.4 to the form 8-A filed by the Registrant with the Securities and Exchange Commission on September 8, 2016, Registration No. 001-33177). 4.3 * Description of Securities (10) Material Contracts 10.1 + Employment Agreement - Mr. Eugene W. Landy dated December 9, 1994 (incorporated by reference to Form 10-K filed by the Registrant with the Securities and Exchange Commission on December 28, 1994). 10.2 + First Amendment to Employment Agreement - Mr. Eugene W. Landy dated June 26, 1997 (incorporated by reference to the Exhibit 10.2 to the Form 10-K filed by the Registrant with the Securities and Exchange Committee on December 10, 2009, Registration No. 001-33177). 10.3 + Second Amendment to Employment Agreement - Mr. Eugene W. Landy dated November 5, 2003 (incorporated by reference to Appendix A to the Proxy Statement filed by the Registrant with the Securities and Exchange Committee on April 1, 2004, Registration No. 000-04248). 10.4 + Third Amendment to Employment Agreement - Eugene W. Landy, dated April 14, 2008 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 16, 2008, Registration No. 001-33177). 10.5 + Fourth Amendment to Employment Agreement – Eugene W. Landy, dated July 13, 2010 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 13, 2010, Registration No. 001-33177). 10.6 + Fifth Amendment to Employment Agreement – Eugene W. Landy, dated April 25, 2013 (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 25, 2013, Registration No. 001-33177). 60 Table of Contents 10.7 + Sixth Amendment to Employment Agreement – Eugene W. Landy, dated December 20, 2013 (incorporated by reference to Exhibit 99 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 20, 2013, Registration No. 001-33177). 10.8 + Seventh Amendment to Employment Agreement – Eugene W. Landy, dated December 18, 2014 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on December 19, 2014, Registration No. 001-33177). 10.9 + Eighth Amendment to Employment Agreement – Eugene W. Landy, dated January 12, 2016 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on January 13, 2016, Registration No. 001-33177). 10.10 + Amended and Restated Employment Agreement – Kevin S. Miller, dated August 19, 2019 (incorporated by reference to Exhibit 10.1 to the Form 8- K filed by the Registrant with the Securities and Exchange Commission on August 19, 2019, Registration No. 001-33177). 10.11 + Employment Agreement - Michael P. Landy, dated January 11, 2016 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on January 11, 2016, Registration No. 001-33177). 10.12 + Employment Agreement - Michael P. Landy, dated August 24, 2020 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on August 24, 2020, Registration No. 001-33177). 10.13 Monmouth Real Estate Investment Corporation’s 2007 Stock Option Plan, Amended and Restated (incorporated by reference to Appendix A to the Proxy Statement filed by the Registrant with the Securities and Exchange Committee on March 26, 2010, Registration No.001-33177). 10.14 Monmouth Real Estate Investment Corporation’s 2007 Stock Option Plan, Amended and Restated (incorporated by reference to Appendix A to the Proxy Statement filed by the Registrant with the Securities and Exchange Committee on March 31, 2017, Registration No.001-33177). 10.15 + Form of Restricted Stock Award Agreement and Stock Option Agreement (incorporated by reference to Exhibit 10.1 and 10.2 to the Form 10-Q filed by the Registrant with the Securities and Exchange Commission on August 9, 2017, Registration No. 001-33177) 10.16 + Change in Control Severance Plan of Monmouth Real Estate Investment Corporation (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on January 14, 2021, Registration No. 001-33177) 10.17 + Form of Indemnification Agreement between Monmouth Real Estate Investment Corporation and its Directors and Executive Officers (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 23, 2012, Registration No. 001-33177). 10.18 Dividend Reinvestment and Stock Purchase Plan of Monmouth Real Estate Investment Corporation (incorporated by reference to Form S-3D filed by the Registrant with the Securities and Exchange Commission on June 1, 2018, Registration No. 333-225374). 61 Table of Contents 10.19 Credit Agreement by and among Monmouth Real Estate Investment Corporation, the subsidiary guarantors party thereto, Bank of Montreal, as administrative agent, BMO Capital Markets, as sole lease arranger and sole book runner, and JPMorgan Chase Bank N.A. and Royal Bank of Canada, as co-syndication agents, dated as of August 27, 2015 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on August 28, 2015, Registration No. 001-33177). 10.20 First Amendment to Credit Agreement by and among Monmouth Real Estate Investment Corporation, the subsidiary guarantors party thereto, Bank of Montreal, as administrative agent, BMO Capital Markets, as sole lease arranger and sole book runner, and JPMorgan Chase Bank N.A. and Royal Bank of Canada, as co-syndication agents, dated as of September 30, 2016 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on October 4, 2016, Registration No. 001-33177). 10.21 Second Amendment to Credit Agreement by and among Monmouth Real Estate Investment Corporation, the subsidiary guarantors party thereto, Bank of Montreal, as administrative agent, BMO Capital Markets, as sole lease arranger and sole book runner, and JPMorgan Chase Bank N.A. and Royal Bank of Canada, as co-syndication agents, dated as of March 22, 2018 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on March 23, 2018, Registration No. 001-33177). 10.22 Amended and Restated Credit Agreement, dated November 15, 2019, among Monmouth Real Estate Investment Corporation, as borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, Bank of Montreal, as administrative agent, BMO Capital Markets Corp., JPMorgan Chase Bank, N.A. and Royal Bank of Canada, as joint lead arrangers and joint book runners, and JPMorgan Chase Bank, N.A. and Royal Bank of Canada, as co-syndication agents. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on November 18, 2019, Registration No. 001-33177). (21) * Subsidiaries of the Registrant (23) * Consent of PKF O’Connor Davies, LLP. (31.1) * Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31.2) * Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (32.1) * Certification of Michael P. Landy, President and Chief Executive Officer, and Kevin S. Miller, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS ++ iXBRL Instance Document 101.SCH ++ iXBRL Taxonomy Extension Schema Document 101.CAL ++ iXBRL Taxonomy Extension Calculation Document 101.LAB ++ iXBRL Taxonomy Extension Label Linkbase Document 101.PRE ++ iXBRL Taxonomy Extension Presentation Linkbase Document 101.DEF ++ iXBRL Taxonomy Extension Definition Linkbase Document * Filed herewith. + Denotes a management contract or compensatory plan or arrangement. ++ Pursuant to Rule 406T of Regulation S-T, this interactive date file is deemed not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, is deemed not “filed” for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections. 62 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Monmouth Real Estate Investment Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Monmouth Real Estate Investment Corporation (the “Company”) as of September 30, 2021 and 2020, and the related consolidated statements of income (loss), comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended September 30, 2021, and the related notes and schedule listed in the Index at Item 15(a)(2)(i) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated November 12, 2021, expressed an unqualified opinion. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Acquisition of Real Estate Properties As discussed in Note 3 to the consolidated financial statements, during fiscal 2021, the Company purchased four real estate properties for an aggregate purchase price of approximately $258.4 million. The Company determined that all four acquisitions are acquisitions of assets and that these property acquisitions do not meet the definition of a business. As a result, the total cash consideration for the four acquisitions were allocated to land, building and an intangible asset related to in-place leases on a relative fair value basis. Auditing both (1) the determination that these acquisitions were asset acquisitions and (2) the relative fair value allocation of the cost of the property acquisitions to tangible and intangible assets involved a high degree of judgment, estimation and an increased extent of effort. The allocation of value to the components of properties acquired could have a material effect on the Company’s net income due to the differing depreciable and amortizable lives of each component and the classification of the related depreciation or amortization expense in the Company’s consolidated statements of income (loss). Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of management’s internal controls relating to acquisition accounting, including management’s review of third-party valuation reports, and their assessment of any intangible assets relating to in-place leases and above or below market leases. Among other audit procedures performed, (1) we evaluated the assets acquired to determine that they did not meet the definition of a business, and (2) we evaluated the appropriateness of the relative fair value allocation, including the key inputs and assumptions used by management. Our procedures included evaluating the reasonableness of the inputs and assumptions used by management and determining whether those inputs and assumptions were consistent with other evidence obtained in other areas of the audit and by considering the consistency with external market and industry data. Additionally, we recomputed the relative fair value allocation for each asset acquisition. /s/ PKF O’Connor Davies, LLP November 12, 2021 New York, New York We have served as the Company’s auditor since 2008. * * * 63 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, (in thousands except per share amounts) 2021 2020 ASSETS Real Estate Investments: Land $ 277,846 $ 250,497 Buildings and Improvements 2,025,844 1,793,367 Total Real Estate Investments 2,303,690 2,043,864 Accumulated Depreciation (345,988) (296,020) Real Estate Investments 1,957,702 1,747,844 Cash and Cash Equivalents 48,618 23,517 Securities Available for Sale at Fair Value 143,505 108,832 Tenant and Other Receivables 5,083 5,431 Deferred Rent Receivable 15,679 12,856 Prepaid Expenses 8,502 7,554 Intangible Assets, net of Accumulated Amortization of $19,669 and $17,330, respectively 20,959 16,832 Capitalized Lease Costs, net of Accumulated Amortization of $4,435 and $4,286, respectively 5,719 5,631 Financing Costs, net of Accumulated Amortization of $745 and $356, respectively 991 1,380 Other Assets 9,125 9,906 TOTAL ASSETS $ 2,215,883 $ 1,939,783 See Accompanying Notes to the Consolidated Financial Statements 64 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONT’D) AS OF SEPTEMBER 30, (in thousands except per share amounts) 2021 2020 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs $ 832,184 $ 799,507 Loans Payable 250,000 75,000 Accounts Payable and Accrued Expenses 8,231 3,998 Other Liabilities 30,734 23,673 Total Liabilities 1,121,149 902,178 COMMITMENTS AND CONTINGENCIES Shareholders’ Equity: 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 26,600 and 21,900 Shares Authorized as of September 30, 2021 and 2020, respectively; 21,986 and 18,880 Shares Issued and Outstanding As of September 30, 2021 and 2020, respectively 549,640 471,994 Common Stock, $0.01 Par Value Per Share: 300,000 and 200,000 Shares Authorized as of September 30, 2021 and 2020, respectively; 98,333 and 98,054 Shares Issued and Outstanding as of September 30, 2021 and 2020, respectively 983 981 Excess Stock, $0.01 Par Value Per Share: 200,000 Shares Authorized as of September 30, 2021 and 2020; No Shares Issued or Outstanding as of September 30, 2021 and 2020 0 0 Additional Paid-In Capital 546,341 568,998 Accumulated Other Comprehensive Loss (2,230) (4,368) Undistributed Income 0 0 Total Shareholders’ Equity 1,094,734 1,037,605 TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY $ 2,215,883 $ 1,939,783 See Accompanying Notes to the Consolidated Financial Statements 65 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FOR THE YEARS ENDED SEPTEMBER 30, (in thousands) 2021 2020 2019 INCOME: Rental Revenue $ 155,044 $ 141,583 $ 132,524 Reimbursement Revenue 27,712 26,234 22,297 Lease Termination Income 377 0 0 TOTAL INCOME 183,133 167,817 154,821 EXPENSES: Real Estate Taxes 21,798 20,193 17,010 Operating Expenses 6,984 6,919 6,464 General and Administrative Expenses 9,353 8,932 9,081 Non-recurring Strategic Alternatives & Proxy Costs 35,920 0 0 Non-recurring Severance Expense 0 786 0 Depreciation 51,478 46,670 43,020 Amortization of Capitalized Lease Costs and Intangible Assets 3,586 3,180 2,870 TOTAL EXPENSES 129,119 86,680 78,445 OTHER INCOME (EXPENSE): Dividend Income 6,182 10,445 15,168 Realized Gain on Sale of Real Estate Investment 6,376 0 0 Realized Gain on Sale of Securities Transactions 2,248 0 0 Unrealized Holding Gains (Losses) Arising During the Periods 50,239 (77,380) (24,680) Interest Expense, including Amortization of Financing Costs (37,880) (36,376) (36,912) TOTAL OTHER INCOME (EXPENSE) 27,165 (103,311) (46,424) NET INCOME (LOSS) 81,179 (22,174) 29,952 Less: Net Income (Loss) Attributable to Non-Controlling Interest 2,996 (31) 152 NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS 78,183 (22,143) 29,800 Less: Preferred Dividends 33,419 26,474 18,774 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 44,764 $ (48,617) $ 11,026 See Accompanying Notes to the Consolidated Financial Statements 66 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FOR THE YEARS ENDED SEPTEMBER 30, 2021 2020 2019 BASIC INCOME – PER SHARE Net Income (Loss) $ 0.83 $ (0.23) $ 0.32 Less: Net Income (Loss) Attributable to Non-Controlling Interest (0.03) 0 0 Net Income (Loss) Attributable to Shareholders $ 0.80 $ (0.23) $ 0.32 Less: Preferred Dividends (0.34) (0.27) (0.20) Net Income (Loss) Attributable to Common Shareholders – Basic $ 0.46 $ (0.50) $ 0.12 DILUTED INCOME – PER SHARE Net Income (Loss) $ 0.82 $ (0.23) $ 0.32 Less: Net Income (Loss) Attributable to Non-Controlling Interest (0.03) 0 0 Net Income (Loss) Attributable to Shareholders $ 0.79 $ (0.23) $ 0.32 Less: Preferred Dividends (0.34) (0.27) (0.20) Net Income (Loss) Attributable to Common Shareholders – Diluted $ 0.45 $ (0.50) $ 0.12 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands) Basic 98,253 98,082 93,387 Diluted 98,443 98,164 93,485 See Accompanying Notes to the Consolidated Financial Statements 67 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED SEPTEMBER 30, (in thousands) 2021 2020 2019 Net Income (Loss) $ 81,179 $ (22,174) $ 29,952 Other Comprehensive Income: Change in Fair Value of Interest Rate Swap Agreement 2,138 (4,368) 0 Total Comprehensive Income (Loss) 83,317 (26,542) 29,952 Less: Net Income (Loss) Attributable to Non-Controlling Interest (2,996) 31 (152) Comprehensive Income (Loss) Attributable to Shareholders 80,321 (26,511) 29,800 Less: Preferred Dividends 33,419 26,474 18,774 Comprehensive Income (Loss) Attributable to Common Shareholders $ 46,902 $ (52,985) $ 11,026 See Accompanying Notes to the Consolidated Financial Statements 68 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 2021, 2020, AND 2019 (in thousands except per share amounts) Common Stock Preferred Stock Series C Additional Paid in Capital Balance September 30, 2018 $ 815 $ 287,200 $ 534,635 Impact of Adoption of Accounting Standards Update 2016-01 0 0 0 Shares Issued in Connection with the DRIP (1) 56 0 73,909 Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs 92 0 132,246 Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 60,478 (2,279) Shares Issued Through the Exercise of Stock Options 1 0 566 Stock Compensation Expense 0 0 784 Distributions To Common Shareholders ($0.68 per share) 0 0 (77,460) Net Income Attributable to Shareholders 0 0 0 Preferred Dividends ($1.53125 per share) 0 0 0 Balance September 30, 2019 964 347,678 662,401 Shares Issued in Connection with the DRIP (1) 20 0 26,391 Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 124,316 (1,934) Shares Repurchased through the Common Stock Repurchase Plan (4) 0 (4,272) Shares Issued Through the Exercise of Stock Options 1 0 1,015 Stock Compensation Expense 0 0 452 Distributions To Common Shareholders ($0.68 per share) 0 0 (115,055) Net Income (Loss) Attributable to Shareholders 0 0 0 Preferred Dividends ($1.53125 per share) 0 0 0 Change in Fair Value of Interest Rate Swap Agreement 0 0 0 Balance September 30, 2020 981 471,994 568,998 Shares Issued in Connection with the DRIP (1) 1 0 1,360 Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 77,646 (1,688) Shares Issued Through the Exercise of Stock Options 1 0 2,374 Stock Compensation Expense 0 0 287 Distributions To Common Shareholders ($0.71 per share) 0 0 (24,990) Net Income Attributable to Shareholders 0 0 0 Preferred Dividends ($1.53125 per share) 0 0 0 Change in Fair Value of Interest Rate Swap Agreement 0 0 0 Balance September 30, 2021 $ 983 $ 549,640 $ 546,341 (1) Dividend Reinvestment and Stock Purchase Plan See Accompanying Notes to the Consolidated Financial Statements 69 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 2021, 2020 AND 2019, CONT’D. (in thousands except per share amounts) Undistributed Income (Loss) Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity Balance September 30, 2018 $ 0 $ (24,744) $ 797,906 Impact of Adoption of Accounting Standards Update 2016-01 (24,744) 24,744 0 Shares Issued in Connection with the DRIP (1) 0 0 73,965 Shares Issued in Connection with Underwritten Public Offering of Common Stock, net of offering costs 0 0 132,338 Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 0 58,199 Shares Issued Through the Exercise of Stock Options 0 0 567 Stock Compensation Expense 0 0 784 Distributions To Common Shareholders ($0.68 per share) 13,718 0 (63,742) Net Income Attributable to Shareholders 29,800 0 29,800 Preferred Dividends ($1.53125 per share) (18,774) 0 (18,774) Balance September 30, 2019 0 0 1,011,043 Shares Issued in Connection with the DRIP (1) 0 0 26,411 Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 0 122,382 Shares Repurchased through the Common Stock Repurchase Plan 0 0 (4,276) Shares Issued Through the Exercise of Stock Options 0 0 1,016 Stock Compensation Expense 0 0 452 Distributions To Common Shareholders ($0.68 per share) 48,617 0 (66,438) Net Income (Loss) Attributable to Shareholders (22,143) 0 (22,143) Preferred Dividends ($1.53125 per share) (26,474) 0 (26,474) Change in Fair Value of Interest Rate Swap Agreement 0 (4,368) (4,368) Balance September 30, 2020 0 (4,368) 1,037,605 Shares Issued in Connection with the DRIP (1) 0 0 1,361 Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs 0 0 75,958 Shares Issued Through the Exercise of Stock Options 0 0 2,375 Stock Compensation Expense 0 0 287 Distributions To Common Shareholders ($0.71 per share) (44,764) 0 (69,754) Net Income Attributable to Shareholders 78,183 0 78,183 Preferred Dividends ($1.53125 per share) (33,419) 0 (33,419) Change in Fair Value of Interest Rate Swap Agreement 0 2,138 2,138 Balance September 30, 2021 $ 0 $ (2,230) $ 1,094,734 (1) Dividend Reinvestment and Stock Purchase Plan See Accompanying Notes to the Consolidated Financial Statements 70 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, (in thousands) 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) $ 81,179 $ (22,174) $ 29,952 Noncash Items Included in Net Income (Loss): Depreciation & Amortization 56,448 51,263 47,142 Stock Compensation Expense 287 452 784 Deferred Straight Line Rent (3,024) (1,976) (1,926) Securities Available for Sale Received as Dividend Income (1,012) (1,213) (874) Unrealized Holding (Gains) Losses Arising During the Periods (50,239) 77,380 24,680 Realized Gain on Sale of Securities Transactions (2,248) 0 0 Realized Gain on Sale of Real Estate Investment (6,376) 0 0 Changes in: Tenant & Other Receivables 451 (3,993) 18 Prepaid Expenses (948) (840) (524) Other Assets & Capitalized Lease Costs (733) (2,052) 729 Accounts Payable, Accrued Expenses & Other Liabilities 11,023 2,014 767 NET CASH PROVIDED BY OPERATING ACTIVITIES 84,808 98,861 100,748 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Real Estate & Intangible Assets (260,833) (175,261) (138,964) Capital Improvements (7,959) (5,996) (14,734) Net Proceeds from Sale of Real Estate Investment 12,303 0 0 Return of Deposits on Real Estate 5,360 2,000 200 Deposits Paid on Acquisitions of Real Estate (5,515) (1,670) (6,000) Proceeds from the Sale of Securities Available for Sale 16,327 0 0 Proceeds from Securities Available for Sale Called for Redemption 2,500 251 0 Purchase of Securities Available for Sale 0 0 (54,136) NET CASH USED IN INVESTING ACTIVITIES (237,817) (180,676) (213,634) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Fixed Rate Mortgage Notes Payable 104,000 110,310 96,500 Principal Payments on Fixed Rate Mortgage Notes Payable (71,749) (55,855) (63,350) Net Draws (Repayments) from Loans Payable 175,000 (20,000) (91,609) Financing Costs Paid on Debt (567) (2,525) (662) Proceeds from Underwritten Public Offering of Common Stock, net of offering costs 0 0 132,338 Proceeds from At-The-Market Preferred Equity Program, net of offering costs 75,958 122,382 58,199 Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments 320 18,815 57,079 Net Distributions to Non-Controlling Interest (5,491) (32) 0 Shares repurchased through the Common Stock Repurchase Plan 0 (4,276) 0 Proceeds from the Exercise of Stock Options 2,375 1,016 567 Preferred Dividends Paid (33,023) (25,839) (18,465) Common Dividends Paid, net of Reinvestments (68,713) (58,843) (46,856) NET CASH PROVIDED BY FINANCING ACTIVITIES 178,110 85,153 123,741 Net Increase in Cash and Cash Equivalents 25,101 3,338 10,855 Cash and Cash Equivalents at Beginning of Year 23,517 20,179 9,324 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 48,618 $ 23,517 $ 20,179 See Accompanying Notes to the Consolidated Financial Statements 71 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2021 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of the Business Monmouth Real Estate Investment Corporation, a Maryland corporation, together with its consolidated subsidiaries (we, our, us, the Company or MREIC), operates as a real estate investment trust (REIT) deriving its income primarily from real estate rental operations. We were founded in 1968 and have been publicly owned since that time, making us one of the oldest public equity REITs in the world. As of September 30, 2021 and 2020, rental properties consisted of 122 and 119 property holdings, respectively. These properties are located in 32 states: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. As of September 30, 2021, our weighted average lease maturity was 7.0 years and our annualized average base rent per occupied square foot was $6.61. Our weighted average lease expiration has been 7.0 years or greater for over seven consecutive years. Our overall occupancy rate has been 98.9% or above for over six consecutive years. As of September 30, 2021, the weighted average building age, based on the square footage of our buildings, was 10.2 years. Our portfolio of modern, net-leased industrial properties continues to provide shareholders with reliable and predictable income streams. Our resilient occupancy rates and rent collection results highlight the mission-critical nature of our assets and underscore the essential need for our tenants’ operations. Furthermore, because our weighted average lease term is 7.0 years and our weighted average fixed rate mortgage debt maturity is 10.9 years, we expect our cash flow to remain resilient over long periods of time. Our overall occupancy rate has been over 99% throughout the COVID-19 Pandemic and is currently 99.7%. Our base rent collections remained strong, averaging 99.9% throughout the COVID-19 Pandemic and we expect future months to be consistent with this trend. US industrial real estate market conditions are as strong as they have ever been with record high asking rents, a robust development pipeline, and an all- time high occupancy rate of 96%. Companies are leasing space at record levels to handle the large increase in ecommerce sales as well as the need for safety stock to counter supply chain disruptions. Construction costs are rising dramatically due to the long lead times for sourcing materials. The amount of new construction for US industrial real estate has been increasing for several years as more industrial space is needed to handle direct-to-consumer distribution. It is estimated that ecommerce sales require three times the amount of warehouse space relative to brick and mortar retail sales. These new buildings are often highly automated and have much larger truck courts and parking requirements. Because modern industrial buildings are built to handle both wholesale distribution as well as direct to consumer distribution, they are known as omni-channel facilities. The West coast ports are continuing to experience severe bottlenecks in processing imports and therefor, container traffic is being diverted towards the Gulf and East coast ports. The West coast ports are continuing to experience severe bottlenecks in processing imports and as a result much container traffic is being diverted towards the Gulf and East coast ports. Given our geographic footprint, this trend is a very favorable one for us. As previously announced, on November 5, 2021, we entered into a definitive merger agreement with Industrial Logistics Properties Trust, a Maryland real estate investment trust (“ILPT”), under which, on the terms and subject to the conditions set forth in the merger agreement, ILPT will acquire us in an all-cash transaction, with our common stockholders receiving $21.00 in cash for each outstanding share of our common stock in connection with consummation of the transaction. ILPT’s acquisition of us is subject to obtaining the requisite approval of our common stockholders and the satisfaction of other customary closing conditions. Upon closing of the merger with ILPT, holders of our outstanding 6.125% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) will receive the amount of $25 per share plus any accrued and unpaid dividends. We plan to continue to pay our regular quarterly common stock dividend and our Series C Cumulative Redeemable Preferred Stock dividend for each full quarterly dividend period completed prior to the closing of the transaction. This transaction with ILPT represents the culmination of the publicly announced comprehensive strategic alternatives review processes conducted by our Board of Directors during 2021. Our Board re-initiated its strategic alternatives review process in September 2021 after a previous agreement for a merger that we entered into with another party, following a strategic alternatives review process earlier this year, did not receive the requisite approval of our stockholders. 72 Table of Contents Use of Estimates In preparing the financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we are required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates and assumptions. Segment Reporting & Financial Information Our primary business is the ownership and management of real estate properties. We invest in well-located, modern, single-tenant, industrial buildings leased primarily to investment-grade tenants or their subsidiaries on long-term net leases. We review operating and financial information for each property on an individual basis and, therefore, each property represents an individual operating segment. We evaluate financial performance using Net Operating Income (NOI) from property operations. NOI is a non-GAAP financial measure, which we define as recurring Rental and Reimbursement Revenue, less Real Estate Taxes and Operating Expenses, such as insurance, utilities and repairs and maintenance. We have aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities, including the fact that they are operated as industrial properties subject to long-term net leases primarily to investment-grade tenants or their subsidiaries. Principles of Consolidation The consolidated financial statements include the Company and our wholly-owned subsidiaries. In 2005, we formed MREIC Financial, Inc., a taxable REIT subsidiary which has had no activity since inception. In 2007, we merged with Monmouth Capital Corporation (Monmouth Capital), with Monmouth Capital surviving as our wholly-owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. Non-controlling interests For real estate investments that the Company consolidates but does not own 100% interest, any resulting non-controlling interest, if considered material, is presented as a component of shareholders equity on its Consolidated Balance Sheet, and the portion of earnings or loss attributable to non-controlling interest is presented separately in the Consolidated Statements of Income (Loss). As a result of the sale of one of its majority owned real estate investments in fiscal 2021 (See Note 3), the Company has presented the non-controlling interest in its Statement of Income (Loss), however the presentation of non-controlling interest was considered immaterial to the Consolidated Balance Sheet and Consolidated Statements of Shareholder’s Equity. Buildings and Improvements Buildings and improvements are stated at the lower of depreciated cost or net realizable value. Depreciation is computed based on the straight-line method over the estimated useful lives of the assets. These lives are 39 years for buildings and range from 3 to 39 years for improvements. We apply Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10, Property, Plant & Equipment (ASC 360-10) to measure impairment in real estate investments. Rental properties are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (on an undiscounted basis without interest) from a rental property is less than its historical net cost basis. These expected future cash flows consider factors such as future operating income, trends and prospects as well as the effects of leasing demand, competition and other factors. Upon determination that an other-than-temporary impairment has occurred, rental properties are reduced to their fair value. For properties to be disposed of, an impairment loss is recognized when the fair value of the property, less the estimated cost to sell, is less than the carrying amount of the property measured at the time there is a commitment to sell the property and/or it is actively being marketed for sale. A property to be disposed of is reported at the lower of its carrying amount or its estimated fair value, less its cost to sell. Subsequent to the date that a property is held for disposition, depreciation expense is not recorded. 73 Table of Contents Realized Gain on Sale of Real Estate Investment Realized Gain on Sale of Real Estate Investment is recognized only when it is determined that we will collect substantially all of the consideration to which we are entitled, possession and other attributes of ownership have been transferred to the buyer and we have no controlling financial interest. The application of these criteria can be complex and requires us to make assumptions. We have determined that all of these criteria were met for the real estate sold during the periods presented. Acquisitions We account for our property acquisitions as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized to real estate investments as part of the purchase price. In addition, acquisitions that do not meet the definition of a business combination are accounted for as asset acquisitions whereby the consideration incurred is allocated to the individual assets acquired on a relative fair value basis. Marketable Securities Investments in securities available for sale primarily consist of marketable common and preferred stock securities of other REITs. We limit the size of this portfolio to no more than approximately 5% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. The value of the marketable securities was $143.5 million as of September 30, 2021, representing 5.6% of our undepreciated assets. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of last fiscal year. This new rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income. The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. These marketable securities are all publicly-traded and purchased on the open market through private transactions or through dividend reinvestment plans. These securities may be classified among three categories: held-to-maturity, trading, and available-for-sale. We normally hold REIT securities on a long-term basis and have the ability and intent to hold securities to recovery. Therefore, as of September 30, 2021 and 2020, our securities are all classified as available-for-sale and are carried at fair value based upon quoted market prices in active markets. Gains or losses on the sale of securities are based on average cost and are accounted for on a trade date basis. In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes became effective for our fiscal year beginning October 1, 2018. The most significant change for us, once ASU 2016-01 was adopted, was the accounting treatment for our investments in marketable securities that are classified as available-for-sale. The accounting treatment used for our Consolidated Financial Statements through fiscal 2018 was that our investments in marketable securities, classified as available for sale, were carried at fair value, with net unrealized holding gains and losses being excluded from earnings and reported as a separate component of Shareholders’ Equity until realized and the change in net unrealized holding gains and losses being reflected as comprehensive income (loss). Under ASU 2016-01, effective October 1, 2018, these marketable securities continue to be measured at fair value, however, the changes in net unrealized holding gains and losses are now recognized through net income on our Consolidated Statements of Income (Loss). On October 1, 2018, we recorded a $(24.7) million adjustment to beginning Undistributed Income (Loss). In addition, $50.2 million, $(77.4) million and $(24.7) million of the net unrealized holding gains (losses) have been reflected as Unrealized Holding Gains (Losses) Arising During the Periods in the accompanying Consolidated Statements of Income (Loss) for the fiscal years ended 2021, 2020 and 2019, respectively. 74 Table of Contents Cash and Cash Equivalents Cash and cash equivalents include all cash and investments with an original maturity of three months or less. We maintain our cash in bank accounts in amounts that may exceed federally insured limits. We have not experienced any losses in these accounts in the past. The fair value of cash and cash equivalents approximates their current carrying amounts since all such items are short-term in nature. Intangible Assets, Capitalized Lease Costs and Financing Costs Intangible assets, consisting primarily of the value of in-place leases, are amortized to expense over the remaining terms of the respective leases. Upon termination of a lease, the unamortized portion is charged to expense. The weighted average amortization period upon acquisition for intangible assets recorded during 2021, 2020 and 2019 was 17 years, 14 years and 12 years, respectively. Costs incurred in connection with the execution of leases are capitalized and amortized over the term of the respective leases. Unamortized lease costs are charged to expense upon cancellation of leases prior to the expiration of lease terms. Costs incurred in connection with obtaining mortgages and other financings and re-financings are deferred and are amortized over the term of the related obligations using the effective interest method. Unamortized costs are charged to expense upon prepayment of the obligation. Amortization expense related to these deferred leasing and financing costs were $2.7 million, $2.6 million and $2.2 million for the years ended September 30, 2021, 2020 and 2019, respectively. We estimate that aggregate amortization expense for existing assets will be $2.5 million, $2.4 million, $1.8 million, $1.4 million and $1.4 million for the fiscal years 2022, 2023, 2024, 2025 and 2026, respectively. Derivative Instruments and Hedging Activities In the normal course of business, we are exposed to financial market risks, including interest rate risk on our variable rate debt. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of derivative financial instruments. Our primary strategy in entering into derivative contracts is to minimize the variability that changes in interest rates could have on its future cash flows. We generally employ derivative instruments that effectively convert a portion of our variable rate debt to fixed rate debt. We do not enter into derivative instruments for speculative purposes. As further described in “Note 7 – Mortgage Notes and Loans Payable”, in November 2019 we entered into an interest rate swap agreement that has the effect of fixing the interest rate on our $75.0 million unsecured term loan (the “Term Loan”). The interest rate for borrowings under the Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. The re- pricing and scheduled maturity dates, payment dates, index and the notional amounts of the interest rate swap agreement coincides with those of the underlying Term Loan. The interest rate swap agreement is net settled monthly. The Company has designated this derivative as a cash flow hedge and has recorded the fair value on the balance sheet in accordance with ASC 815, Derivatives and Hedging (See Note 14 for information on the determination of fair value). The effective portion of the gain or loss on this hedge will be reported as a component of Accumulated Other Comprehensive Income (Loss) on our Consolidated Balance Sheets. To the extent that the hedging relationship is not effective or does not qualify as a cash flow hedge, the ineffective portion is recorded in interest expense. Hedges that received designated hedge accounting treatment are evaluated for effectiveness at the time that they are designated as well as through the hedging period. As of September 30, 2021, we have determined that this interest rate swap agreement is highly effective as a cash flow hedge. As a result, the fair value of this derivative of $2.2 million as of September 30, 2021 was recorded as a component of Accumulated Other Comprehensive Loss, with the corresponding liability included in Other Liabilities. 75 Table of Contents Revenue Recognition Rental revenue from tenants with leases having scheduled rental increases are recognized on a straight-line basis over the term of the lease. Tenant recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred. The reimbursements are recognized and presented gross, as we are generally the primary obligor and, with respect to purchasing goods and services from third-party suppliers, have discretion in selecting the supplier and bears the associated credit risk. These occupancy charges are recognized as earned. When applicable, we provide an allowance for doubtful accounts against the portion of tenant and other receivables and deferred rent receivables, which are estimated to be uncollectible. For accounts receivables that we deem uncollectible, we use the direct write-off method. Lease Termination Income Lease Termination Income is recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with us. Effective October 1, 2020, we entered into a lease termination agreement with RGH Enterprises, Inc. (Cardinal Health) for our 75,000 square foot facility located in Halfmoon (Albany), NY, whereby we received a termination fee in the amount of $377,000 representing approximately 50% of the then remaining rent due under the lease, which was set to expire on November 30, 2021. We simultaneously entered into a 10.4 year lease agreement with United Parcel Service, Inc. (UPS) which became effective November 1, 2020. The lease agreement with UPS provides for five months of free rent, after which, on April 1, 2021, initial annual rent of $510,000, representing $6.80 per square foot, commenced, with 2.0% annual increases thereafter, resulting in a straight-line annualized rent of $541,000, representing $7.21 per square foot over the life of the lease, which expires March 31, 2031. This compares to the former U.S. GAAP straight-line rent of $574,000, representing $7.65 per square foot, and former cash rent of $8.19 per square foot, resulting in a decrease of $33,000, representing a 5.8% decrease on a U.S. GAAP straight-line basis and a decrease of 17.0% on a cash basis. The new 10.4 year lease agreement with UPS provides for an additional 9.3 years of lease term versus the old lease with Cardinal Health. In addition, effective June 4, 2021, we completed a parking lot expansion at this location for a cost of approximately $835,000 resulting in an initial increase in annual rent effective on the date of completion of approximately $52,000 from approximately $510,000, or $6.80 per square foot, to approximately $562,000, or $7.50 per square foot. Furthermore, annual rent will continue to increase each year by 2.0% resulting in an annualized rent from June 4, 2021 through the remaining term of the lease of approximately $622,000, or $8.29 per square foot. Only three of our 122 properties have leases that contain an early termination provision. These three properties contain 177,000 total rentable square feet, representing less than 1% of our total rentable square feet. Our leases with early termination provisions are our 36,000 square foot location in Urbandale (Des Moines), IA, our 39,000 square foot location in Rockford, IL, and our 102,000 square foot location in O’Fallon (St. Louis), MO. Each lease termination provision contains certain requirements that must be met in order to exercise each termination provision. These requirements include: the date termination can be exercised, the time frame that notice must be given by the tenant to us and the termination fee that would be required to be paid by the tenant to us. The total potential termination fees that would be payable to us from the three tenants with leases that have a termination provision amounts to $1.5 million. Net Income Per Share Basic Net Income (Loss) per Common Share is calculated by dividing Net Income (Loss) Attributable to Common Shareholders by the weighted average number of common shares outstanding during the period. Diluted Net Income (Loss) per Common Share is calculated by dividing Net Income (Loss) Attributable to Common Shareholders by the weighted average number of common shares outstanding for the period and, when dilutive, the potential net shares that would be issued upon exercise of stock options pursuant to the treasury stock method. In periods with a net loss, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation because they are anti-dilutive. In addition, common stock equivalents of 190,000, 82,000 and 98,000 shares are included in the diluted weighted average shares outstanding for fiscal years 2021, 2020 and 2019, respectively. As of September 30, 2021, 2020 and 2019, options to purchase 65,000, 315,000 and 305,000 shares, respectively, were antidilutive. 76 Table of Contents Stock Compensation Plan We account for awards of stock, stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation.” ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of stock awards and restricted stock awards is equal to the fair value of our stock on the grant date. The amortization of compensation costs for the awards of stock, stock option grants and restricted stock are included in General and Administrative Expenses in the accompanying Consolidated Statements of Income and amounted to $287,000, $452,000 and $784,000 have been recognized in 2021, 2020 and 2019, respectively. Included in Note 9 to these consolidated financial statements are the assumptions and methodology used to calculate the fair value of stock options and restricted shares. Income Tax We have elected to be taxed as a REIT under Sections 856-860 of the Code, and we intend to maintain our qualification as a REIT in the future. As a qualified REIT, with limited exceptions, we will not be taxed under Federal and certain state income tax laws at the corporate level on taxable income that we distribute to our shareholders. For special tax provisions applicable to REITs, refer to Sections 856-860 of the Code. We are subject to franchise taxes in several of the states in which we own properties. In December 2017, the Tax Cuts and Jobs Act of 2017 (the TCJA), Code Section 199A, was added to the Code and became effective for tax years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, individual taxpayers and trusts and estates may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or qualified dividend income. We follow the provisions of ASC Topic 740, Income Taxes, that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de- recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on our evaluation, we determined that we have no uncertain tax positions and no unrecognized tax benefits as of September 30, 2021. We record interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of September 30, 2021, the fiscal tax years 2018 through and including 2021 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress. Comprehensive Income (Loss) Comprehensive income (loss) is comprised of net income (loss) attributable to shareholders and other comprehensive income (loss). Other comprehensive income (loss) consists of the change in the fair value of an interest rate swap derivative. Prior to our adoption of Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” on October 1, 2018, other comprehensive income consisted of unrealized holding gains or losses arising during the period on securities available for sale, less any reclassification adjustments for net gains of sales of securities transactions realized in income. Once we adopted ASU 2016-01, the changes in net unrealized holding gains and losses were no longer recognized through other comprehensive income and instead these changes are now recognized through net income on our Consolidated Statements of Income (Loss). 77 Table of Contents Reclassifications Certain amounts in the consolidated financial statements for the prior years have been reclassified to conform to the financial statement presentation for the current year. Recent Accounting Pronouncements In April 2020, FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of the COVID-19 Pandemic that allows entities to treat the concession as if it was a part of the existing contract instead of applying lease modification accounting. This guidance is only applicable to the COVID-19 Pandemic related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected this option relating to qualifying rent deferral and rent abatement agreements. For qualifying lease modifications with rent deferrals, this results in no change to our revenue recognition but an increase in the lease receivable balance until the deferred rent has been repaid. For qualifying lease modifications that include rent abatement concessions, this results in a direct reduction of rental income in the current period. We do not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements. NOTE 2 – REAL ESTATE INVESTMENTS The following is a summary of the cost and accumulated depreciation of our land, buildings and improvements at September 30, 2021 and 2020 (in thousands): Property Buildings & Accumulated Net Book SEPTEMBER 30, 2021 Type Land Improvements Depreciation Value Alabama: Huntsville Industrial $ 748 $ 5,914 $ 1,714 $ 4,948 Mobile Industrial 2,480 30,572 2,548 30,504 Arizona: Tolleson (Phoenix) Industrial 1,316 15,508 7,674 9,150 Colorado: Colorado Springs Industrial 2,150 27,170 3,744 25,576 Denver Industrial 1,150 5,224 2,108 4,266 Connecticut: Newington (Hartford) Industrial 410 3,116 1,635 1,891 Florida: Cocoa Industrial 1,881 12,246 3,725 10,402 Davenport (Orlando) Industrial 7,060 31,027 4,094 33,993 Daytona Beach Industrial 3,120 27,754 2,454 28,420 Ft. Myers Industrial 2,486 19,198 2,312 19,372 Homestead (Miami) Industrial 4,427 33,485 3,656 34,256 Jacksonville (FDX) Industrial 1,165 5,419 3,159 3,425 Jacksonville (FDX Ground) Industrial 6,000 24,926 4,305 26,621 Lakeland Industrial 261 1,782 724 1,319 Orlando Industrial 2,200 6,610 2,405 6,405 Punta Gorda Industrial 0 4,134 1,398 2,736 Tampa (FDX Ground) Industrial 5,000 14,745 6,059 13,686 Tampa (FDX) Industrial 2,830 5,518 2,004 6,344 Tampa (Tampa Bay Grand Prix) Industrial 1,867 3,811 1,448 4,230 Georgia: Augusta (FDX Ground) Industrial 614 4,749 1,878 3,485 Augusta (FDX) Industrial 380 1,613 602 1,391 Braselton (Atlanta) Industrial 13,965 46,273 3,659 56,579 Griffin (Atlanta) Industrial 760 14,322 5,716 9,366 Locust Grove (Atlanta) Industrial 9,667 83,569 1,607 91,629 78 Table of Contents Property Buildings & Accumulated Net Book SEPTEMBER 30, 2021 (cont’d) Type Land Improvements Depreciation Value Savannah (Shaw) Industrial $ 4,405 $ 51,621 $ 4,853 $ 51,173 Savannah (FDX Ground) Industrial 3,441 24,091 1,750 25,782 Illinois: Burr Ridge (Chicago) Industrial 270 1,615 869 1,016 Elgin (Chicago) Industrial 1,280 5,902 2,984 4,198 Granite City (St. Louis, MO) Industrial 340 12,418 6,252 6,506 Montgomery (Chicago) Industrial 2,000 9,303 3,484 7,819 Rockford (Collins Aerospace Systems) Industrial 480 4,620 829 4,271 Rockford (Sherwin-Williams Co.) Industrial 1,100 4,451 1,206 4,345 Sauget (St. Louis, MO) Industrial 1,890 15,519 2,391 15,018 Schaumburg (Chicago) Industrial 1,040 4,407 2,671 2,776 Wheeling (Chicago) Industrial 5,112 14,513 5,600 14,025 Indiana: Greenwood (Indianapolis) (ULTA) Industrial 2,250 35,524 5,828 31,946 Greenwood (Indianapolis) (Amazon) Industrial 4,839 74,525 3,822 75,542 Indianapolis (FDX Ground) Industrial 3,746 21,758 4,009 21,495 Lafayette Industrial 2,802 22,277 1,238 23,841 Iowa: Urbandale (Des Moines) Industrial 310 2,234 1,459 1,085 Kansas: Edwardsville (Kansas City) (Carlstar Group) Industrial 1,185 6,098 3,014 4,269 Edwardsville (Kansas City) (International Paper) Industrial 2,750 15,544 3,245 15,049 Olathe (Kansas City) Industrial 3,616 31,831 3,960 31,487 Topeka Industrial 0 3,680 1,179 2,501 Kentucky: Buckner (Louisville) Industrial 2,280 24,528 5,039 21,769 Frankfort (Lexington) Industrial 1,850 26,150 4,582 23,418 Louisville Industrial 1,590 9,714 1,328 9,976 Louisiana: Covington (New Orleans) Industrial 2,720 15,706 2,352 16,074 Maryland: Beltsville (Washington, DC) Industrial 3,200 11,521 5,045 9,676 Michigan: Walker (Grand Rapids) Industrial 4,034 27,621 3,187 28,468 Livonia (Detroit) Industrial 320 13,568 3,127 10,761 Orion Industrial 4,650 18,506 5,902 17,254 Romulus (Detroit) Industrial 531 4,418 2,477 2,472 Minnesota: Stewartville (Rochester) Industrial 900 4,332 888 4,344 Mississippi: Olive Branch (Memphis, TN) (Anda Pharmaceuticals, Inc.) Industrial 800 13,750 3,261 11,289 Olive Branch (Memphis, TN) (Milwaukee Tool) Industrial 2,550 34,365 6,697 30,218 Richland (Jackson) Industrial 211 1,690 1,200 701 Ridgeland (Jackson) Industrial 218 2,738 1,585 1,371 Missouri: Kansas City Industrial 1,000 9,003 1,670 8,333 Liberty (Kansas City) Industrial 724 7,075 4,128 3,671 O’Fallon (St. Louis) Industrial 264 3,986 2,735 1,515 St. Joseph Industrial 800 12,705 6,518 6,987 Nebraska: Omaha Industrial 1,170 4,794 2,734 3,230 New Jersey: Somerset Shopping Center 35 3,104 1,873 1,266 Trenton Industrial 8,336 75,652 5,819 78,169 79 Table of Contents Property Buildings & Accumulated Net Book SEPTEMBER 30, 2021 (cont’d) Type Land Improvements Depreciation Value New York: Cheektowaga (Buffalo) Industrial $ 4,797 $ 6,164 $ 2,330 $ 8,631 Halfmoon (Albany) Industrial 1,190 5,551 1,134 5,607 Hamburg (Buffalo) Industrial 1,700 33,440 4,313 30,827 North Carolina: Concord I (Charlotte) Industrial 4,305 28,749 4,847 28,207 Concord II (Charlotte) Industrial 4,307 35,736 3,818 36,225 Fayetteville Industrial 172 5,286 3,532 1,926 Whitsett (Greensboro) Industrial 2,735 43,976 1,503 45,208 Winston-Salem Industrial 980 6,447 3,239 4,188 Ohio: Bedford Heights (Cleveland) Industrial 990 6,314 2,530 4,774 Cincinnati Industrial 800 5,950 928 5,822 Lancaster (Columbus) Industrial 959 16,599 638 16,920 Kenton Industrial 855 17,876 1,970 16,761 Lebanon (Cincinnati) Industrial 240 4,315 1,069 3,486 Monroe (Cincinnati) Industrial 1,800 19,777 2,452 19,125 Plain City (Columbus) Industrial 6,554 65,187 1,254 70,487 Richfield (Cleveland) Industrial 2,677 13,960 4,156 12,481 Stow Industrial 1,430 17,504 1,795 17,139 Streetsboro (Cleveland) Industrial 1,760 17,840 4,346 15,254 West Chester Twp. (Cincinnati) Industrial 695 5,039 2,842 2,892 Oklahoma: Oklahoma City (FDX Ground) Industrial 1,410 11,215 2,479 10,146 Oklahoma City (Bunzl) Industrial 845 7,883 859 7,869 Oklahoma City (Amazon) Industrial 1,618 28,260 2,778 27,100 Oklahoma City (Amazon II) Industrial 1,378 13,584 363 14,599 Tulsa Industrial 790 2,958 631 3,117 Pennsylvania: Altoona Industrial 1,200 7,823 1,595 7,428 Imperial (Pittsburgh) Industrial 3,700 16,290 2,331 17,659 Monaca (Pittsburgh) Industrial 402 7,562 3,730 4,234 South Carolina: Aiken (Augusta, GA) Industrial 1,362 19,678 2,144 18,896 Charleston (FDX) Industrial 4,639 16,900 1,703 19,836 Charleston (FDX Ground) Industrial 7,103 39,473 3,205 43,371 Ft. Mill (Charlotte, NC) Industrial 1,747 15,317 3,826 13,238 Hanahan (Charleston) (SAIC) Industrial 1,129 13,334 5,791 8,672 Hanahan (Charleston) (Amazon) Industrial 930 8,376 2,852 6,454 Tennessee: Chattanooga Industrial 300 5,069 1,827 3,542 Kodak (Knoxville) Industrial 2,918 30,972 66 33,824 Lebanon (Nashville) Industrial 2,230 11,985 3,073 11,142 Memphis Industrial 1,235 14,858 4,278 11,815 Shelby County Vacant Land 11 0 0 11 Texas: Carrollton (Dallas) Industrial 1,500 16,997 4,908 13,589 Corpus Christi Industrial 0 4,808 1,176 3,632 Edinburg Industrial 1,000 11,039 2,324 9,715 El Paso Industrial 3,225 9,206 2,780 9,651 Ft. Worth (Dallas) Industrial 8,200 27,448 4,358 31,290 Houston Industrial 1,661 6,560 2,019 6,202 Lindale (Tyler) Industrial 948 11,355 1,699 10,604 Mesquite (Dallas) Industrial 6,248 43,632 4,755 45,125 Spring (Houston) Industrial 1,890 17,439 3,432 15,897 Waco Industrial 1,350 11,201 2,363 10,188 Utah: Ogden (Salt Lake City) Industrial 1,287 11,380 389 12,278 80 Table of Contents Property Buildings & Accumulated Net Book SEPTEMBER 30, 2021 (cont’d) Type Land Improvements Depreciation Value Vermont: Burlington Industrial $ 7,729 $ 46,096 $ 197 $ 53,628 Virginia: Charlottesville Industrial 1,170 3,292 1,905 2,557 Mechanicsville (Richmond) Industrial 1,160 6,676 3,560 4,276 Richmond Industrial 446 4,651 1,937 3,160 Roanoke (CHEP USA) Industrial 1,853 5,619 2,286 5,186 Roanoke (FDX Ground) Industrial 1,740 8,460 1,799 8,401 Washington: Burlington (Seattle/Everett) Industrial 8,000 22,371 3,154 27,217 Wisconsin: Cudahy (Milwaukee) Industrial 980 8,835 4,075 5,740 Green Bay Industrial 590 5,990 1,227 5,353 Total as of September 30, 2021 $ 277,846 $ 2,025,844 $ 345,988 $ 1,957,702 Property Buildings & Accumulated Net Book SEPTEMBER 30, 2020 Type Land Improvements Depreciation Value Alabama: Huntsville Industrial $ 748 $ 5,914 $ 1,562 $ 5,100 Mobile Industrial 2,480 30,572 1,763 31,289 Arizona: Tolleson (Phoenix) Industrial 1,316 15,508 7,167 9,657 Colorado: Colorado Springs Industrial 2,150 27,170 3,027 26,293 Denver Industrial 1,150 5,224 1,973 4,401 Connecticut: Newington (Hartford) Industrial 410 3,097 1,553 1,954 Florida: Cocoa Industrial 1,881 12,246 3,403 10,724 Davenport (Orlando) Industrial 7,060 31,025 3,286 34,799 Daytona Beach Industrial 3,120 27,161 1,730 28,551 Ft. Myers Industrial 2,486 19,198 1,821 19,863 Homestead (Miami) Industrial 4,427 33,485 2,795 35,117 Jacksonville (FDX) Industrial 1,165 5,419 2,979 3,605 Jacksonville (FDX Ground) Industrial 6,000 24,926 3,633 27,293 Lakeland Industrial 261 1,782 676 1,367 Orlando Industrial 2,200 6,610 2,212 6,598 Punta Gorda Industrial 0 4,134 1,286 2,848 Tampa (FDX Ground) Industrial 5,000 14,745 5,680 14,065 Tampa (FDX) Industrial 2,830 5,071 1,824 6,077 Tampa (Tampa Bay Grand Prix) Industrial 1,867 3,811 1,347 4,331 Georgia: Augusta (FDX Ground) Industrial 614 4,749 1,756 3,607 Augusta (FDX) Industrial 380 1,604 558 1,426 Braselton (Atlanta) Industrial 13,965 46,262 2,471 57,756 Griffin (Atlanta) Industrial 760 14,322 5,338 9,744 Savannah (Shaw) Industrial 4,405 51,621 3,530 52,496 Savannah (FDX Ground) Industrial 3,441 24,091 1,133 26,399 Illinois: Burr Ridge (Chicago) Industrial 270 1,437 822 885 Elgin (Chicago) Industrial 1,280 5,902 2,791 4,391 Granite City (St. Louis, MO) Industrial 340 12,358 5,895 6,803 Montgomery (Chicago) Industrial 2,000 9,303 3,245 8,058 Rockford (Collins Aerospace Systems) Industrial 480 4,620 711 4,389 Rockford (Sherwin-Williams Co.) Industrial 1,100 4,451 1,091 4,460 Sauget (St. Louis, MO) Industrial 1,890 13,315 2,050 13,155 Schaumburg (Chicago) Industrial 1,040 4,407 2,534 2,913 81 Table of Contents Property Buildings & Accumulated Net Book SEPTEMBER 30, 2020 (cont’d) Type Land Improvements Depreciation Value Wheeling (Chicago) Industrial $ 5,112 $ 13,881 $ 5,210 $ 13,783 Indiana: Greenwood (Indianapolis) (ULTA) Industrial 2,250 35,515 4,906 32,859 Greenwood (Indianapolis) (Amazon) Industrial 4,839 74,525 1,911 77,453 Indianapolis (FDX Ground) Industrial 3,746 21,758 3,420 22,084 Lafayette Industrial 2,802 22,277 667 24,412 Iowa: Urbandale (Des Moines) Industrial 310 2,234 1,377 1,167 Kansas: Edwardsville (Kansas City) (Carlstar Group) Industrial 1,185 6,098 2,847 4,436 Edwardsville (Kansas City) (International Paper) Industrial 2,750 15,544 2,831 15,463 Olathe (Kansas City) Industrial 2,350 29,476 3,140 28,686 Topeka Industrial 0 3,680 1,085 2,595 Kentucky: Buckner (Louisville) Industrial 2,280 24,528 4,397 22,411 Frankfort (Lexington) Industrial 1,850 26,150 3,911 24,089 Louisvlle Industrial 1,590 9,714 1,079 10,225 Louisiana: Covington (New Orleans) Industrial 2,720 15,706 1,947 16,479 Maryland: Beltsville (Washington, DC) Industrial 3,200 11,312 4,748 9,764 Michigan: Walker (Grand Rapids) Industrial 4,034 27,621 2,479 29,176 Livonia (Detroit) Industrial 320 13,560 2,767 11,113 Orion Industrial 4,650 18,291 5,430 17,511 Romulus (Detroit) Industrial 531 4,418 2,329 2,620 Minnesota: Stewartville (Rochester) Industrial 900 4,324 777 4,447 Mississippi: Olive Branch (Memphis, TN) (Anda Pharmaceuticals, Inc.) Industrial 800 13,750 2,909 11,641 Olive Branch (Memphis, TN) (Milwaukee Tool) Industrial 2,550 34,365 5,813 31,102 Richland (Jackson) Industrial 211 1,690 1,129 772 Ridgeland (Jackson) Industrial 218 2,519 1,465 1,272 Missouri: Kansas City Industrial 1,000 9,003 1,408 8,595 Liberty (Kansas City) Industrial 724 7,075 3,904 3,895 O’Fallon (St. Louis) Industrial 264 3,986 2,614 1,636 St. Joseph Industrial 800 12,598 6,158 7,240 Nebraska: Omaha Industrial 1,170 4,794 2,609 3,355 New Jersey: Carlstadt (New York, NY) Industrial 1,194 4,103 1,229 4,068 Somerset Shopping Center 34 3,105 1,779 1,360 Trenton Industrial 8,336 75,652 3,880 80,108 New York: Cheektowaga (Buffalo) Industrial 4,797 6,164 2,170 8,791 Halfmoon (Albany) Industrial 1,190 4,537 945 4,782 Hamburg (Buffalo) Industrial 1,700 33,432 3,436 31,696 North Carolina: Concord I (Charlotte) Industrial 4,305 28,749 4,002 29,052 Concord II (Charlotte) Industrial 4,307 35,736 2,902 37,141 Fayetteville Industrial 172 5,283 3,397 2,058 Whitsett (Greensboro) Industrial 2,735 43,976 376 46,335 Winston-Salem Industrial 980 6,284 3,057 4,207 82 Table of Contents Property Buildings & Accumulated Net Book SEPTEMBER 30, 2020 (cont’d) Type Land Improvements Depreciation Value Ohio: Bedford Heights (Cleveland) Industrial $ 990 $ 6,314 $ 2,310 $ 4,994 Cincinnati Industrial 800 5,950 776 5,974 Lancaster (Columbus) Industrial 959 16,599 213 17,345 Kenton Industrial 855 17,876 1,449 17,282 Lebanon (Cincinnati) Industrial 240 4,315 933 3,622 Monroe (Cincinnati) Industrial 1,800 19,777 1,945 19,632 Richfield (Cleveland) Industrial 2,677 13,770 3,800 12,647 Stow Industrial 1,430 17,504 1,346 17,588 Streetsboro (Cleveland) Industrial 1,760 17,840 3,888 15,712 West Chester Twp. (Cincinnati) Industrial 695 5,039 2,663 3,071 Oklahoma: Oklahoma City (FDX Ground) Industrial 1,410 11,215 2,185 10,440 Oklahoma City (Bunzl) Industrial 845 7,883 657 8,071 Oklahoma City (Amazon) Industrial 1,618 28,260 2,052 27,826 Oklahoma City (Amazon II) Industrial 1,378 13,584 14 14,948 Tulsa Industrial 790 2,958 553 3,195 Pennsylvania: Altoona Industrial 1,200 7,823 1,392 7,631 Imperial (Pittsburgh) Industrial 3,700 16,264 1,912 18,052 Monaca (Pittsburgh) Industrial 402 7,551 3,481 4,472 South Carolina: Aiken (Augusta, GA) Industrial 1,362 19,678 1,639 19,401 Charleston (FDX) Industrial 4,639 16,880 1,265 20,254 Charleston (FDX Ground) Industrial 7,103 39,473 2,193 44,383 Ft. Mill (Charlotte, NC) Industrial 1,747 15,317 3,434 13,630 Hanahan (Charleston) (SAIC) Industrial 1,129 13,334 5,256 9,207 Hanahan (Charleston) (Amazon) Industrial 930 8,373 2,513 6,790 Tennessee: Chattanooga Industrial 300 5,069 1,678 3,691 Lebanon (Nashville) Industrial 2,230 11,985 2,766 11,449 Memphis Industrial 1,235 14,858 3,787 12,306 Shelby County Vacant Land 11 0 0 11 Texas: Carrollton (Dallas) Industrial 1,500 16,995 4,442 14,053 Corpus Christi Industrial 0 4,808 1,049 3,759 Edinburg Industrial 1,000 11,039 2,040 9,999 El Paso Industrial 3,225 9,206 2,512 9,919 Ft. Worth (Dallas) Industrial 8,200 27,419 3,627 31,992 Houston Industrial 1,661 6,530 1,825 6,366 Lindale (Tyler) Industrial 540 9,426 1,456 8,510 Mesquite (Dallas) Industrial 6,248 43,632 3,636 46,244 Spring (Houston) Industrial 1,890 17,439 2,979 16,350 Waco Industrial 1,350 11,201 2,075 10,476 Utah: Ogden (Salt Lake City) Industrial 1,287 11,380 97 12,570 Virginia: Charlottesville Industrial 1,170 3,292 1,801 2,661 Mechanicsville (Richmond) Industrial 1,160 6,667 3,375 4,452 Richmond Industrial 446 4,644 1,794 3,296 Roanoke (CHEP USA) Industrial 1,853 5,610 2,092 5,371 Roanoke (FDX Ground) Industrial 1,740 8,460 1,582 8,618 Washington: Burlington (Seattle/Everett) Industrial 8,000 22,371 2,572 27,799 Wisconsin: Cudahy (Milwaukee) Industrial 980 8,827 3,812 5,995 Green Bay Industrial 590 5,979 1,072 5,497 Total as of September 30, 2020 $ 250,497 $ 1,793,367 $ 296,020 $ 1,747,844 83 Table of Contents NOTE 3 – ACQUISITIONS, EXPANSIONS AND DISPOSITIONS Fiscal 2021 Acquisitions On December 17, 2020, we purchased a newly constructed 500,000 square foot industrial building, situated on 100.0 acres, located in the Columbus, OH MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through September 2035. The purchase price was $73.3 million. We obtained a 15 year, fully-amortizing mortgage loan of $47.0 million at a fixed interest rate of 2.95%. Annual rental revenue over the remaining term of the lease averages $4.6 million. On December 24, 2020, we purchased a newly constructed 658,000 square foot industrial building, situated on 130.2 acres, located in the Atlanta, GA MSA. The building is 100% net-leased to Home Depot U.S.A., Inc. for 20 years through November 2040. The purchase price was $95.9 million. We obtained a 17 year, fully-amortizing mortgage loan of $57.0 million at a fixed interest rate of 3.25%. Annual rental revenue over the remaining term of the lease averages $5.5 million. On July 29, 2021, we purchased a newly constructed 144,000 square foot industrial building, situated on 43.4 acres, located in the Burlington, VT MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through May 2036. The property was acquired for a purchase price of $54.8 million. Annual rental revenue over the remaining term of the lease averages $3.2 million. Subsequent to the closing of the purchase, we obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $35.5 million at a fixed interest rate of 2.50%. On August 25, 2021, we purchased a newly constructed 259,000 square foot industrial building, situated on 42.6 acres, located in the Knoxville, TN MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through May 2036. The property was acquired for a purchase price of $34.4 million. Annual rental revenue over the remaining term of the lease averages $2.0 million. Subsequent to the closing of the purchase, we obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $22.3 million at a fixed interest rate of 2.50%. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The property was acquired for a purchase price of $30.2 million. Annual rental revenue over the remaining term of the lease averages $1.7 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40%, which has not yet closed. We evaluated the property acquisitions which took place during the twelve months ended September 30, 2021, to determine whether an integrated set of assets and activities meets the definition of a business, pursuant to ASU 2017-01. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. Accordingly, we accounted for all four properties purchased during fiscal 2021 as asset acquisitions and allocated the total cash consideration, including transaction costs of $720,000, to the individual assets acquired on a relative fair value basis. There were no liabilities assumed in these acquisitions. The financial information set forth below summarizes our purchase price allocation for these four properties acquired during the fiscal year 2021 that were accounted for as asset acquisitions (in thousands): Land $ 26,868 Building 225,824 In-Place Leases 6,466 84 Table of Contents The following table summarizes the operating results included in our consolidated statements of income for the fiscal year ended September 30, 2021 for the four properties acquired during the twelve months ended September 30, 2021 (in thousands): Year Ended 9/30/2021 Rental Revenues $ 8,590 Net Income (Loss) Attributable to Common Shareholders 3,089 FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, and Home Depot U.S.A., Inc’s ultimate parent, Home Depot, Inc., are publicly-listed companies and financial information related to these entities are available at the SEC’s website, www.sec.gov. The references in this report to the SEC’s website are not intended to and do not include, or incorporate by reference into this report, the information on the www.sec.gov website. Fiscal 2021 Expansions During fiscal 2021, we completed the first phase of a two-phase parking expansion project for FedEx Ground Package System, Inc. at our property located in Olathe (Kansas City), KS. The first phase of this parking expansion project was completed for a total cost of $3.4 million, resulting in an initial increase in annual rent effective November 5, 2020 of approximately $340,000 from approximately $2.1 million, or $6.83 per square foot, to approximately $2.5 million, or $7.91 per square foot. Furthermore, annual rent increased by 2.1% on June 1, 2021 and will continue to increase 2.1% every five years, resulting in an annualized rent from November 5, 2021 through the remaining term of the lease of approximately $2.6 million, or $8.15 per square foot. We recently began construction on the second phase of this parking expansion project at this location, which upon completion will further increase the rental rate and extend the lease term. In addition, effective June 4, 2021, we completed a parking lot expansion for UPS at our property located in Halfmoon (Albany), NY for a cost of approximately $835,000, resulting in an initial increase in annual rent effective on the date of completion of approximately $52,000 from approximately $510,000, or $6.80 per square foot, to approximately $562,000, or $7.50 per square foot. Furthermore, annual rent will continue to increase each year by 2.0% resulting in an annualized rent from June 4, 2021 through the remaining term of the lease of approximately $622,000, or $8.29 per square foot. We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are nine parking expansion projects underway, which we expect to cost approximately $42.6 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at eight additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently. Due to the proliferation of ecommerce sales and last mile deliveries, it is important to take into account the large amounts of real estate utilized for trailer, van, and car parking at many of our properties in determining how our in-place rental rates compare to market rental rates for properties being used in a similar manner. Rents per square foot on properties that may be nearby, but have only limited acreage devoted to parking, are poor comparisons as they cannot accommodate the same tenant needs. Fiscal 2021 Disposition On April 15, 2021, we sold our 60,400 square foot building located in Carlstadt, NJ which is in the New York, NY MSA, for gross proceeds of $13.0 million. Prior to the sale, we owned a 51% interest in this property. Our 51% portion of the sale proceeds resulted in a U.S. GAAP net realized gain applicable to common shareholders of approximately $3.3 million, representing a 159% gain over the depreciated U.S. GAAP basis and a net realized gain over our historic undepreciated cost basis of approximately $2.6 million, representing a 96% net gain over our historic undepreciated cost basis. 85 Table of Contents Fiscal 2020 Acquisitions On October 10, 2019, we purchased a newly constructed 616,000 square foot industrial building, situated on 78.6 acres, located in the Indianapolis, IN Metropolitan Statistical Area (MSA). The building is 100% net-leased to a subsidiary of Amazon.com Services, Inc. (Amazon) for 15 years through August 2034. The lease is guaranteed by Amazon. The purchase price was $81.5 million. We obtained an 18 year, fully-amortizing mortgage loan of $52.5 million at a fixed interest rate of 4.27%. Annual rental revenue over the remaining term of the lease averages $5.0 million. On March 30, 2020, we purchased a newly constructed 153,000 square foot industrial building, situated on 24.2 acres, located in the Columbus, OH MSA. The building is 100% net-leased to Magna Seating of America, Inc. for 10 years through January 2030. The purchase price was $17.9 million. We obtained a 10 year, fully-amortizing mortgage loan of $9.4 million at a fixed interest rate of 3.47%. Annual rental revenue over the remaining term of the lease averages $1.2 million. On May 21, 2020, we purchased a newly constructed 286,000 square foot industrial building, situated on 39.3 acres, located in the Greensboro, NC MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through April 2035. The purchase price was $47.6 million. We obtained a 15 year, fully-amortizing mortgage loan of $30.3 million at a fixed interest rate of 3.10%. Annual rental revenue over the remaining term of the lease averages $3.0 million. On May 21, 2020, we purchased a newly constructed 70,000 square foot industrial building, situated on 7.5 acres, located in the Salt Lake City, UT MSA. The building is 100% net-leased to FedEx Corporation for 15 years through March 2035. The purchase price was $12.9 million. We obtained a 15 year, fully- amortizing mortgage loan of $8.4 million at a fixed interest rate of 3.18%. Annual rental revenue over the remaining term of the lease averages $772,000. On September 15, 2020, we purchased a newly constructed 121,000 square foot industrial building, situated on 21.5 acres, located in Oklahoma City, OK. The building is 100% net-leased to a subsidiary of Amazon for 10 years through August 2030. The lease is guaranteed by Amazon. The purchase price was $15.2 million. We obtained a 15 year, fully-amortizing mortgage loan of $9.8 million at a fixed interest rate of 3.00%. Annual rental revenue over the remaining term of the lease averages $934,000. We evaluated the property acquisitions which took place during the twelve months ended September 30, 2020, to determine whether an integrated set of assets and activities meets the definition of a business, pursuant to ASU 2017-01. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. Accordingly, we accounted for all five properties purchased during fiscal 2020 as asset acquisitions and allocated the total cash consideration, including transaction costs of $179,000, to the individual assets acquired on a relative fair value basis. There were no liabilities assumed in these acquisitions. The financial information set forth below summarizes our purchase price allocation for these five properties acquired during the fiscal year 2020 that were accounted for as asset acquisitions (in thousands): Land $ 11,198 Building 160,064 In-Place Leases 3,999 The following table summarizes the operating results included in our consolidated statements of income for the fiscal year ended September 30, 2020 for the five properties acquired during the twelve months ended September 30, 2020 (in thousands): Year Ended 9/30/2020 Rental Revenues $ 6,846 Net Income (Loss) Attributable to Common Shareholders 1,624 86 Table of Contents FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation, Magna Seating of America, Inc.’s ultimate parent, Magna International Inc. and Amazon are publicly-listed companies that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). The references in this report to the S&P Global Ratings’ website and the Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of S&P Global Ratings or Moody’s on such websites. Consolidated Statements of Income for the three fiscal years ended September 30, 2021, 2020 and 2019 of properties sold during the periods presented On April 15, 2021, we sold our 60,400 square foot building located in Carlstadt, NJ which is in the New York, NY MSA, for gross proceeds of $13.0 million. Prior to the sale, we owned a 51% interest in this property. Our 51% portion of the sale proceeds resulted in a U.S. GAAP net realized gain of approximately $3.3 million, representing a 159% gain over the depreciated U.S. GAAP basis and a net realized gain over our historic undepreciated cost basis of approximately $2.6 million, representing a 96% net gain over our historic undepreciated cost basis. Prior to the sale, the 49% Non-controlling interest (“NCI”) did not have a material impact on our financial position or results of operations and accordingly was not separately presented in the financial statements. However, upon the sale of the property on April 15, 2021, we presented the effects of the NCI in the Consolidated Statements of Income (Loss) for all periods presented. Since the sale of this property does not represent a strategic shift that has a major effect on our operations and financial results, the results of operations generated from this property are not included in Discontinued Operations. There were no properties sold during fiscal 2019 or 2020. The following table summarizes (in thousands) the operations of this property, prior to its sale, that is included in the accompanying Consolidated Statements of Income (Loss) for the three fiscal years ended September 30, 2021, 2020 and 2019: 2021 2020 2019 Rental and Reimbursement Revenue $ 467 $ 702 $ 684 Real Estate Taxes (62) (113) (116) Operating Expenses (218) (428) (50) Depreciation & Amortization (244) (149) (123) Interest Expense (205) (75) (84) Income from Operations (262) (63) 311 Gain on Sale of Real Estate Investment 6,376 0 0 Net Income 6,114 (63) 311 Less: Net Income (Loss) Attributable to Non-Controlling Interest 2,996 (31) 152 Net Income (Loss) Attributable to Shareholders $ 3,118 $ (32) $ 159 Pro forma information (unaudited) The following unaudited pro-forma condensed financial information has been prepared utilizing our historical financial statements, the effect of the reduction of revenue and expenses that will no longer be generated from a property that was sold on April 15, 2021 and the effect of additional revenue and expenses generated from properties acquired and expanded during fiscal 2021 and fiscal 2020, assuming that the property acquisitions, completed expansions and the sale of one property had occurred as of October 1, 2019, after giving effect to certain adjustments including: (a) Rental Revenue adjustments resulting from the straight-lining of scheduled rent increases, (b) Interest Expense resulting from the assumed increase in Fixed Rate Mortgage Notes Payable and Loans Payable related to the new acquisitions, and (c) Depreciation Expense related to the new acquisitions and expansions. Furthermore, the net proceeds raised from our Dividend Reinvestment and Stock Purchase Plan (the DRIP) were used to fund property acquisitions and expansions and therefore, the weighted average shares outstanding used in calculating the pro-forma Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders has been adjusted to account for the increase in shares issued pursuant to the DRIP, as if all such shares have been issued on October 1, 2019. Additionally, the net proceeds raised from the issuance of additional shares of our 6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (6.125% Series C Preferred Stock), through our At-The-Market Sales Agreement Program were used to help fund property acquisitions and, therefore, the pro-forma preferred dividend has been adjusted to account for its effect on pro-forma Net Income (Loss) Attributable to Common Shareholders as if all the preferred stock issuances had occurred on October 1, 2019. The unaudited pro-forma condensed financial information is not indicative of the results of operations that would have been achieved had the acquisitions and expansions reflected herein been consummated on the dates indicated or that will be achieved in the future. 87 Table of Contents Fiscal Year Ended (in thousands, except per share amounts) 2021 2020 As Reported Pro-forma As Reported Pro-forma Rental Revenue $ 155,044 $ 163,097 $ 141,583 $ 162,463 Net Income (Loss) Attributable to Common Shareholders $ 44,764 $ 43,020 $ (48,617) $ (50,443) Basic Net Income (Loss) per Share Attributable to Common Shareholders $ 0.46 $ 0.44 $ (0.50) $ (0.51) Diluted Net Income (Loss) per Share Attributable to Common Shareholders $ 0.45 $ 0.44 $ (0.50) $ (0.51) NOTE 4 – INTANGIBLE ASSETS Net intangible assets consist of the estimated value of the acquired in-place leases and the acquired above market rent leases at acquisition for the following properties and are amortized over the remaining term of the lease. Intangible Assets, net of Accumulated Amortization is made up of the following balances as of September 30, 2021 and 2020 (in thousands): As of 9/30/21 As of 9/30/20 Topeka, KS $ 0 $ 34 Lebanon (Nashville), TN 57 78 Rockford, IL (Sherwin-Williams Co.) 45 65 Edinburg, TX 0 52 Corpus Christi, TX 0 21 Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals) 153 336 Livonia (Detroit), MI 34 103 Stewartville (Rochester), MN 8 13 Buckner (Louisville), KY 264 286 Edwardsville (Kansas City), KS (International Paper) 143 218 Lindale (Tyler), TX 96 131 Sauget (St. Louis, MO), IL 16 18 Rockford, IL (Collins Aerospace Systems) 45 53 Kansas City, MO 0 5 Monroe, OH (Cincinnati) 269 301 Cincinnati, OH 28 32 Imperial (Pittsburgh), PA 36 45 Burlington (Seattle/Everett), WA 281 312 Colorado Springs, CO 165 202 Hamburg (Buffalo), NY 164 181 Ft. Myers, FL 122 143 Walker (Grand Rapids), MI 348 382 Aiken (Augusta, GA), SC 665 728 Mesquite (Dallas), TX 574 628 Homestead (Miami), FL 399 437 Oklahoma City, OK (Bunzl) 118 159 Concord (Charlotte), NC 454 496 88 Table of Contents As of 9/30/21 As of 9/30/20 Kenton, OH $ 291 $ 340 Stow, OH 346 404 Charleston, SC (FDX) 296 324 Oklahoma City, OK (Amazon) 448 522 Savannah, GA (Shaw) 935 1,091 Daytona Beach, FL 524 604 Mobile, AL 717 817 Charleston, SC (FDX Ground) 532 577 Braselton (Atlanta), GA 792 861 Trenton, NJ 1,192 1,303 Savannah, GA (FDX Ground) 261 298 Lafayette, IN 375 424 Greenwood (Indianapolis), IN (Amazon) 1,861 2,005 Lancaster (Columbus), OH 299 335 Whitsett (Greensboro), NC 897 963 Ogden (Salt Lake City), UT 215 232 Oklahoma City, OK (Amazon II) 246 273 Plain City (Columbus), OH 1,527 0 Locust Grove (Atlanta), GA 3,108 0 Burlington, VT 1,048 0 Kodak (Knoxville), TN 565 0 Total Intangible Assets, net of Accumulated Amortization $ 20,959 $ 16,832 Amortization expense related to the intangible assets attributable to acquired in-place leases was $2.2 million, $2.0 million and $1.9 million for the years ended September 30, 2021, 2020 and 2019, respectively. We estimate that the aggregate amortization expense for these existing intangible assets will be $2.3 million, $2.1 million, $2.0 million, $1.9 million, and $1.9 million for each of the fiscal years 2022, 2023, 2024, 2025 and 2026, respectively. The amount that is being amortized into rental revenue related to the intangible assets attributable to acquired above market leases was $103,000 for the years ended September 30, 2021, 2020 and 2019. We estimate that the aggregate amount that will be amortized into rental revenue for existing intangible assets will be $34,000 for fiscal year 2022. NOTE 5 – SIGNIFICANT CONCENTRATIONS OF CREDIT RISK As of September 30, 2021, we had 24.9 million square feet of property, of which 11.6 million square feet, or 47%, consisting of 65 separate stand-alone leases, were leased to FedEx Corporation (FDX) and its subsidiaries (5% to FDX and 42% to FDX subsidiaries). These properties are located in 27 different states. As of September 30, 2021, the 65 separate stand-alone leases that are leased to FDX and FDX subsidiaries had a weighted average lease maturity of 7.5 years. As of September 30, 2021, in addition to FDX and its subsidiaries, the only tenants that leased 5% or more of our total square footage were subsidiaries of Amazon, which are parties to five separate stand-alone leases for properties located in four different states, containing 1.5 million total square feet, comprising 6% of our total leasable square feet. None of our properties are subject to a master lease or any cross-collateralization agreements. The tenants that leased more than 5% of total rentable square footage as of September 30, 2021, 2020, and 2019 were as follows: 2021 2020 2019 FDX and Subsidiaries 47% 46% 47% Subsidiaries of Amazon 6% 6% <5% During fiscal 2021, the only tenants that accounted for 5% or more of our rental and reimbursement revenue were FDX (including its subsidiaries) and subsidiaries of Amazon. Our rental and reimbursement revenue from FDX and its subsidiaries for the fiscal years ended September 30, 2021, 2020 and 2019, respectively, totaled $104.3 million, $96.4 million and $93.3 million, or calculated as a percentage of total rent and reimbursement revenues were, 57% (5% from FDX and 52% from FDX subsidiaries), 58% (5% from FDX and 53% from FDX subsidiaries) and 60% (5% from FDX and 55% from FDX subsidiaries). Subsidiaries of Amazon represented 6% of our Rental and Reimbursement Revenue for the fiscal year ended September 30, 2021 and 2020. Rental and Reimbursement Revenue from subsidiaries of Amazon for the fiscal year ended September 30, 2019 was less than 5% of our Rental and Reimbursement Revenue. No other tenant accounted for 5% or more of our total Rental and Reimbursement revenue for the fiscal years ended September 30, 2021, 2020 and 2019. 89 Table of Contents FDX and Amazon are rated “BBB” and “AA”, respectively by S&P Global Ratings (www.standardandpoors.com) and are rated “Baa2” and “A1”, respectively by Moody’s (www.moodys.com), which are both considered “Investment Grade” ratings. The references in this report to the SEC’s website, S&P Global Ratings’ website and Moody’s website are not intended to and do not include, or incorporate by reference into this report, the information of FDX, Amazon, S&P Global Ratings or Moody’s on such websites. NOTE 6 – SECURITIES AVAILABLE FOR SALE Our Securities Available for Sale at Fair Value consists primarily of marketable common and preferred stock of other REITs with a fair value of $143.5 million as of September 30, 2021. We intend to limit the size of this portfolio to no more than approximately 5% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. We continue to believe that our REIT securities portfolio provides us with diversification, income, a source of potential liquidity when needed and also serves as a proxy for real estate when more favorable risk adjusted returns are not available in the private real estate markets. Our decision to reduce this threshold mainly stems from the implementation of accounting rule ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which took effect at the beginning of fiscal 2019. This new rule requires that quarterly changes in the market value of our marketable securities flow through our Consolidated Statements of Income (Loss). The implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Total assets excluding accumulated depreciation were $2.6 billion as of September 30, 2021. Our $143.5 million investment in marketable REIT securities as of September 30, 2021 represented 5.6% of our undepreciated assets. During the fiscal year ended September 30, 2021, our preferred stock investment in UMH’s 8.00% Series B Cumulative Redeemable Preferred Stock was redeemed and called for redemption at its liquidation value, which was equal to our cost basis. In addition, during the fiscal year ended September 30, 2021, we also sold marketable REIT securities for gross proceeds totaling $16.3 million with an original cost basis of $14.1 million, resulting in a realized gain of $2.2 million. During the fiscal year ended September 30, 2020, one of our preferred stock investments was called for redemption at its liquidation value, which was equal to our cost basis. Other than these two Preferred Stock redemptions and the sales of securities that took place during fiscal 2021, there have been no open market purchases or sales of securities during the fiscal years ended September 30, 2021, 2020 and 2019. We recorded the following realized Gain on Sale of Securities Transactions for the fiscal years ended September 30 (in thousands): 2021 2020 2019 Gross realized gains $ 2,248 $ 0 $ 0 Gross realized losses 0 0 0 Gains on Sale of Securities Transactions, net $ 2,248 $ 0 $ 0 We recognized dividend income from our portfolio of REIT investments for the fiscal years ended September 30, 2021, 2020 and 2019 of $6.2 million, $10.4 million and $15.2 million, respectively. As of September 30, 2021, we had total net unrealized holding losses on our securities portfolio of $76.6 million. As a result of the adoption of ASU 2016-01, On October 1, 2018, we recorded a $(24.7) million adjustment to beginning Undistributed Income (Loss). In addition, $50.2 million, $(77.4) million and $(24.7) million of the net unrealized holding gains (losses) have been reflected as Unrealized Holding Gains (Losses) Arising During the Periods in the accompanying Consolidated Statements of Income (Loss) for the fiscal years ended 2021, 2020 and 2019, respectively. The components of the Unrealized Holding Gains (Losses) Arising During the Periods included in the accompanying Consolidated Statements of Income (Loss) for the fiscal years ended September 30 (in thousands) are as follows: 2021 2020 2019 Unrealized Holding Gains (Losses) $ 52,487 $ (77,380) $ (24,680) Reclassification Adjustment for Net (Gains) Realized in Income (2,248) 0 0 Unrealized Holding Gains (Losses) Arising During the Period $ 50,239 $ (77,380) $ (24,680) 90 Table of Contents We normally hold REIT securities long-term and have the ability and intent to hold these securities to recovery. We have determined that none of our security holdings are other than temporarily impaired and therefore all unrealized gains and losses from these securities have been recognized as Unrealized Holding Gains (Losses) Arising During the Periods in our Consolidated Statements of Income (Loss). If we were to determine any of our securities to be other than temporarily impaired, we would present these unrealized holding losses as an impairment charge in our Consolidated Statements of Income (Loss). The following is a listing of our investments in securities at September 30, 2021 (in thousands): Description Series Interest Rate/ Dividend Number of Shares Cost Fair Value Equity Securities - Preferred Stock: CBL & Associates Properties, Inc. D 7.375% 400 $ 7,967 $ 640 Cedar Realty Trust, Inc. B 7.25% 6 136 148 iStar Inc. D 8.00% 10 232 262 iStar Inc. I 7.50% 60 1,301 1,533 Pennsylvania Real Estate Investment Trust D 6.875% 120 2,150 1,524 Pennsylvania Real Estate Investment Trust B 7.375% 120 2,216 1,643 Total Equity Securities - Preferred Stock $ 14,002 $ 5,750 Description Number of Shares Cost Fair Value Equity Securities - Common Stock: CBL & Associates Properties, Inc. 4,000 $ 33,525 $ 736 Diversified Healthcare Trust 1,100 17,871 3,729 Franklin Street Properties Corp. 1,000 8,478 4,640 Kimco Realty Corporation 1,700 27,937 35,275 Office Properties Income Trust 659 37,892 16,692 Pennsylvania Real Estate Investment Trust 1,800 13,443 3,492 Tanger Factory Outlet Centers, Inc. 600 12,300 9,780 VEREIT, Inc. 700 27,891 31,661 Washington Prime Group Inc. 167 11,860 135 UMH Properties, Inc. (1) 1,381 14,870 31,614 Total Equity Securities - Common Stock $ 206,067 $ 137,754 Description Interest Rate/ Dividend Number of Shares Cost Fair Value Modified Pass-Through Mortgage-Backed Securities: Government National Mortgage Association (GNMA) 6.50% 500 $ 1 $ 1 Total Securities Available for Sale $ 220,070 $ 143,505 (1) Investment is in a related company. See Note No. 11 for further discussion. 91 Table of Contents The following is a listing of our investments in securities at September 30, 2020 (in thousands): Description Series Interest Rate/ Dividend Number of Shares Cost Fair Value Equity Securities - Preferred Stock: CBL & Associates Properties, Inc. D 7.375% 400 $ 7,967 $ 304 Cedar Realty Trust, Inc. B 7.25% 6 136 109 iStar Inc. D 8.00% 10 232 253 iStar Inc. I 7.50% 60 1,301 1,452 Pennsylvania Real Estate Investment Trust D 6.875% 120 2,150 610 Pennsylvania Real Estate Investment Trust B 7.375% 120 2,216 606 UMH Properties, Inc. (1) (2) B 8.00% 100 2,500 2,526 Total Equity Securities - Preferred Stock $ 16,502 $ 5,860 Description Number of Shares Cost Fair Value Equity Securities - Common Stock: CBL & Associates Properties, Inc. 4,000 $ 33,525 $ 644 Diversified Healthcare Trust 1,100 17,871 3,872 Five Star Senior Living Inc. 75 290 378 Franklin Street Properties Corp. 1,000 8,478 3,660 Industrial Logistics Property Trust 700 13,789 15,309 Kimco Realty Corporation 1,700 27,937 19,142 Office Properties Income Trust 659 37,892 13,655 Pennsylvania Real Estate Investment Trust 1,800 13,443 997 Tanger Factory Outlet Centers, Inc. 600 12,300 3,618 VEREIT, Inc. 3,500 27,891 22,750 Washington Prime Group Inc. 1,500 11,860 971 UMH Properties, Inc. (1) 1,328 13,858 17,975 Total Equity Securities - Common Stock $ 219,134 $ 102,971 Description Interest Rate/ Dividend Number of Shares Cost Fair Value Modified Pass-Through Mortgage-Backed Securities: Government National Mortgage Association (GNMA) 6.50% 500 $ 1 $ 1 Total Securities Available for Sale $ 235,637 $ 108,832 (1) Investment is in a related company. See Note No. 11 for further discussion. (2) Subsequent to fiscal yearend 2020, UMH redeemed all their 8.00% Series B Cumulative Redeemable Preferred Stock at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends. 92 Table of Contents NOTE 7- MORTGAGE NOTES AND LOANS PAYABLE Mortgage Notes Payable: As of September 30, 2021, we owned 122 properties, of which 60 carried Fixed Rate Mortgage Notes Payable with outstanding principal balances totaling $839.6 million. Interest is payable on these mortgages at fixed rates ranging from 2.95% to 6.75%, with a weighted average interest rate of 3.86%. This compares to a weighted average interest rate of 3.98% as of September 30, 2020. As of September 30, 2021, the weighted average loan maturity of the Mortgage Notes Payable was 10.9 years. This compares to a weighted average loan maturity of the Mortgage Notes Payable of 11.1 years as of September 30, 2020. As described in Note 3, during fiscal year ended September 30, 2021, we entered into two mortgages in connection with two of the four acquisitions we acquired during the 2021 fiscal year. These two mortgages consisted of one 15 year fully-amortizing mortgage loan and one 17 year fully-amortizing mortgage loan. These two mortgage loans originally totaled $104.0 million, with an original weighted average mortgage loan maturity of 16.1 years with interest rates ranging from 2.95% to 3.25% resulting in a weighted average interest rate of 3.11%. In connection with the remaining two properties acquired during the 2021 fiscal year, we entered into commitments for two, 15 year, fully-amortizing mortgage loans. These four fully-amortizing loans have a weighted average term of 15.7 years. The principal amount of the four mortgage loans originally totaled $161.8 million with fixed interest rates ranging from 2.50% to 3.25%, resulting in a weighted average fixed interest rate of 2.89%. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The property was acquired for a purchase price of $30.2 million. Annual rental revenue over the remaining term of the lease averages $1.7 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40%, which has not yet closed. During the fiscal year ended September 30, 2021, we fully prepaid four self-amortizing mortgage loans for our properties located in Carlstadt, NJ, Houston, TX, Kansas City, KS and Topeka, KS. These loans were at a weighted average interest rate of 5.35%. Subsequent to fiscal yearend, on November 1, 2021, we fully prepaid a $7.3 million mortgage loan for our property located in Streetsboro (Cleveland), OH. The loan had an interest rate of 5.5%. During the fiscal year ended September 30, 2020, we fully repaid two self-amortizing mortgage loans for our properties located in Augusta, GA and Huntsville, AL. These loans were at a weighted average interest rate of 5.52%. The following is a summary of our Fixed Rate Mortgage Notes Payable as of September 30, 2021 and 2020 (in thousands): 9/30/21 9/30/20 Amount Weighted Average Interest Rate (1) Amount Weighted Average Interest Rate (1) Fixed Rate Mortgage Notes Payable $ 839,622 3.86% $ 807,371 3.98% Debt Issuance Costs $ 12,643 $ 12,377 Accumulated Amortization of Debt Issuance Costs (5,205) (4,513) Unamortized Debt Issuance Costs $ 7,438 $ 7,864 Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs $ 832,184 $ 799,507 (1) Weighted average interest rate excludes amortization of debt issuance costs. 93 Table of Contents The following is a summary of our mortgage notes payable by property at September 30, 2021 and 2020 (in thousands): Property Fixed Rate Maturity Date Balance 9/30/21 Balance 9/30/20 Topeka, KS (1) 6.50% 08/10/21 $ 0 $ 288 Streetsboro, OH (Cleveland) (2) 5.50% 11/01/21 7,332 8,025 Kansas City, MO (1) 5.18% 12/01/21 0 6,273 Olive Branch, MS (Memphis, TN)(Anda Pharmaceuticals, Inc.) 4.80% 04/01/22 5,558 6,259 Waco, TX 4.75% 08/01/22 3,280 3,613 Houston, TX (1) 6.88% 09/10/22 0 1,102 Tolleson, AZ (Phoenix) 3.95% 11/01/22 1,103 2,010 Edwardsville, KS (Kansas City)(International Paper) 3.45% 11/01/23 6,804 7,627 Spring, TX (Houston) 4.01% 12/01/23 5,931 6,623 Memphis, TN 4.50% 01/01/24 2,364 3,304 Oklahoma City, OK (FDX Ground) 4.35% 07/01/24 1,767 2,341 Indianapolis, IN 4.00% 09/01/24 7,366 8,431 Frankfort, KY (Lexington) 4.84% 12/15/24 13,483 14,611 Carrollton, TX (Dallas) 6.75% 02/01/25 3,781 4,733 Altoona, PA (3) 4.00% 10/01/25 1,987 2,426 Green Bay, WI (3) 4.00% 10/01/25 1,613 1,971 Stewartville, MN (Rochester) (3) 4.00% 10/01/25 1,292 1,578 Carlstadt, NJ (New York, NY) (4) 5.25% 05/15/26 0 1,227 Roanoke, VA (FDX Ground) 3.84% 07/01/26 2,866 3,395 Livonia, MI (Detroit) 4.45% 12/01/26 4,267 4,973 Oklahoma City, OK (Amazon) 3.64% 12/01/27 16,501 17,369 Olive Branch, MS (Memphis, TN) (Milwaukee Tool) 3.76% 10/01/28 16,095 18,042 Tulsa, OK 4.58% 11/01/28 1,267 1,413 Oklahoma City, OK (Bunzl) 4.13% 07/01/29 4,243 4,692 Lindale, TX (Tyler) 4.57% 11/01/29 4,393 4,827 Sauget, IL (St. Louis, MO) 4.40% 11/01/29 6,659 7,322 Jacksonville, FL (FDX Ground) 3.93% 12/01/29 12,587 13,854 Lancaster (Columbus), OH 3.47% 01/01/30 8,311 9,091 Imperial, PA (Pittsburgh) 3.63% 04/01/30 8,734 9,586 Monroe, OH (Cincinnati) (5) 3.77% 04/01/30 5,567 6,107 Monroe, OH (Cincinnati) (5) 3.85% 04/01/30 5,886 6,453 Greenwood, IN (Indianapolis) (ULTA) 3.91% 06/01/30 15,855 17,346 Ft. Worth, TX (Dallas) 3.56% 09/01/30 16,364 17,879 Concord, NC (Charlotte) 3.87% 12/01/30 14,197 15,449 Covington, LA (New Orleans) 4.08% 01/01/31 8,917 9,686 Burlington, WA (Seattle/Everett) 3.67% 05/01/31 14,264 15,471 Louisville, KY 3.74% 07/01/31 5,267 5,702 Colorado Springs, CO 3.90% 07/01/31 13,469 14,571 Davenport, FL (Orlando) 3.89% 09/01/31 19,243 20,788 Olathe, KS (Kansas City) 3.96% 09/01/31 16,217 17,513 Hamburg, NY (Buffalo) 4.03% 11/01/31 17,411 18,770 Ft. Myers, FL 3.97% 01/01/32 10,873 11,707 Savannah, GA (Shaw) 3.53% 02/01/32 26,273 28,324 Walker, MI (Grand Rapids) 3.86% 05/01/32 16,027 17,219 Mesquite, TX (Dallas) 3.60% 07/01/32 25,461 27,350 Aiken, SC (Augusta, GA) 4.20% 07/01/32 12,003 12,861 Homestead, FL (Miami) 3.60% 07/01/32 19,193 20,616 Mobile, AL 4.14% 07/01/32 15,609 16,728 Concord, NC (Charlotte) 3.80% 09/01/32 20,587 22,067 Kenton, OH 4.45% 10/01/32 9,592 10,247 Stow, OH 4.17% 10/01/32 10,106 10,809 Charleston, SC (FDX) 4.23% 12/01/32 11,444 12,222 Daytona Beach, FL 4.25% 05/31/33 16,170 17,219 Charleston, SC (FDX Ground) 3.82% 09/01/33 25,171 26,794 94 Table of Contents Property Fixed Rate Maturity Date Balance 9/30/21 Balance 9/30/20 Braselton, GA (Atlanta) 4.02% 10/01/33 $ 33,730 $ 35,856 Buckner, KY (Louisville) 4.17% 11/01/33 12,993 13,796 Trenton, NJ 4.13% 11/01/33 47,039 49,955 Savannah, GA (FDX Ground) 4.40% 12/01/33 15,091 16,001 Lafayette, IN 4.25% 08/01/34 15,234 16,101 Whitsett (Greensboro), NC 3.10% 06/01/35 28,277 29,902 Ogden (Salt Lake City), UT 3.18% 06/01/35 7,805 8,251 Oklahoma City, OK (Amazon) 3.00% 10/01/35 9,272 9,750 Plain City (Columbus), OH 2.95% 01/01/36 45,322 0 Greenwood (Indianapolis), IN (Amazon II) 4.27% 11/01/37 48,802 50,855 Locust Grove (Atlanta), GA 3.25% 01/01/38 55,307 0 Total Mortgage Notes Payable $ 839,622 $ 807,371 (1) Loan was paid in full during fiscal 2021. (2) Loan was paid in full subsequent to fiscal yearend 2021 on November 1, 2021. (3) One self-amortizing loan is secured by Altoona, PA, Green Bay, WI and Stewartville (Rochester), MN. (4) This property was sold during fiscal 2021 and loan was paid in full at closing. (5) Two self-amortizing loans secured by same property. Principal on the foregoing debt at September 30, 2021 is scheduled to be paid as follows (in thousands): Year Ending September 30, 2022 $ 81,537 2023 67,234 2024 80,674 2025 75,069 2026 66,263 Thereafter 468,845 $ 839,622 Loans Payable: BMO Capital Markets The $250.0 million Loans Payable represents our $75.0 million unsecured term loan (the “Term Loan”) and $175.0 drawn down under our unsecured line of credit facility (the “Revolver”). On November 15, 2019, we entered into a new line of credit facility (the “New Facility”) consisting of a $225.0 million Revolver and a new $75.0 million Term Loan, resulting in the total potential availability under both the Revolver and the Term Loan of $300.0 million, which is an additional $100.0 million over the former line of credit facility. In addition, the Revolver includes an accordion feature that will allow the total potential availability under the New Facility to further increase to $400.0 million, under certain conditions. The $225.0 million Revolver matures in January 2024 with two options to extend for additional six-month periods. Availability under the New Facility is limited to 60% of the value of the borrowing base properties. The value of the borrowing base properties is determined by applying a capitalization rate to the NOI generated by our unencumbered, wholly-owned industrial properties. Under the New Facility the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the former line of credit facility to 6.25%, thus increasing the value of the borrowing base properties under the terms of the New Facility. In addition, the interest rate for borrowings under the Revolver was lowered by a range of 5 basis points to 35 basis points, depending on our leverage ratio, and will, at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending on our leverage ratio, or ii) bear interest at Bank of Montreal’s (BMO) prime lending rate plus 35 basis points to 105 basis points, depending on our leverage ratio. Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of 1.53%. As of the fiscal yearend and currently, we have $175.0 million drawn down under our Revolver, resulting in $50.0 million being currently available. Including the accordion feature, we have up to $150.0 million potentially available under the Revolver. As of September 30, 2021, Loans Payable represented $75.0 million outstanding under our Term Loan which matures January 2025 and $175.0 million outstanding under our Revolver which matures in January 2024. The interest rate for borrowings under the Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to 200 basis points, depending on our leverage ratio, or ii) bear interest at BMO’s prime lending rate plus 30 basis points to 100 basis points, depending on our leverage ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75.0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%. 95 Table of Contents Margin Loans From time to time we use a margin loan for purchasing securities, for temporary funding of acquisitions, and for working capital purposes. This loan is due on demand and is collateralized by our securities portfolio. We must maintain a coverage ratio of approximately 50%. The interest rate charged on the margin loan is the bank’s margin rate and is 0.75%. At September 30, 2021 and 2020, there were no amounts drawn down under the margin loan. For the three fiscal years ended September 30, 2021, 2020 and 2019, amortization of financing costs included in interest expense was $1.4 million, $1.4 million and $1.3 million, respectively. NOTE 8 - OTHER LIABILITIES Other liabilities consist of the following as of September 30, 2021 and 2020 (in thousands): 9/30/21 9/30/20 Rent paid in advance $ 11,760 $ 10,167 Unearned reimbursement revenue 7,218 6,208 Interest Rate Swap, Market Value 2,230 4,368 Tenant security deposits 597 1,326 Deferred Straight Line Rent 771 972 Legal & Other Liabilities 8,158 632 Total $ 30,734 $ 23,673 NOTE 9 - STOCK COMPENSATION PLAN At our Annual Meeting held on May 18, 2017, our common shareholders approved our Amended and Restated 2007 Incentive Award Plan (the Plan) which extended the term of our 2007 Incentive Award Plan for an additional 10 years, until March 13, 2027, added 1.6 million shares of common stock to the share reserve, expanded the types of awards available for grant under the Plan and made other improvements to the 2007 Plan. The Compensation Committee, in its capacity as Plan Administrator, shall determine, among other things: the recipients of awards; the type and number of awards participants will receive; the terms, conditions and forms of the awards; the times and conditions subject to which awards may be exercised or become vested, deliverable or exercisable, or as to which any restrictions may apply or lapse; and may amend or modify the terms and conditions of an award, except that repricing of options or Stock Appreciation Rights (SAR) is not permitted without shareholder approval. No participant may receive awards during any calendar year covering more than 200,000 shares of common stock or more than $1.5 million in cash. Regular annual awards granted to non-employee directors as compensation for services as non-employee directors during any fiscal year may not exceed $100,000 in value on the date of grant, and the grant date value of any special or one-time award upon election or appointment to the Board of Directors may not exceed $200,000. Awards granted pursuant to the Plan generally may not vest until the first anniversary of the date the award was granted, provided, however, that up to 5% of the Common Shares available under the Plan may be awarded to any one or more Eligible Individuals without the minimum vesting period. If an award made under the Plan is forfeited, expires or is converted into shares of another entity in connection with a recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares or other similar event, or the award is settled in cash, the shares associated with the forfeited, expired, converted or settled award will become available for additional awards under the Plan. 96 Table of Contents The term of any stock option or SAR generally may not be more than 10 years from the date of grant. The exercise price per common share under the Plan generally may not be below 100% of the fair market value of a common share at the date of grant. We account for our stock options and restricted stock in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). Stock Options During fiscal 2021, one employee was granted options to purchase 65,000 shares. During fiscal 2020, one employee was granted options to purchase 65,000 shares. During fiscal 2019, thirteen employees were granted options to purchase 450,000 shares. The fair value of these options that were issued during the fiscal years 2021, 2020 and 2019 was $97,000, $81,000, and $528,000. The value of these options was determined based on the assumptions below and is being amortized over a one-year vesting period. For the fiscal years ended September 30, 2021, 2020 and 2019, amounts charged to compensation expense related to stock options totaled $93,000, $154,000 and $464,000, respectively. The remaining unamortized stock option expense was $24,000 as of September 30, 2021 which will be expensed in fiscal 2022. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in fiscal 2021, 2020 and 2019: 2021 2020 2019 Dividend yield 4.37% 4.67% 5.03% Expected volatility 20.17% 18.40% 17.17% Risk-free interest rate 0.80% 1.76% 2.88% Expected lives (years) 8 8 8 Estimated forfeitures 0 0 0 A summary of the status of our stock option plan as of September 30, 2021, 2020 and 2019 is as follows (shares in thousands): 2021 2020 2019 2021 Shares Weighted Average Exercise Price 2020 Shares Weighted Average Exercise Price 2019 Shares Weighted Average Exercise Price Outstanding at beginning of year 950 $ 13.17 1,080 $ 12.95 695 $ 12.17 Granted 65 16.46 65 14.55 450 13.53 Exercised (189) 12.57 (95) 10.69 (65) 8.72 Expired/Forfeited 0 0 (100) 13.97 0 0 Outstanding at end of year 826 13.57 950 13.17 1,080 12.95 Exercisable at end of year 761 885 630 Weighted average fair value of options granted during the year $ 1.49 $ 1.24 $ 1.17 97 Date of Grant Number of Grants Number of Shares (in thousands) Option Price Expiration Date 01/03/14 1 65 $ 8.94 01/03/22 01/05/15 1 65 $ 11.16 01/05/23 01/05/16 1 65 $ 10.37 01/05/24 12/09/16 6 113 $ 14.24 12/09/24 01/04/17 1 65 $ 15.04 01/04/25 01/03/18 1 65 $ 17.80 01/03/26 12/10/18 8 193 $ 13.64 12/10/26 01/10/19 1 65 $ 12.86 01/10/27 01/13/20 1 65 $ 14.55 01/13/28 01/13/21 1 65 $ 16.46 01/13/29 826 Table of Contents The following is a summary of stock options outstanding as of September 30, 2021: The aggregate intrinsic value of options outstanding as of September 30, 2021, 2020 and 2019 was $4.2 million, $ 1.1 million and $ 1.8 million, respectively. The intrinsic value of options exercised in fiscal years 2021, 2020 and 2019 was $651,000, $381,000, and $267,000, respectively. The weighted average remaining contractual term of the above options was 4.0, 4.5 and 5.1 years as of September 30, 2021, 2020 and 2019, respectively. Unrestricted Stock Effective September 12, 2017, a portion of our quarterly directors’ fee was paid with our unrestricted common stock. During fiscal 2021, 3,000 unrestricted shares of common stock were granted with a weighted average fair value on the grant date of $17.52 per share. During fiscal 2020, 5,000 unrestricted shares of common stock were granted with a weighted average fair value on the grant date of $13.44 per share. During fiscal 2019, 5,000 unrestricted shares of common stock were granted with a weighted average fair value on the grant date of $13.58 per share. Restricted Stock During fiscal 2021 and 2020, there were no shares of restricted stock awarded under our Plan. During fiscal 2019, we awarded 25,000 shares of restricted stock to one participant under our Plan. The grant date fair value of restricted stock grants awarded to participants was $0, $0 and $386,000 in fiscal 2021, 2020 and 2019, respectively. These grants vest in equal installments over five years. As of September 30, 2021, there remained a total of $234,000 of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded under the Plan and outstanding at that date. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 1.8 years. For the fiscal years ended September 30, 2021, 2020 and 2019, amounts charged to compensation expense related to restricted stock grants totaled $147,000, $235,000 and $258,000, respectively. 98 Table of Contents A summary of the status of our non-vested restricted stock awards as of September 30, 2021, 2020 and 2019 are presented below (shares in thousands): 2021 2020 2019 2021 Shares Weighted Average Grant Date Fair Value 2020 Shares Weighted Average Grant Date Fair Value 2019 Shares Weighted Average Grant Date Fair Value Non-vested at beginning of year 46 $ 15.02 77 $ 13.94 78 $ 13.18 Granted 0 0 0 0 25 15.45 Dividend Reinvested Shares 1 18.14 4 12.89 5 13.11 Vested (21) (17.01) (35) (14.37) (31) (14.33) Forfeited 0 0 0 0 0 0 Non-vested at end of year 26 $ 15.54 46 $ 15.02 77 $ 13.94 As of September 30, 2021, there were 1.2 million shares available for grant under the Plan. NOTE 10 - INCOME FROM LEASES We derive income primarily from operating leases on our commercial properties. At September 30, 2021, we held investments in 122 properties totaling 24.9 million square feet with an overall occupancy rate of 99.7%. In general, these leases are written for periods up to 10 years or more with various provisions for renewal. These leases generally contain clauses for reimbursement (or direct payment) of real estate taxes, maintenance, insurance and certain other operating expenses of the properties. As of September 30, 2021, we had a weighted average lease maturity of 7.0 years and our average annualized rent per occupied square foot was $6.61. Our weighted average lease expiration has been 7.0 years or greater for over seven consecutive years. Our overall occupancy rate has been 98.9% or above for over six consecutive years. Approximate minimum base rents due under non-cancellable leases as of September 30, 2021 are scheduled as follows (in thousands): Fiscal Year Amount 2022 $ 157,646 2023 152,056 2024 140,646 2025 129,437 2026 118,354 thereafter 581,268 Total $ 1,279,407 NOTE 11 - RELATED PARTY TRANSACTIONS Four of our 13 directors are also directors and shareholders of UMH. As of September 30, 2021, we held common stock of UMH in our securities portfolio. See Note 6 for current holdings. During fiscal 2021, we made total purchases of 53,000 common shares of UMH for a total cost of $1.0 million, or a weighted average cost of $19.11 per share, which were purchased through UMH’s Dividend Reinvestment and Stock Purchase Plan. We owned a total of 1.4 million shares of UMH’s common stock as of September 30, 2021 at a total cost of $14.9 million and a fair value of $31.6 million representing 2.8% of the outstanding common shares of UMH. The unrealized gain on our investment in UMH’s common stock as of September 30, 2021 was $16.7 million. During fiscal 2021, UMH made total purchases of 13,000 of our common shares through our DRIP for a total cost of $205,000, or a weighted average cost of $15.68 per share. As of September 30, 2021, we had 14 full-time employees. Our Chairman of the Board is also the Chairman of the Board of UMH. Other than our Chairman of the Board, we do not share any employees with UMH. 99 Table of Contents NOTE 12 - TAXES Income Tax We have elected to be taxed as a REIT under the applicable provisions of the Code under Sections 856 to 860 and the comparable New Jersey Statutes. Under such provisions, we will not be taxed on that portion of our taxable income distributed currently to shareholders, provided that at least 90% of our taxable income is distributed. As we have and intend to continue to distribute all of our income, currently no provision has been made for income taxes. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and to federal income and excise taxes on our undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state, and local income taxes. Federal Excise Tax We do not have a Federal excise tax liability for the calendar years 2021, 2020 and 2019, since we intend to or have distributed all of our annual Federal taxable net income. Reconciliation Between U.S. GAAP Net Income and Taxable Income The following table reconciles Net Income (Loss) Attributable to common shares to taxable income for the years ended September 30, 2021, 2020 and 2019 (in thousands): 2021 Estimated (unaudited) 2020 Actual 2019 Actual Net Income (Loss) Attributable to Common Shareholders $ 44,764 $ (48,617) $ 11,026 Book / tax difference on gains realized from capital transactions 5,237 0 0 Stock compensation expense 287 452 784 Unrealized Holding (Gain)/Loss Arising During the Period (50,239) 77,380 24,680 Other book / tax differences, net 31,753 (3,149) (4,441) Taxable income before adjustments 31,802 26,066 32,049 Add: Capital gains (losses) 0 0 0 Estimated taxable income subject to 90% dividend requirement $ 31,802 $ 26,066 $ 32,049 Reconciliation Between Cash Dividends Paid and Dividends Paid Deduction The following table reconciles cash dividends paid with the dividends paid deduction for the years ended September 30, 2021, 2020 and 2019 (in thousands): 2021 Estimated (unaudited) 2020 Actual 2019 Actual Cash dividends paid $ 69,754 $ 66,438 $ 63,742 Less: Return of capital (4,533) (14,533) (51,406) Estimated dividends paid deduction $ 65,221 $ 51,905 $ 12,336 NOTE 13 - SHAREHOLDERS’ EQUITY Our authorized stock as of September 30, 2021 consisted of 300.0 million shares of common stock, of which 98.3 million shares were issued and outstanding, 26.6 million authorized shares of 6.125% Series C Preferred Stock, of which 22.0 million shares were issued and outstanding, and 200.0 million authorized shares of Excess Stock, $0.01 par value per share, of which none were issued or outstanding. 100 Table of Contents Common Stock We have implemented a Dividend Reinvestment and Stock Purchase Plan (the DRIP) effective December 15, 1987. Under the terms of the DRIP, as subsequently amended, shareholders who participate may reinvest all or part of their dividends in additional shares at a discounted price (approximately 95% of market value) directly from us, from authorized but unissued shares of our common stock. Shareholders may also purchase additional shares through the DRIP by making optional cash payments monthly. In January 2021, when our Board of Directors unanimously decided to explore strategic alternatives to maximize shareholder value, the Board also determined to temporarily suspend our DRIP program during this process. Because the exploration of strategic alternative process is still ongoing, the DRIP program remains suspended. Amounts received in connection with the DRIP and shares issued in connection with the DRIP for the fiscal years ended September 30, 2021, 2020 and 2019 were as follows: 2021 2020 2019 Amounts received (1) $ 1,361 $ 26,411 $ 73,965 Less: Dividend reinvestments 1,041 7,596 16,886 Amounts received, net $ 320 $ 18,815 $ 57,079 Number of Shares Issued 88 1,956 5,601 (1) Optional cash payments must be not less than $500 per payment nor more than $1,000 unless a request for a waiver has been accepted by us. We have not granted any waivers since March 2020 and the DRIP program has been temporarily suspended since January 2021. The following cash distributions were paid to common shareholders during the years ended September 30, 2021, 2020 and 2019 (in thousands): 2021 2020 2019 Quarter Ended Amount Per Share Amount Per Share Amount Per Share December 31 $ 16,672 $ 0.17 $ 16,486 $ 0.17 $ 15,570 $ 0.17 March 31 17,694 0.18 16,654 0.17 15,825 0.17 June 30 17,694 0.18 16,641 0.17 16,064 0.17 September 30 17,694 0.18 16,657 0.17 16,283 0.17 $ 69,754 $ 0.71 $ 66,438 $ 0.68 $ 63,742 $ 0.68 On January 14, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend, raising it to $0.18 per share from $0.17 per share representing an annualized dividend rate of $0.72 per share. This increase was the third dividend increase in the past five years, representing a total increase of 20%. We have maintained or increased our common stock cash dividend for 30 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis. On October 1, 2021, our Board of Directors declared a dividend of $0.18 per share to be paid December 15, 2021 to common shareholders of record as of the close of business on November 15, 2021. On February 6, 2020, we entered into an Equity Distribution Agreement (Common Stock ATM Program) with BMO Capital Markets Corp., B. Riley Securities, Inc. (formerly B. Riley FBR, Inc.), D.A. Davidson & Co., Janney Montgomery Scott LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC (together the “Distribution Agents”) under which we may offer and sell shares of our common stock, $0.01 par value per share, having an aggregate sales price of up to $150.0 million from time to time through the Distribution Agents. Sales of the shares of Common Stock under the Agreement, if any, will be in “at the market offerings.” We implemented the Common Stock ATM program for the flexibility that it provides to opportunistically access the capital markets and to best time our equity capital needs as we close on acquisitions. To date, we have not raised any equity though our Common Stock Equity Program and it has since expired. 101 Table of Contents Repurchase of Common Stock On January 16, 2019, our Board of Directors authorized a $40.0 million increase to our previously announced $10.0 million Common Stock Repurchase Program (the “Program”), bringing the total available under the Program to $50.0 million. The timing, manner, price and amount of any repurchase will be determined by us at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice. On September 14, 2021, our Board of Directors reaffirmed the Program that authorizes us to purchase up to $50.0 million of shares of our common stock. Under the Program, during fiscal 2020, we repurchased 400,000 shares of our common stock for $4.3 million at an average price of $10.69 per share. These were the only repurchases made under the Program to date and we may elect not to repurchase any additional common stock in the future. The remaining maximum dollar value that may be purchased under the Repurchase Program as of September 30, 2021 is $45.7 million. Preferred Stock 6.125% Series C Cumulative Redeemable Preferred Stock As of September 30, 2021, 22.0 million shares of our 6.125% Series C Preferred Stock were outstanding representing a liquidation preference of $549.6 million. At-the-Market Sales Agreement Program for our 6.125% Series C Cumulative Redeemable Preferred Stock On June 29, 2017, we entered into a Preferred Stock At-The-Market Sales Agreement Program with B. Riley FBR, Inc., or B. Riley (formerly FBR Capital Markets & Co.), that provided for the offer and sale of shares of our 6.125% Series C Preferred Stock, having an aggregate sales price of up to $100.0 million. On August 2, 2018, we replaced this program with a new Preferred Stock At-The-Market Sales Agreement Program that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $96.5 million, with $28.5 million being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on June 29, 2017. On December 4, 2019, we replaced the Preferred Stock At-The-Market Sales Agreement Program entered into on August 2, 2018 with another Preferred Stock At-The-Market Sales Agreement Program that provides for the offer and sale from time to time of $125.0 million of our 6.125% Series C Preferred Stock, representing an additional $101.0 million, with $24.0 million being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on August 2, 2018. On November 25, 2020, we entered into a Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) with B. Riley FBR., or B. Riley, providing for the offer and sale from time to time of up to $150.0 million of our 6.125% Series C Preferred Stock, which replaced a previous Preferred Stock ATM Program entered into on December 4, 2019 (which itself had replaced an earlier Preferred Stock ATM Program). Sales of shares of our 6.125% Series C Preferred Stock under our Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the NYSE, or on any other existing trading market for the 6.125% Series C Preferred Stock, or to or through a market maker, or any other method permitted by law, including, without limitation, negotiated transactions and block trades. We began selling shares through the first of these programs on July 3, 2017. Since inception through September 30, 2021, we sold 13.6 million shares of our 6.125% Series C Preferred Stock under these programs at a weighted average price of $24.91 per share, and generated net proceeds, after offering expenses, of $332.4 million, of which 3.1 million shares were sold during the 2021 fiscal year at a weighted average price of $24.88 per share, generating net proceeds after offering expenses of $76.0 million. No shares were sold pursuant to the Preferred Stock ATM Program since December 31, 2020. Our Preferred Stock ATM Program has since expired. Our Board of Directors has authorized and we have paid the following dividends on our 6.125% Series C Preferred Stock for the fiscal years ended September 30, 2021, 2020 and 2019 (in thousands except per share amounts): Declaration Date Record Date Payment Date Dividend Dividend per Share 10/1/20 11/16/20 12/15/20 $ 7,775 $ 0.3828125 1/14/21 2/16/21 3/15/21 8,416 0.3828125 4/1/21 5/17/21 6/15/21 8,416 0.3828125 7/1/21 8/16/21 8/31/21 8,416 0.3828125 $ 33,023 $ 1.53125 Declaration Date Record Date Payment Date Dividend Dividend per Share 10/1/19 11/15/19 12/16/19 $ 5,873 $ 0.3828125 1/16/20 2/18/20 3/16/20 6,572 0.3828125 4/1/20 5/15/20 6/15/20 6,583 0.3828125 7/1/20 8/17/20 9/15/20 6,811 0.3828125 $ 25,839 $ 1.53125 Declaration Record Payment Dividend Date Date Date Dividend per Share 10/1/18 11/15/18 12/17/18 $ 4,415 $ 0.3828125 1/16/19 2/15/19 3/15/19 4,424 0.3828125 4/2/19 5/15/19 6/17/19 4,681 0.3828125 7/1/19 8/15/19 9/16/19 4,945 0.3828125 $ 18,465 $ 1.53125 The annual dividend of the 6.125% Series C Preferred Stock is $1.53125 per share, or 6.125% of the $25.00 per share liquidation value and is payable quarterly in arrears on March 15, June 15, September 15, and December 15. The 6.125% Series C Preferred Stock has no maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Currently, the 6.125% Series C Preferred Stock is redeemable in whole, or in part, at our option, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) to the date of redemption. Upon the occurrence of a Delisting Event, as defined in the Articles Supplementary (Series C Articles Supplementary) classifying and designating the 6.125% Series C Preferred Stock, we may, at our option and subject to certain conditions, redeem the 6.125% Series C Preferred Stock, in whole or in part, within 90 days after the Delisting Event, for a cash redemption price per share of 6.125% Series C Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared), to, but not including, the redemption date. Upon the occurrence of a Change of Control, as defined in the Series C Articles Supplementary, we may, at our option and subject to certain conditions, redeem the 6.125% Series C Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for a cash redemption price per share of 6.125% Series C Preferred Stock equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date. On October 1, 2021, our Board of Directors declared a quarterly dividend for the period September 1, 2021 through November 30, 2021, of $0.3828125 per share to be paid December 15, 2021 to shareholders of record as of the close of business on November 15, 2021. 102 Table of Contents NOTE 14 - FAIR VALUE MEASUREMENTS We follow ASC 825, Financial Instruments, for financial assets and liabilities recognized at fair value on a recurring basis. We measure certain financial assets and liabilities at fair value on a recurring basis, including securities available for sale and an interest rate swap agreement. Our financial assets consist mainly of marketable REIT securities. The fair value of these certain financial assets was determined using the following inputs at September 30, 2021 and 2020 (in thousands): Fair Value Measurements at Reporting Date Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) September 30, 2021: Securities available for sale $ 143,505 $ 143,505 $ 0 $ 0 Interest Rate Swap (2,230) 0 (2,230) 0 Total $ 141,275 $ 143,505 $ (2,230) $ 0 September 30, 2020: Securities available for sale $ 108,832 $ 108,832 $ 0 $ 0 Interest Rate Swap (4,368) 0 (4,368) 0 Total $ 104,464 $ 108,832 $ (4,368) $ 0 In addition to our investments in Securities Available for Sale at Fair Value and our interest rate swap agreement, we are required to disclose certain information about fair values of our other financial instruments. Estimates of fair value are made at a specific point in time based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. For a portion of our other financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside of our control). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties; future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only, and therefore cannot be compared to the historical accounting model. The use of different assumptions or methodologies is likely to result in significantly different fair value estimates. The fair value of Cash and Cash Equivalents approximates their current carrying amounts since all such items are short-term in nature. The fair value of variable rate Loans Payable approximates their current carrying amounts since such amounts payable are at approximately a weighted average current market rate of interest. The estimated fair value of fixed rate mortgage notes payable is based on discounting the future cash flows at a year-end risk adjusted borrowing rate currently available to us for issuance of debt with similar terms and remaining maturities. These fair value measurements fall within level 2 of the fair value hierarchy. At September 30, 2021, the fixed rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $885.9 million and the carrying value amounted to $839.6 million. When we acquired a property, we allocate purchase price based upon relative fair value of all the assets and liabilities, including intangible assets and liabilities, relating to the properties acquired lease (See Note 3). Those fair value measurements were estimated based on independent third-party appraisals and fell within level 3 of the fair value hierarchy. 103 Table of Contents NOTE 15 - CASH FLOW During fiscal years 2021, 2020 and 2019, we paid cash for interest of $36.4 million, $35.0 million and $35.9 million, respectively. During fiscal years 2021, 2020 and 2019, we had $1.0 million, $7.6 million and $16.9 million, respectively, of dividends which were reinvested that required no cash transfers. NOTE 16 – CONTINGENCIES, COMMITMENTS AND LEGAL MATTERS From time to time, we can be subject to claims and litigation in the ordinary course of business. We do not believe that any such claim or litigation will have a material adverse effect on our consolidated balance sheet or results of operations. In addition to the $30.2 million property purchased in October 2021, as described below in Note 18, we have entered into agreements to purchase three, new build-to-suit, industrial buildings that are currently being developed in Alabama, Georgia and Texas, totaling 1.1 million square feet. These future acquisitions have net-leased terms ranging from 10 to 15 years with a weighted average lease term of 12.6 years. The total purchase price for these three properties is $126.8 million. All three properties are leased to companies, or subsidiaries of companies, that are considered Investment Grade by S&P Global Ratings (www.standardandpoors.com) and by Moody’s (www.moodys.com). Two of these three properties, consisting of an aggregate of 563,000 square feet, or 52% of the total leasable area, are leased to FedEx Ground Package System, Inc. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing all three of these transactions during fiscal 2022. We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are nine parking expansion projects underway, which we expect to cost approximately $42.6 million. These parking expansion projects will enable us to capture additional rent while lengthening the terms of these leases. We are also in discussions to expand the parking at eight additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently. Our headquarters is located within the Bell Works complex in Holmdel, NJ and comprises 13,000 square feet of office space and is leased for 10.3 years through December 2029 with two, five-year extension options at fair market rent, as defined in the lease agreement. Initial annual rent when the lease commenced in September 2019 was at a rate of $410,000 or $31.00 per square foot, with 2% annual escalations. The base rent includes our proportionate share of real estate taxes and common area maintenance and we are responsible for increases in real estate taxes and common area maintenance above our 2019 base year actual amounts. In addition, we received four months of free rent and a tenant improvement allowance of $48.00 per square foot. We and the members of our Board of Directors are defendants in a class action lawsuit that was commenced in the Circuit Court for Baltimore City, Maryland in August 2021, prior to termination of our merger agreement with EQC, and which currently remains pending. The lawsuit alleges that our directors violated their legal duties in connection with the proposed EQC merger and seeks injunctive relief and damages. We believe that the claims asserted in this lawsuit are without merit and that in any event the claims are now moot in light of the termination of the merger agreement. We intend to seek to have this lawsuit dismissed. However, litigation is inherently uncertain and there can be no assurance we will be successful in obtaining a dismissal. Four other lawsuits that had been brought with respect to the proposed merger with EQC after the transaction was announced have since been voluntarily dismissed by the plaintiffs in light of the termination of the EQC merger agreement. In January 2021, we commenced legal proceedings in the Superior Court of New Jersey, Chancery Division, Monmouth County, against our former general counsel, Allison Nagelberg, and Blackwells alleging that Ms. Nagelberg was in violation of her obligations owed to us as our former general counsel as a result of, among other things, having agreed to be a nominee of Blackwells for election to our Board of Directors at our 2021 annual meeting. The complaint also alleged that Blackwells wrongfully induced Ms. Nagelberg’s wrongful actions. Ms. Nagelberg filed counterclaims against us seeking indemnification and advancement of expenses pursuant to the terms of her agreements with us and our charter and bylaws. Subsequent to September 30, 2021, we entered into a Release and Settlement Agreement with Blackwells and Ms. Nagelberg resolving the claims asserted in these proceedings and other matters, as described in Note 18. 104 Table of Contents NOTE 17 – TERMINATED MERGER AGREEMENT WITH EQUITY COMMONWEALTH, REVIEW OF STRATEGIC ALTERNATIVES AND RELATED MATTERS On May 4, 2021, following a comprehensive review and analysis by our Board of Directors of our strategic alternatives, which included consideration of proposals from several third parties that expressed interest in acquiring us, we entered into an Agreement and Plan of Merger (the “EQC Merger Agreement”) with Equity Commonwealth (“EQC”) and EQC Maple Industrial LLC, a wholly-owned subsidiary of EQC, which provided that, on the terms and subject to the conditions set forth in the EQC Merger Agreement, we would merge with and into EQC Industrial LLC and become a wholly owned subsidiary of EQC. The terms of the EQC Merger Agreement as originally executed on May 4, 2021 provided that, upon consummation of the merger, our common stockholders would receive 0.67 EQC common shares for each outstanding share of our common stock. On August 15, 2021, the EQC Merger Agreement was amended (the “Amended EQC Merger Agreement”) to provide that, upon consummation of the merger, our common stockholders would have the right to elect to receive, for each common share, either $19.00 in cash or 0.713 EQC common shares, subject to certain caps and prorations set forth in the Amended EQC Merger Agreement. Both the original EQC Merger Agreement and the Amended EQC Merger Agreement provided that the proposed merger would be subject to customary closing conditions, including, among others, approval of the proposed merger by the holders of at least two-thirds of our outstanding common shares, as required by Maryland law and our charter. On August 31, 2021, we held a special meeting of common stockholders to vote on the proposed merger with EQC, and at the special meeting the proposed merger did not receive approval by the requisite two-thirds of the outstanding shares of our common stock. Following the special meeting, EQC notified us on August 31, 2021 that EQC was terminating the Amended EQC Merger Agreement as a result of our failure to obtain the required stockholder approval. As required by the Merger Agreement, we subsequently reimbursed EQC for approximately $10.0 million of expenses incurred by EQC in connection with the proposed merger. Pending litigation relating to the now terminated merger agreement with EQC is described in Note 16 and under Part I, Item 3 – Legal Proceedings. Following termination of the Amended EQC Merger Agreement, on September 13, 2021, we announced that our Board of Directors would be re-initiating its exploration of strategic alternatives and expected to consider a wide range of potential strategic and financial alternatives, including a potential sale or merger, joint ventures and changes in our capital structure, in an expeditious process. This re-instituted strategic alternatives review process resulted in our execution of a Merger Agreement with Industrial Logistics Properties Trust on November 5, 2021, as described in Note 18. 105 Table of Contents NOTE 18 – SUBSEQUENT EVENTS Material subsequent events have been evaluated and are disclosed herein. On October 1, 2021, our Board of Directors declared a dividend of $0.18 per share to be paid December 15, 2021 to common shareholders of record as of the close of business on November 15, 2021. In addition, on October 1, 2021, our Board of Directors declared a dividend of $0.3828125 per share to be paid December 15, 2021 to the 6.125% Series C Preferred shareholders of record as of the close of business on November 15, 2021. Subsequent to fiscal yearend, on October 27, 2021, we purchased a newly constructed 291,000 square foot industrial building, situated on 46.0 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through July 2036. The purchase price was $30.2 million. We obtained a mortgage loan commitment for a 15 year, fully-amortizing mortgage loan of $19.3 million at a fixed interest rate of 2.40%, which has not yet closed. Annual rental revenue over the remaining term of the lease averages $1.7 million. Subsequent to fiscal yearend, on November 1, 2021, we fully prepaid a $7.3 million mortgage loan for our property located in Streetsboro (Cleveland), OH. The loan had an interest rate of 5.5%. On November 5, 2021, we entered into a definitive merger agreement with Industrial Logistics Properties Trust, a Maryland real estate investment trust (“ILPT”), under which, on the terms and subject to the conditions set forth in the merger agreement, ILPT agreed to acquire us in an all-cash transaction, with our common stockholders receiving $21.00 in cash for each outstanding share of our common stock. ILPT’s acquisition of us is subject to obtaining the requisite approval of our common stockholders and the satisfaction of other customary closing conditions. Upon closing of the merger with ILPT, holders of our outstanding 6.125% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) will receive the amount of $25 per share plus any accrued and unpaid dividends. On November 4, 2021, we entered into a Release and Settlement Agreement with our former general counsel, Allison Nagelberg, and Blackwells Capital LLC (“Blackwells”) resolving legal proceedings that we had commenced against Ms. Nagelberg and Blackwells in the Superior Court of New Jersey relating to, among other things, Ms. Nagelberg having been named as a nominee of Blackwells for election to our Board of Directors at our 2021 annual meeting, and also resolving Ms. Nagelberg’s counterclaim against us seeking indemnification and advancement of expenses. In connection with the settlement, the parties exchanged mutual releases, whereby, among other things, Blackwells agreed to release claims, including those it had previously demanded that we assert against the members of our Board for alleged breach of their legal duties relating to the Board’s rejection of an unsolicited acquisition offer that we received from Blackwells in December 2020 and subsequent actions taken by the Board in connection with its review of strategic alternatives earlier this year. Simultaneous with the Release and Settlement Agreement, we and Blackwells entered into a Cooperation Agreement that, among other things, resolved a potential proxy contest to elect directors at the 2021 Annual Meeting. Under the Cooperation Agreement, Blackwells also agreed, among other things, to withdraw its slate of proposed nominees and various shareholder proposals for consideration at the 2021 Annual Meeting and committed to vote all its shares of our common stock at the 2021 Annual Meeting in favor of all of the Board’s director nominees and in support of all Board-recommended proposals, including voting in favor of the Merger Agreement with ILPT. Blackwells also agreed to comply with certain additional standstill, voting and affirmative solicitation commitments and terms. The estimated costs associated with the Release and Settlement Agreement and the Cooperation Agreement and the related litigation and potential litigation have been reflected in the accompanying Consolidated Financial Statements. NOTE 19 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following is the Unaudited Selected Quarterly Financial Data: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) THREE MONTHS ENDED (in thousands) FISCAL 2021 12/31/20 3/31/21 6/30/21 9/30/21 Rental and Reimbursement Revenue $ 43,583 $ 46,365 $ 45,993 $ 46,815 Total Expenses 22,159 25,620 32,040 49,300 Unrealized Holding Gains (Losses) Arising During the Periods 19,721 19,186 16,471 (5,139) Other Income (Expense) 12,169 13,634 14,648 (13,286) Net Income (Loss) Attributable to Shareholders 33,916 34,329 25,709 (15,771) Net Income (Loss) Attributable to Shareholders per diluted share $ 0.34 $ 0.35 $ 0.26 $ (0.16) Net Income (Loss) Attributable to Common Shareholders 25,746 25,913 17,292 (24,187) Net Income (Loss) Attributable to Common Shareholders per diluted share $ 0.26 $ 0.26 $ 0.17 $ (0.25) FISCAL 2020 12/31/19 3/31/20 6/30/20 9/30/20 Rental and Reimbursement Revenue $ 41,700 $ 41,707 $ 41,775 $ 42,635 Total Expenses 22,428 21,264 21,459 21,529 Unrealized Holding Gains (Losses) Arising During the Periods (3,635) (83,075) 19,610 (10,280) Other Income (Expense) (9,606) (88,721) 12,979 (17,963) Net Income (Loss) Attributable to Shareholders 9,625 (68,314) 33,458 3,088 Net Income (Loss) Attributable to Shareholders per diluted share $ 0.10 $ (0.70) $ 0.34 $ 0.03 Net Income (Loss) Attributable to Common Shareholders 3,528 (75,078) 26,850 (3,917) Net Income (Loss) Attributable to Common Shareholders per diluted share $ 0.04 $ (0.77) $ 0.27 $ (0.04) 106 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column B Column C Column D Capitalization Buildings and Subsequent to Description Encumbrances Land Improvements Acquisition Industrial Buildings Monaca (Pittsburgh), PA $ 0 $ 402 $ 878 $ 6,684 Ridgeland (Jackson), MS 0 218 1,234 1,504 Urbandale (Des Moines), IA 0 310 1,758 476 Richland (Jackson), MS 0 211 1,195 495 O’Fallon (St. Louis), MO 0 264 3,302 684 Fayetteville, NC 0 172 4,468 818 Schaumburg (Chicago), IL 0 1,040 3,694 713 Burr Ridge (Chicago), IL 0 270 1,237 378 Romulus (Detroit), MI 0 531 3,654 764 Liberty (Kansas City), MO 0 724 6,498 577 Omaha, NE 0 1,170 4,426 368 Charlottesville, VA 0 1,170 2,845 447 Jacksonville, FL (FDX) 0 1,165 4,668 751 West Chester Twp. (Cincinnati), OH 0 695 3,342 1,697 Mechanicsville (Richmond), VA 0 1,160 6,413 263 St. Joseph, MO 0 800 11,754 951 Newington (Hartford), CT 0 410 2,961 155 Cudahy (Milwaukee), WI 0 980 5,051 3,784 Beltsville (Washington, DC), MD 0 3,200 5,959 5,562 Granite City (St. Louis, MO), IL 0 340 12,047 371 Winston-Salem, NC 0 980 5,610 837 Elgin (Chicago), IL 0 1,280 5,529 373 Cheektowaga (Buffalo), NY 0 4,797 3,884 2,280 Tolleson (Phoenix), AZ 1,103 1,316 13,329 2,179 Edwardsville (Kansas City), KS (Carlstar) 0 1,185 5,815 283 Wheeling (Chicago), IL 0 5,112 9,187 5,326 Richmond, VA 0 446 3,911 740 Tampa, FL (FDX Ground) 0 5,000 12,660 2,085 Montgomery (Chicago), IL 0 2,000 9,226 77 Denver, CO 0 1,150 3,890 1,334 Hanahan (Charleston), SC (SAIC) 0 1,129 11,831 1,503 Hanahan (Charleston), SC (Amazon) 0 930 3,426 4,950 Augusta, GA (FDX Ground) 0 614 3,026 1,723 Tampa, FL (Tampa Bay Grand Prix) 0 1,867 3,685 126 Huntsville, AL 0 748 2,724 3,190 Augusta, GA (FDX) 0 380 1,401 212 Lakeland, FL 0 261 1,621 161 El Paso, TX 0 3,225 4,514 4,692 Richfield (Cleveland), OH 0 2,677 7,198 6,762 Tampa, FL (FDX) 0 2,830 4,705 813 Griffin (Atlanta), GA 0 760 13,692 630 Roanoke, VA (CHEP USA) 0 1,853 4,816 803 Orion, MI 0 4,650 13,053 5,453 Chattanooga, TN 0 300 4,465 604 Bedford Heights (Cleveland), OH 0 990 4,894 1,420 Punta Gorda, FL 0 0 4,105 29 Cocoa, FL 0 1,881 8,624 3,622 Orlando, FL 0 2,200 6,134 476 Topeka, KS 0 0 3,680 0 Memphis, TN 2,364 1,235 13,380 1,478 Houston, TX 0 1,661 6,320 240 Carrollton (Dallas), TX 3,781 1,500 16,240 757 107 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column B Column C Column D Capitalization Buildings and Subsequent to Description Encumbrances Land Improvements Acquisition Ft. Mill (Charlotte, NC), SC $ 0 $ 1,747 $ 10,045 $ 5,272 Lebanon (Nashville), TN 0 2,230 11,985 0 Rockford, IL (Sherwin-Williams Co.) 0 1,100 4,440 11 Edinburg, TX 0 1,000 6,414 4,625 Streetsboro (Cleveland), OH 7,332 1,760 17,840 0 Corpus Christi, TX 0 0 4,765 43 Halfmoon (Albany), NY 0 1,190 4,336 1,215 Lebanon (Cincinnati), OH 0 240 4,176 139 Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals Inc.) 5,558 800 13,750 0 Oklahoma City, OK (FDX Ground) 1,767 1,410 8,043 3,172 Waco, TX 3,280 1,350 7,383 3,818 Livonia (Detroit), MI 4,267 320 13,380 188 Olive Branch (Memphis, TN), MS (Milwaukee Tool) 16,095 2,550 24,819 9,546 Roanoke, VA (FDX Ground) 2,866 1,740 8,460 0 Green Bay, WI 1,613 590 5,979 11 Stewartville (Rochester), MN 1,292 900 4,320 12 Tulsa, OK 1,267 790 2,910 48 Buckner (Louisville), KY 12,993 2,280 24,353 175 Edwardsville (Kansas City), KS (International Paper) 6,804 2,750 15,335 209 Altoona, PA 1,987 1,200 7,790 33 Spring (Houston), TX 5,931 1,890 13,391 4,048 Indianapolis, IN 7,366 3,746 20,446 1,312 Sauget (St. Louis, MO), IL 6,659 1,890 13,310 2,209 Lindale (Tyler), TX 4,393 948 9,390 1,965 Kansas City, MO 0 1,000 8,600 403 Frankfort (Lexington), KY 13,483 1,850 26,150 0 Jacksonville, FL (FDX Ground) 12,587 6,000 24,646 280 Monroe (Cincinnati), OH 11,453 1,800 11,137 8,640 Greenwood (Indianapolis), IN (ULTA) 15,855 2,250 35,235 289 Ft. Worth (Dallas), TX 16,364 8,200 27,101 347 Cincinnati, OH 0 800 5,950 0 Rockford, IL (Collins Aerospace Systems) 0 480 4,620 0 Concord (Charlotte), NC 14,197 4,305 27,671 1,078 Covington (New Orleans), LA 8,917 2,720 15,690 16 Imperial (Pittsburgh), PA 8,734 3,700 16,250 40 Burlington (Seattle/Everett), WA 14,264 8,000 22,211 160 Colorado Springs, CO 13,469 2,150 26,350 820 Louisville, KY 5,267 1,590 9,714 0 Davenport (Orlando), FL 19,243 7,060 30,721 306 Olathe (Kansas City), KS 16,217 3,616 29,387 2,444 Hamburg (Buffalo), NY 17,411 1,700 33,150 290 Ft. Myers, FL 10,873 2,486 18,400 798 Walker (Grand Rapids), MI 16,027 4,034 27,621 0 Mesquite (Dallas), TX 25,461 6,248 43,632 0 Aiken (Augusta, GA), SC 12,003 1,362 19,678 0 Homestead (Miami), FL 19,193 4,427 33,446 39 Oklahoma City, OK (Bunzl) 4,243 845 7,883 0 Concord (Charlotte), NC 20,587 4,307 35,736 0 Kenton, OH 9,592 855 17,027 849 Stow, OH 10,106 1,430 17,504 0 Charleston, SC (FDX) 11,444 4,639 16,848 52 Oklahoma City, OK (Amazon) 16,501 1,618 28,260 0 108 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column B Column C Column D Capitalization Buildings and Subsequent to Description Encumbrances Land Improvements Acquisition Savannah, GA (Shaw) $ 26,273 $ 4,405 $ 51,621 $ 0 Daytona Beach, FL 16,170 3,120 26,855 899 Mobile, AL 15,609 2,480 30,572 0 Charleston, SC (FDX Ground) 25,171 7,103 39,473 0 Braselton (Atlanta), GA 33,730 13,965 46,262 11 Trenton, NJ 47,039 8,336 75,652 0 Savannah, GA (FDX Ground) 15,091 3,441 24,091 0 Lafayette, IN 15,234 2,802 22,277 0 Greenwood (Indianapolis), IN (Amazon) 48,802 4,839 74,525 0 Lancaster (Columbus), OH 8,311 959 16,599 0 Whitsett (Greensboro), NC 28,277 2,735 43,976 0 Ogden (Salt Lake City), UT 7,805 1,287 11,380 0 Oklahoma City, OK (Amazon II) 9,272 1,378 13,584 0 Plain City (Columbus), OH 45,322 6,554 65,187 0 Locust Grove (Atlanta), GA 55,307 9,667 83,569 0 Burlington, VT 0 7,729 46,096 0 Kodak (Knoxville), TN 0 2,918 30,972 0 Shopping Center Somerset, NJ 0 35 637 2,467 Vacant Land Shelby County, TN 0 11 0 0 $ 839,622 $ 277,846 $ 1,884,965 $ 140,879 109 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column E (1) (2) Gross Amount at Which Carried September 30, 2021 Description Land Bldg & Imp Total Industrial Buildings Monaca (Pittsburgh), PA $ 402 $ 7,562 $ 7,964 Ridgeland (Jackson), MS 218 2,738 2,956 Urbandale (Des Moines), IA 310 2,234 2,544 Richland (Jackson), MS 211 1,690 1,901 O’Fallon (St. Louis), MO 264 3,986 4,250 Fayetteville, NC 172 5,286 5,458 Schaumburg (Chicago), IL 1,040 4,407 5,447 Burr Ridge (Chicago), IL 270 1,615 1,885 Romulus (Detroit), MI 531 4,418 4,949 Liberty (Kansas City), MO 724 7,075 7,799 Omaha, NE 1,170 4,794 5,964 Charlottesville, VA 1,170 3,292 4,462 Jacksonville, FL (FDX) 1,165 5,419 6,584 West Chester Twp. (Cincinnati), OH 695 5,039 5,734 Mechanicsville (Richmond), VA 1,160 6,676 7,836 St. Joseph, MO 800 12,705 13,505 Newington (Hartford), CT 410 3,116 3,526 Cudahy (Milwaukee), WI 980 8,835 9,815 Beltsville (Washington, DC), MD 3,200 11,521 14,721 Granite City (St. Louis, MO), IL 340 12,418 12,758 Winston-Salem, NC 980 6,447 7,427 Elgin (Chicago), IL 1,280 5,902 7,182 Cheektowaga (Buffalo), NY 4,797 6,164 10,961 Tolleson (Phoenix), AZ 1,316 15,508 16,824 Edwardsville (Kansas City), KS (Carlstar) 1,185 6,098 7,283 Wheeling (Chicago), IL 5,112 14,513 19,625 Richmond, VA 446 4,651 5,097 Tampa, FL (FDX Ground) 5,000 14,745 19,745 Montgomery (Chicago), IL 2,000 9,303 11,303 Denver, CO 1,150 5,224 6,374 Hanahan (Charleston), SC (SAIC) 1,129 13,334 14,463 Hanahan (Charleston), SC (Amazon) 930 8,376 9,306 Augusta, GA (FDX Ground) 614 4,749 5,363 Tampa, FL (Tampa Bay Grand Prix) 1,867 3,811 5,678 Huntsville, AL 748 5,914 6,662 Augusta, GA (FDX) 380 1,613 1,993 Lakeland, FL 261 1,782 2,043 El Paso, TX 3,225 9,206 12,431 Richfield (Cleveland), OH 2,677 13,960 16,637 Tampa, FL (FDX) 2,830 5,518 8,348 Griffin (Atlanta), GA 760 14,322 15,082 Roanoke, VA (CHEP USA) 1,853 5,619 7,472 Orion, MI 4,650 18,506 23,156 Chattanooga, TN 300 5,069 5,369 Bedford Heights (Cleveland), OH 990 6,314 7,304 Punta Gorda, FL 0 4,134 4,134 Cocoa, FL 1,881 12,246 14,127 Orlando, FL 2,200 6,610 8,810 Topeka, KS 0 3,680 3,680 Memphis, TN 1,235 14,858 16,093 Houston, TX 1,661 6,560 8,221 Carrollton (Dallas), TX 1,500 16,997 18,497 110 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column E (1) (2) Gross Amount at Which Carried September 30, 2021 Description Land Bldg & Imp Total Ft. Mill (Charlotte, NC), SC $ 1,747 $ 15,317 $ 17,064 Lebanon (Nashville), TN 2,230 11,985 14,215 Rockford, IL (Sherwin-Williams Co.) 1,100 4,451 5,551 Edinburg, TX 1,000 11,039 12,039 Streetsboro (Cleveland), OH 1,760 17,840 19,600 Corpus Christi, TX 0 4,808 4,808 Halfmoon (Albany), NY 1,190 5,551 6,741 Lebanon (Cincinnati), OH 240 4,315 4,555 Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals Inc.) 800 13,750 14,550 Oklahoma City, OK (FDX Ground) 1,410 11,215 12,625 Waco, TX 1,350 11,201 12,551 Livonia (Detroit), MI 320 13,568 13,888 Olive Branch (Memphis, TN), MS (Milwaukee Tool) 2,550 34,365 36,915 Roanoke, VA (FDX Ground) 1,740 8,460 10,200 Green Bay, WI 590 5,990 6,580 Stewartville (Rochester), MN 900 4,332 5,232 Tulsa, OK 790 2,958 3,748 Buckner (Louisville), KY 2,280 24,528 26,808 Edwardsville (Kansas City), KS (International Paper) 2,750 15,544 18,294 Altoona, PA 1,200 7,823 9,023 Spring (Houston), TX 1,890 17,439 19,329 Indianapolis, IN 3,746 21,758 25,504 Sauget (St. Louis, MO), IL 1,890 15,519 17,409 Lindale (Tyler), TX 948 11,355 12,303 Kansas City, MO 1,000 9,003 10,003 Frankfort (Lexington), KY 1,850 26,150 28,000 Jacksonville, FL (FDX Ground) 6,000 24,926 30,926 Monroe (Cincinnati), OH 1,800 19,777 21,577 Greenwood (Indianapolis), IN (ULTA) 2,250 35,524 37,774 Ft. Worth (Dallas), TX 8,200 27,448 35,648 Cincinnati, OH 800 5,950 6,750 Rockford, IL (Collins Aerospace Systems) 480 4,620 5,100 Concord (Charlotte), NC 4,305 28,749 33,054 Covington (New Orleans), LA 2,720 15,706 18,426 Imperial (Pittsburgh), PA 3,700 16,290 19,990 Burlington (Seattle/Everett), WA 8,000 22,371 30,371 Colorado Springs, CO 2,150 27,170 29,320 Louisville, KY 1,590 9,714 11,304 Davenport (Orlando), FL 7,060 31,027 38,087 Olathe (Kansas City), KS 3,616 31,831 35,447 Hamburg (Buffalo), NY 1,700 33,440 35,140 Ft. Myers, FL 2,486 19,198 21,684 Walker (Grand Rapids), MI 4,034 27,621 31,655 Mesquite (Dallas), TX 6,248 43,632 49,880 Aiken (Augusta, GA), SC 1,362 19,678 21,040 Homestead (Miami), FL 4,427 33,485 37,912 Oklahoma City, OK (Bunzl) 845 7,883 8,728 Concord (Charlotte), NC 4,307 35,736 40,043 Kenton, OH 855 17,876 18,731 Stow, OH 1,430 17,504 18,934 Charleston, SC (FDX) 4,639 16,900 21,539 Oklahoma City, OK (Amazon) 1,618 28,260 29,878 111 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column E (1) (2) Gross Amount at Which Carried September 30, 2021 Description Land Bldg & Imp Total Savannah, GA (Shaw) $ 4,405 $ 51,621 $ 56,026 Daytona Beach, FL 3,120 27,754 30,874 Mobile, AL 2,480 30,572 33,052 Charleston, SC (FDX Ground) 7,103 39,473 46,576 Braselton (Atlanta), GA 13,965 46,273 60,238 Trenton, NJ 8,336 75,652 83,988 Savannah, GA (FDX Ground) 3,441 24,091 27,532 Lafayette, IN 2,802 22,277 25,079 Greenwood (Indianapolis), IN (Amazon) 4,839 74,525 79,364 Lancaster (Columbus), OH 959 16,599 17,558 Whitsett (Greensboro), NC 2,735 43,976 46,711 Ogden (Salt Lake City), UT 1,287 11,380 12,667 Oklahoma City, OK (Amazon II) 1,378 13,584 14,962 Plain City (Columbus), OH 6,554 65,187 71,741 Locust Grove (Atlanta), GA 9,667 83,569 93,236 Burlington, VT 7,729 46,096 53,825 Kodak (Knoxville), TN 2,918 30,972 33,890 Shopping Center Somerset, NJ 35 3,104 3,139 Vacant Land Shelby County, TN 11 0 11 $ 277,846 $ 2,025,844 $ 2,303,690 (1) See pages 125-128 for reconciliation. (2) The aggregate cost for Federal tax purposes approximates historical cost. 112 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column F Column G Column H Column I Accumulated Date of Date Depreciable Description Depreciation Construction Acquired Life Industrial Buildings Monaca (Pittsburgh), PA $ 3,730 1973 1973 (3) Ridgeland (Jackson), MS 1,585 1989 1993 (3) Urbandale (Des Moines), IA 1,459 1985 1994 (3) Richland (Jackson), MS 1,200 1986 1994 (3) O’Fallon (St. Louis), MO 2,735 1989 1995 (3) Fayetteville, NC 3,532 1996 1997 (3) Schaumburg (Chicago), IL 2,671 1997 1997 (3) Burr Ridge (Chicago), IL 869 1998 1998 (3) Romulus (Detroit), MI 2,477 1998 1998 (3) Liberty (Kansas City), MO 4,128 1998 1998 (3) Omaha, NE 2,734 1999 1999 (3) Charlottesville, VA 1,905 1998 1999 (3) Jacksonville, FL (FDX) 3,159 1997 1999 (3) West Chester Twp. (Cincinnati), OH 2,842 1999 2000 (3) Mechanicsville (Richmond), VA 3,560 2000 2001 (3) St. Joseph, MO 6,518 2001 2001 (3) Newington (Hartford), CT 1,635 2001 2001 (3) Cudahy (Milwaukee), WI 4,075 2001 2001 (3) Beltsville (Washington, DC), MD 5,045 2001 2001 (3) Granite City (St. Louis, MO), IL 6,252 2001 2002 (3) Winston-Salem, NC 3,239 2001 2002 (3) Elgin (Chicago), IL 2,984 2002 2002 (3) Cheektowaga (Buffalo), NY 2,330 2001 2007 (3) Tolleson (Phoenix), AZ 7,674 2002 2003 (3) Edwardsville (Kansas City), KS (Carlstar) 3,014 2002 2003 (3) Wheeling (Chicago), IL 5,600 2003 2003 (3) Richmond, VA 1,937 2004 2004 (3) Tampa, FL (FDX Ground) 6,059 2004 2004 (3) Montgomery (Chicago), IL 3,484 2000 2005 (3) Denver, CO 2,108 2004 2005 (3) Hanahan (Charleston), SC (SAIC) 5,791 2002 2005 (3) Hanahan (Charleston), SC (Amazon) 2,852 2005 2005 (3) Augusta, GA (FDX Ground) 1,878 2004 2005 (3) Tampa, FL (Tampa Bay Grand Prix) 1,448 1989 2005 (3) Huntsville, AL 1,714 2004 2005 (3) Augusta, GA (FDX) 602 1993 2007 (3) Lakeland, FL 724 1993 2007 (3) El Paso, TX 2,780 2006 2007 (3) Richfield (Cleveland), OH 4,156 2005 2006 (3) Tampa, FL (FDX) 2,004 1997 2006 (3) Griffin (Atlanta), GA 5,716 2003 2006 (3) Roanoke, VA (CHEP USA) 2,286 1996 2007 (3) Orion, MI 5,902 2007 2007 (3) Chattanooga, TN 1,827 2003 2007 (3) Bedford Heights (Cleveland), OH 2,530 1998 2007 (3) Punta Gorda, FL 1,398 2007 2007 (3) Cocoa, FL 3,725 2006 2008 (3) Orlando, FL 2,405 1997 2008 (3) Topeka, KS 1,179 2006 2009 (3) Memphis, TN 4,278 1994 2010 (3) Houston, TX 2,019 2006 2010 (3) Carrollton (Dallas), TX 4,908 2009 2010 (3) 113 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column F Column G Column H Column I Accumulated Date of Date Depreciable Description Depreciation Construction Acquired Life Ft. Mill (Charlotte, NC), SC $ 3,826 2010 2010 (3) Lebanon (Nashville), TN 3,073 1993 2011 (3) Rockford, IL (Sherwin-Williams Co.) 1,206 1998-2008 2011 (3) Edinburg, TX 2,324 2011 2011 (3) Streetsboro (Cleveland), OH 4,346 2012 2012 (3) Corpus Christi, TX 1,176 2011 2012 (3) Halfmoon (Albany), NY 1,134 2011 2012 (3) Lebanon (Cincinnati), OH 1,069 2008 2012 (3) Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals Inc.) 3,261 2012 2012 (3) Oklahoma City, OK (FDX Ground) 2,479 2012 2012 (3) Waco, TX 2,363 2012 2012 (3) Livonia (Detroit), MI 3,127 1999 2013 (3) Olive Branch (Memphis, TN), MS (Milwaukee Tool) 6,697 2012 2012 (3) Roanoke, VA (FDX Ground) 1,799 2013 2013 (3) Green Bay, WI 1,227 2013 2014 (3) Stewartville (Rochester), MN 888 2013 2013 (3) Tulsa, OK 631 2009 2014 (3) Buckner (Louisville), KY 5,039 2014 2014 (3) Edwardsville (Kansas City), KS (International Paper) 3,245 2013 2014 (3) Altoona, PA 1,595 2013 2014 (3) Spring (Houston), TX 3,432 2013 2014 (3) Indianapolis, IN 4,009 2014 2014 (3) Sauget (St. Louis, MO), IL 2,391 2014 2015 (3) Lindale (Tyler), TX 1,699 2014 2015 (3) Kansas City, MO 1,670 2015 2015 (3) Frankfort (Lexington), KY 4,582 2015 2015 (3) Jacksonville, FL (FDX Ground) 4,305 2015 2015 (3) Monroe (Cincinnati), OH 2,452 2015 2015 (3) Greenwood (Indianapolis), IN (ULTA) 5,828 2015 2015 (3) Ft. Worth (Dallas), TX 4,358 2015 2015 (3) Cincinnati, OH 928 2015 2015 (3) Rockford, IL (Collins Aerospace Systems) 829 2012 2015 (3) Concord (Charlotte), NC 4,847 2015 2016 (3) Covington (New Orleans), LA 2,352 2015 2016 (3) Imperial (Pittsburgh), PA 2,331 2016 2016 (3) Burlington (Seattle/Everett), WA 3,154 2015 2016 (3) Colorado Springs, CO 3,744 2016 2016 (3) Louisville, KY 1,328 2016 2016 (3) Davenport (Orlando), FL 4,094 2016 2016 (3) Olathe (Kansas City), KS 3,960 2016 2017 (3) Hamburg (Buffalo), NY 4,313 2016 2017 (3) Ft. Myers, FL 2,312 2017 2017 (3) Walker (Grand Rapids), MI 3,187 2017 2017 (3) Mesquite (Dallas), TX 4,755 2017 2017 (3) Aiken (Augusta, GA), SC 2,144 2017 2017 (3) Homestead (Miami), FL 3,656 2017 2017 (3) Oklahoma City, OK (Bunzl) 859 2017 2017 (3) Concord (Charlotte), NC 3,818 2017 2017 (3) Kenton, OH 1,970 2017 2017 (3) Stow, OH 1,795 2017 2017 (3) Charleston, SC (FDX) 1,703 2017 2018 (3) Oklahoma City, OK (Amazon) 2,778 2018 2018 (3) 114 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) Column A Column F Column G Column H Column I Accumulated Date of Date Depreciable Description Depreciation Construction Acquired Life Savannah, GA (Shaw) $ 4,853 2018 2018 (3) Daytona Beach, FL 2,454 2018 2018 (3) Mobile, AL 2,548 2018 2018 (3) Charleston, SC (FDX Ground) 3,205 2018 2018 (3) Braselton (Atlanta), GA 3,659 2018 2018 (3) Trenton, NJ 5,819 2017 2019 (3) Savannah, GA (FDX Ground) 1,750 2019 2019 (3) Lafayette, IN 1,238 2019 2019 (3) Greenwood (Indianapolis), IN (Amazon) 3,822 2020 2020 (3) Lancaster (Columbus), OH 638 2020 2020 (3) Whitsett (Greensboro), NC 1,503 2020 2020 (3) Ogden (Salt Lake City), UT 389 2020 2020 (3) Oklahoma City, OK (Amazon II) 363 2020 2020 (3) Plain City (Columbus), OH 1,254 2021 2021 (3) Locust Grove (Atlanta), GA 1,607 2021 2021 (3) Burlington, VT 197 2021 2021 (3) Kodak (Knoxville), TN 66 2021 2021 (3) Shopping Center Somerset, NJ 1,873 1969 1970 (3) Vacant Land Shelby County, TN 0 N/A 2007 N/A $ 345,988 (3) Depreciation is computed based upon the following estimated lives: Building: 31.5 to 39 years; Building Improvements: 3 to 39 years; Tenant Improvements: Lease Term 115 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION SEPTEMBER 30, 2021 (in thousands) (1) Reconciliation REAL ESTATE INVESTMENTS 9/30/2021 9/30/2020 9/30/2019 Balance-Beginning of Year $ 2,043,864 $ 1,866,518 $ 1,719,578 Additions: Acquisitions 252,693 171,262 136,598 Improvements 12,430 6,084 10,342 Total Additions 265,123 177,346 146,940 Deletions: Sales (5,297) 0 0 Total Deletions (5,297) 0 0 Balance-End of Year $ 2,303,690 $ 2,043,864 $ 1,866,518 ACCUMULATED DEPRECIATION 9/30/2021 9/30/2020 9/30/2019 Balance-Beginning of Year $ 296,020 $ 249,584 $ 207,065 Depreciation 51,250 46,436 42,519 Sales (1,282) 0 0 Balance-End of Year $ 345,988 $ 296,020 $ 249,584 116 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES NOTES TO SCHEDULE III SEPTEMBER 30, 2021 (in thousands) (1) Reconciliation 2021 2020 2019 Balance – Beginning of Year $ 2,043,864 $ 1,866,518 $ 1,719,578 Additions: Monaca (Pittsburgh), PA $ 11 $ 42 $ 0 Ridgeland (Jackson), MS 220 425 426 Urbandale (Des Moines), IA 0 0 20 Richland (Jackson), MS 0 0 0 O’Fallon (St. Louis), MO 0 0 4 Fayetteville, NC 3 0 4 Schaumburg (Chicago), IL 0 269 0 Burr Ridge (Chicago), IL 178 0 14 Romulus (Detroit), MI 0 0 217 Liberty (Kansas City), MO 0 262 137 Omaha, NE 0 0 19 Charlottesville, VA 0 0 6 Jacksonville, FL (FDX) 0 0 187 West Chester Twp. (Cincinnati), OH 0 0 0 Mechanicsville (Richmond), VA 9 21 14 St. Joseph, MO 106 10 25 Newington (Hartford), CT 19 13 0 Cudahy (Milwaukee), WI 8 0 41 Beltsville (Washington, DC), MD 208 0 0 Carlstadt (New York, NY), NJ 0 0 354 Granite City (St. Louis, MO), IL 60 0 0 Winston-Salem, NC 163 17 0 Elgin (Chicago), IL 3 204 0 Cheektowaga (Buffalo), NY 0 0 0 Tolleson (Phoenix), AZ 0 0 0 Edwardsville (Kansas City), KS (Carlstar) 0 50 0 Wheeling (Chicago), IL 632 0 10 Richmond, VA 7 184 138 Tampa, FL (FDX Ground) 0 44 0 Montgomery (Chicago), IL 0 0 0 Denver, CO 0 10 10 Hanahan (Charleston), SC (SAIC) 0 447 606 Hanahan (Charleston), SC (Amazon) 3 1,613 75 Augusta, GA (FDX Ground) 0 0 0 Tampa, FL (Tampa Bay Grand Prix) 0 0 0 Huntsville, AL 0 0 0 Augusta, GA (FDX) 9 0 6 Lakeland, FL 0 0 0 El Paso, TX 0 0 0 Richfield (Cleveland), OH 190 0 0 Tampa, FL (FDX) 447 36 8 Griffin (Atlanta), GA 0 7 142 Roanoke, VA (CHEP USA) 8 0 0 Orion, MI 215 51 0 Chattanooga, TN 0 20 210 Bedford Heights (Cleveland), OH 0 6 378 Punta Gorda, FL 0 0 0 Cocoa, FL 0 0 0 Orlando, FL 0 36 0 Topeka, KS 0 0 0 Memphis, TN 0 (21) 1,499 Houston, TX 30 28 0 Carrollton (Dallas), TX 2 548 128 117 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES NOTES TO SCHEDULE III, (CONT’D) SEPTEMBER 30, 2021 (in thousands) (1) Reconciliation (cont’d) 2021 2020 2019 Ft. Mill (Charlotte, NC), SC $ 0 $ 0 $ (10) Lebanon (Nashville), TN 0 0 0 Rockford, IL (Sherwin-Williams Co.) 0 0 0 Edinburg, TX 0 0 0 Streetsboro (Cleveland), OH 0 0 0 Corpus Christi, TX 0 0 0 Halfmoon (Albany), NY 1,014 202 0 Lebanon (Cincinnati), OH 0 102 0 Olive Branch (Memphis, TN), MS (Anda Pharmaceuticals) 0 0 0 Oklahoma City, OK (FDX Ground) 0 19 21 Waco, TX 0 0 0 Livonia (Detroit), MI 8 0 118 Olive Branch (Memphis, TN), MS (Milwaukee Tool) 0 0 0 Roanoke, VA (FDX Ground) 0 0 0 Green Bay, WI 10 0 0 Stewartville (Rochester), MN 8 0 4 Tulsa, OK 0 0 0 Buckner (Louisville), KY 0 0 0 Edwardsville (Kansas City), KS (International Paper) 0 0 0 Altoona, PA 0 (4) 4 Spring (Houston), TX 0 12 22 Indianapolis, IN 0 0 0 Sauget (St. Louis, MO), IL 2,204 0 0 Lindale (Tyler), TX 2,338 0 0 Kansas City, MO 0 0 23 Frankfort (Lexington), KY 0 0 0 Jacksonville, FL (FDX Groun d) 0 99 91 Monroe (Cincinnati), OH 0 0 4,052 Greenwood (Indianapolis), IN (ULTA) 8 253 0 Ft. Worth (Dallas), TX 29 287 32 Cincinnati, OH 0 0 0 Rockford, IL (Collins Aerospace Systems) 0 0 0 Concord (Charlotte), NC 0 9 0 Covington (New Orleans), LA 0 0 16 Imperial (Pittsburgh), PA 26 0 14 Burlington (Seattle/Everett), WA 0 49 92 Colorado Springs, CO 0 0 0 Louisville, KY 0 0 0 Davenport (Orlando), FL 3 304 0 Olathe (Kansas City), KS 3,621 89 0 Hamburg (Buffalo), NY 8 38 244 Ft. Myers, FL 0 21 0 Walker (Grand Rapids), MI 0 0 0 Mesquite (Dallas), TX 0 0 0 Aiken (Augusta, GA), SC 0 0 0 Homestead (Miami), FL 0 0 38 Oklahoma City, OK (Bunzl) 0 0 0 Concord (Charlotte), NC 0 0 0 Kenton, OH 0 0 849 Stow, OH 0 0 0 Charleston, SC (FDX) 19 0 0 Oklahoma City, OK (Amazon) 0 0 0 118 Table of Contents MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES NOTES TO SCHEDULE III, (CONT’D) SEPTEMBER 30, 2021 (in thousands) (1) Reconciliation (cont’d) 2021 2020 2019 Savannah, GA (Shaw) $ 0 $ 0 $ 0 Daytona Beach, FL 593 272 35 Mobile, AL 0 0 0 Charleston, SC (FDX Ground) 0 0 0 Braselton (Atlanta), GA 10 0 0 Trenton, NJ 0 0 83,988 Savannah, GA (FDX Ground) 0 0 27,532 Lafayette, IN 0 0 25,079 Greenwood (Indianapolis), IN (Amazon) 0 79,364 0 Lancaster (Columbus), OH 0 17,558 0 Whitsett (Greensboro), NC 0 46,711 0 Ogden (Salt Lake City), UT 0 12,667 0 Oklahoma City, OK (Amazon II) 0 14,963 0 Plain City (Columbus), OH 71,742 0 0 Locust Grove (Atlanta), GA 93,236 0 0 Burlington, VT 53,825 0 0 Kodak (Knoxville), TN 33,890 0 0 Shopping Center Somerset, NJ 0 9 18 Total Additions $ 265,123 $ 177,346 $ 146,940 Total Disposals (5,297) 0 0 Balance – End of Year $ 2,303,690 $ 2,043,864 $ 1,866,518 119 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 of 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MONMOUTH REAL ESTATE INVESTMENT CORPORATION (registrant) Date: November 12, 2021 By: /s/ Michael P. Landy Michael P. Landy, President, Chief Executive Officer and Director, its principal executive officer Date: November 12, 2021 By: /s/ Kevin S. Miller Kevin S. Miller, Chief Financial Officer, its principal financial officer and principal accounting officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: November 12, 2021 By: /s/ Eugene W. Landy Eugene W. Landy, Chairman of the Board and Director Date: November 12, 2021 By: /s/ Michael P. Landy Michael P. Landy, President, Chief Executive Officer and Director Date: November 12, 2021 By: /s/ Kevin S. Miller Kevin S. Miller, Chief Financial Officer and Director Date: November 12, 2021 By: /s/ Kiernan Conway Kiernan Conway, Director Date: November 12, 2021 By: /s/ Daniel D. Cronheim Daniel D. Cronheim, Director Date: November 12, 2021 By: /s/ Catherine B. Elflein Catherine B. Elflein, Director Date: November 12, 2021 By: /s/ Brian H. Haimm Brian H. Haimm, Director Date: November 12, 2021 By: /s/ Neal Herstik Neal Herstik, Director Date: November 12, 2021 By: /s/ Matthew I. Hirsch Matthew I. Hirsch, Director Date: November 12, 2021 By: /s/ Samuel A. Landy Samuel A. Landy, Director Date: November 12, 2021 By: /s/ Gregory T. Otto Gregory T. Otto, Director Date: November 12, 2021 By: /s/ Sonal Pande Sonal Pande, Director Date: November 12, 2021 By: /s/ Scott L. Robinson Scott L. Robinson, Director 120 Exhibit 4.3 DESCRIPTION OF SECURITIES General In this Exhibit 4.3, “we”, “us”, “our”, “MREIC” or “the Company”, refers to Monmouth Real Estate Investment Corporation, together with its predecessors and subsidiaries, unless the context requires otherwise. Our authorized stock consists of 526,600,000 shares, classified as 300,000,000 shares of common stock, par value $0.01 per share, 200,000,000 shares of excess stock, par value $0.01 per share, and 26,600,000 shares of 6.125% Series C Cumulative Redeemable Preferred Stock, par value $.01 per share, or Series C Preferred Stock. The excess stock is intended to, among other purposes, assist us in preserving our status as a REIT under the Code. See “—Restrictions on Ownership and Transfer.” Under the Maryland General Corporation Law (the “MGCL”) and our charter, a majority of our entire board of directors has the power, without action by our common stockholders, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have the authority to issue. Our board of directors is also authorized under the MGCL and our charter to classify and reclassify any unissued shares of our stock into other classes or series of stock. Before we issue shares of each class or series, our board of directors is required by the MGCL and our charter to set, subject to restrictions in our charter on ownership and transfer of our stock, the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption for each class or series. Under Maryland law, stockholders generally are not liable for a corporation’s debts or obligations. As of September 30, 2021, 98,333,416 shares of common stock were issued and outstanding, no shares of excess stock were issued and outstanding, and 21,985,616 shares of Series C Preferred Stock were issued and outstanding. Common Stock The shares of common stock have no preferences, conversion, sinking fund, redemption (except with respect to shares of excess stock, described above) or preemptive rights to subscribe for any of our securities. Subject to the provisions of our charter regarding restrictions on transfer and ownership of our stock and the terms of any other class or series of our stock, our common stockholders will have one vote per share on all matters submitted to a vote of our common stockholders, including the election of directors. Except as provided with respect to any other class or series of stock (including the Series C Preferred Stock), the holders of our common stock will possess the exclusive voting power. There is generally no cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of our common stock generally can elect all of the directors then standing for election, and the holders of the remaining shares of our common stock, if any, will not be able to elect any directors, except as otherwise provided by the terms of any other class or series of our stock, including the Series C Preferred Stock. Subject to any preferential rights granted to any class or series of our stock (including the Series C Preferred Stock), and to the provisions of our charter regarding restrictions on ownership and transfer of our stock, holders of our common stock will be entitled to receive dividends or other distributions if, as and when declared by us out of funds legally available for dividends or other distributions to stockholders. Subject to the provisions of our charter regarding restrictions on ownership and transfer of our stock, all shares of our common stock have equal distribution rights. In the event of the liquidation, dissolution or winding up of the affairs of our company, after payment of, or adequate provision for, all of our known debts and liabilities and after payment of any preferential amounts to any class of preferred stock which may be outstanding (including the Series C Preferred Stock), holders of our common stock will be entitled to share ratably in all assets that we may legally distribute to our stockholders. Our common stock is traded on the NYSE under the symbol “MNR.” The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company. 6.125% Series C Cumulative Redeemable Preferred Stock. Ranking. The Series C Preferred Stock ranks, with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up: (1) senior to all classes and series of our common stock and to all other stock issued by us the terms of which expressly provide that such securities rank junior to the Series C Preferred Stock with respect to payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; (2) on a parity with any class or series of stock that may be classified by our board of directors in the future the terms of which specifically provide that such class or series ranks on a parity with the Series C Preferred Stock with respect to payments of dividends and the distribution of assets upon our liquidation, dissolution or winding up; (3) junior to any class or series of stock that may be classified by our board of directors in the future the terms of which specifically provide that such class or series ranks senior to the Series C Preferred Stock with respect to payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (4) effectively junior to all of our existing and future indebtedness (including any future indebtedness that may be convertible to common stock or preferred stock) and the indebtedness of our existing subsidiaries and any future subsidiaries. Dividends. Holders of Series C Preferred Stock are entitled to receive, when, as and if authorized by our board of directors and declared by us, out of funds legally available for the payment of dividends, cumulative cash dividends in the amount of $1.53125 per share, which is equivalent to 6.125% of the $25.00 liquidation preference per share, per year. Dividends on the Series C Preferred Stock are payable quarterly in arrears in the amount of $0.3828125 on the 15th day of September, December, March and June (each, a “dividend payment date”) to holders of record as of the close of business on the applicable record date; except that, if any dividend payment date is not a business day, as defined in the articles supplementary setting forth the terms of the Series C Preferred Stock, then the dividend which would otherwise have been payable on that dividend payment date may be paid or set aside for payment on the next succeeding business day and no interest, additional dividends or other sums will accrue on the amount so payable for the period from that dividend payment date to the next succeeding business day. Any dividend payable on the Series C Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends are payable to holders of record of Series C Preferred Stock as they appear in the transfer agent’s records at the close of business on the applicable record date, which will be the date that our board of directors designates as the record date for the payment of a dividend that is not more than 31 nor fewer than ten days before the applicable dividend payment date. 2 Our board of directors will not authorize, and we will not pay or set apart for payment, any dividend on the Series C Preferred Stock at any time that: ● the terms and conditions of any of our agreements, including any agreement relating to our indebtedness, prohibit such authorization, payment or setting apart for payment; ● the terms and conditions of any of our agreements, including any agreement relating to our indebtedness, provide that such authorization, payment or setting apart for payment would constitute a breach of, or a default under, such agreement; or ● the law restricts or prohibits the authorization, payment or setting apart for payment. Notwithstanding the foregoing, dividends on the Series C Preferred Stock will accumulate whether or not: ● the terms and conditions of any law or any of our agreements, including any agreement relating to our indebtedness, prohibit the current payment of dividends on the Series C Preferred Stock; ● we have earnings; ● there are funds legally available for the payment of the dividends; or ● the dividends are declared by us. No interest, or sum in lieu of interest, will be payable in respect of any accumulated and unpaid dividends on the Series C Preferred Stock which may be in arrears, and holders of the Series C Preferred Stock will not be entitled to any dividends in excess of full cumulative dividends described above. Any dividend payment made on the Series C Preferred Stock will first be credited against the earliest accumulated but unpaid dividend due with respect to such shares which remains payable. Except as described below, we will not declare or pay or set aside for payment any dividends or declare or make any other distribution of cash or other property on or with respect to our common stock or any other class or series of stock that ranks junior to or on a parity with the Series C Preferred Stock with respect to the payment of dividends or redeem, purchase or otherwise acquire for any consideration, or make any funds available for a sinking fund for the redemption of, any shares of common stock or any other class or series of stock that ranks junior to or on a parity with the Series C Preferred Stock with respect to the payment of dividends, unless we also have paid in cash full cumulative dividends on the Series C Preferred Stock for all past dividend periods. Except as described below, if we do not declare and either pay in cash, or set aside a sum sufficient for payment of, full cumulative dividends on the Series C Preferred Stock and any other class or series of stock that ranks on a parity, with respect to the payment of dividends, with the Series C Preferred Stock, any amount which we declare as a dividend will be allocated pro rata to the holders of Series C Preferred Stock and each such other class or series of stock, so that the amount of dividends declared for each share of Series C Preferred Stock and for each share of such other class or series of stock is proportionate to the accumulated and unpaid dividends on those shares (which shall not include any amount in respect of unpaid dividends on such other class or series of stock for prior Series C dividend periods if such other class or series of stock does not have a cumulative dividend). 3 Notwithstanding the foregoing restrictions, and regardless of whether we have paid full cumulative dividends on the Series C Preferred Stock or any other class or series of our stock that ranks on a parity with the Series C Preferred Stock with respect to the payment of dividends for any dividend period, we will not be prohibited or limited from: ● paying dividends on any shares of our stock in shares of our common stock or any other class or series of our stock ranking junior to the Series C Preferred Stock as to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; ● converting or exchanging any shares of our stock for shares of our common stock or any other class or series of our stock ranking junior to the Series C Preferred Stock as to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; ● redeeming, purchasing or otherwise acquiring any shares of our stock pursuant to the provisions of our charter relating to the restrictions upon ownership and transfer of stock or permitting us to redeem shares of our stock to assist us in preserving our status as a REIT; or ● purchasing or acquiring shares of Series C Preferred Stock or shares of any other class or series of our stock ranking on a parity with the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series C Preferred Stock. If, for any taxable year, we elect to designate as “capital gain dividends” (as defined in Section 857 of the Code) a portion, which we refer to as the Capital Gains Amount, of the dividends not in excess of our earnings and profits that are paid or made available for such taxable year to the holders of all classes and series of stock, or the total dividends, then the portion of the Capital Gains Amount that will be allocable to the holders of the Series C Preferred Stock will be the Capital Gains Amount multiplied by a fraction, the numerator of which will be the total dividends (within the meaning of the Code) paid or made available to the holders of the Series C Preferred Stock for the year and the denominator of which will be the total dividends. Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of the then-outstanding shares of Series C Preferred Stock will be entitled to be paid out of our assets legally available for distribution to our stockholders, subject to the payment of or provision for our debts and other liabilities and the preferential rights of the holders of any class or series of stock that we may issue ranking senior to the Series C Preferred Stock with respect to the distribution of assets upon our liquidation, dissolution or winding up, a liquidation preference of $25.00 per share plus an amount equal to any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the date of payment, before any distribution or payment may be made to holders of our common stock or any other class or series of our stock ranking junior to the Series C Preferred Stock with respect to distributions upon our liquidation, dissolution or winding up. If, upon our voluntary or involuntary liquidation, dissolution or winding up, our available assets are insufficient to pay the full amount of the liquidating distributions on all outstanding shares of Series C Preferred Stock and the corresponding amounts payable on all outstanding shares of each other class or series of our stock ranking on a parity with the Series C Preferred Stock in the distribution of assets upon our liquidation, dissolution or winding up, then the holders of Series C Preferred Stock and each such other class or series of stock ranking on a parity with the Series C Preferred Stock as to rights upon our liquidation, dissolution and winding up will share ratably in any distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. Holders of the Series C Preferred Stock will be entitled to notice of any voluntary or involuntary liquidation, dissolution or winding up no fewer than 30 days and no more than 60 days before the first payment date of any such liquidating distribution. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of the Series C Preferred Stock will have no right or claim to any of our remaining assets. Our consolidation, merger or conversion with or into any other entity or the sale, lease, transfer or conveyance of all or substantially all of our property or business will not be deemed to constitute our liquidation, dissolution or winding up. 4 In determining whether a distribution (other than upon voluntary or involuntary dissolution) by dividend, redemption or other acquisition of shares of our stock or otherwise is permitted under the MGCL, amounts that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of the holders of the Series C Preferred Stock will not be added to our total liabilities. Optional Redemption. We may redeem any or all of the outstanding shares of Series C Preferred Stock at any time for a cash redemption price per share equal to $25.00, plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice, as provided below, if our board of directors determines that such redemption is necessary to assist us in preserving our status as a REIT. In addition, we have the option to redeem the Series C Preferred Stock, in whole or in part, from time to time, for a cash redemption price per share equal to $25.00, plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice, as provided below. Special Optional Redemption. At any time when both (i) the Series C Preferred Stock is not listed on the NYSE, the NYSE American or the NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or the NASDAQ, and (ii) we are not subject to the reporting requirements of the Exchange Act, and any shares of Series C Preferred Stock are outstanding (which we refer to collectively as a Delisting Event), we will have the option to redeem the Series C Preferred Stock, in whole or in part, within 90 days after the date of the Delisting Event, for a cash redemption price per share equal to $25.00, plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice, as provided below. Upon the occurrence of a Change of Control (as defined below), we will have the option to redeem the Series C Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for a cash redemption price per share equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice, as provided below. 5 A “Change of Control” occurs when, after the original issuance of the Series C Preferred Stock, the following have occurred and are continuing: ● the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions, of shares of our stock entitling that person to exercise more than 50% of the total voting power of all outstanding shares of our stock entitled to vote generally in the election of directors (and such a person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and ● after the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity (or, if in connection with such transaction holders of common stock receive consideration consisting of common equity securities of another entity, such other entity) has a class of common securities (or American Depository Receipts representing such securities) listed on the NYSE, the NYSE American or the NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or the NASDAQ. If, before the date fixed for conversion of Series C Preferred Stock in connection with a Delisting Event or Change of Control, as described more fully below, we provide notice of redemption of shares of Series C Preferred Stock (whether pursuant to our optional redemption right or our special optional redemption rights), holders of such shares of Series C Preferred Stock will not be entitled to convert their shares as described below under “– Conversion Rights.” Procedures for Redemption. We will mail to the address of a record holder, as shown on our share transfer books, a notice of redemption no less than 30 days nor more than 60 days before the redemption date and before the date fixed for conversion as described under “– Conversion Rights” below. In addition to any information required by law or the rules of any exchange on which the Series C Preferred Stock is listed, quoted or admitted to trading, each notice must state the following: ● the date for redemption, or the redemption date; ● the redemption price; ● the total number of shares of Series C Preferred Stock to be redeemed (and, if fewer than all shares held by any holder are to be redeemed, the number of shares to be redeemed from such holder); ● the place or places where the shares of Series C Preferred Stock are to be surrendered for payment, together with the certificates, if any, representing such shares (duly endorsed for transfer) and any other documents or procedures that we require in connection with such redemption; ● if Series C Preferred Stock is being redeemed pursuant to our special optional redemption right, that the Series C Preferred Stock is being redeemed in connection with the occurrence of a Delisting Event or a Change of Control, as applicable, and, if in connection with the occurrence of a Change of Control, a brief description of the transaction or transactions constituting such Change or Control; ● if a Delisting Event or Change of Control has occurred, that holders of the shares of Series C Preferred Stock to which the notice relates will not be entitled to tender such shares for conversion in connection with the Delisting Event or Change of Control, as applicable, and each share of Series C Preferred Stock tendered for conversion that is selected, before the date fixed for such conversion, for redemption will be redeemed on the related redemption date instead of converted on the applicable conversion date; and ● that dividends on the shares of Series C Preferred Stock designated for redemption will cease to accumulate on the redemption date. 6 A failure to give such notice or any defect in the notice or in its mailing will not affect the sufficiency of notice or validity of the proceedings for redemption of shares of Series C Preferred Stock called for redemption except as to the holder to whom notice was defective or not given. A redemption notice that has been mailed in the manner provided above will be presumed to be given on the date it is mailed whether or not the stockholder receives the redemption notice. The redemption price of the shares of Series C Preferred Stock to be redeemed will then be paid to or on the order of the person whose name appears in our stock ledger as the record owner of such shares. If we have given a notice of redemption, we have set aside the funds necessary for the redemption of the shares of Series C Preferred Stock called and we have given irrevocable instructions to pay the redemption price and all accumulated and unpaid dividends payable on the applicable redemption date, then, from and after the redemption date: ● all dividends on the shares of Series C Preferred Stock designated for redemption in the notice will cease to accumulate; ● all rights of the holders of the shares of Series C Preferred Stock designated for redemption will cease and terminate, except the right to receive the redemption price (including all accumulated and unpaid dividends up to, but not including, the redemption date, that are payable in connection with the payment of the redemption price), without interest; ● the shares of Series C Preferred Stock designated for redemption may not thereafter be transferred except with our consent; and ● the shares of Series C Preferred Stock designated for redemption will not be outstanding for any purpose whatsoever. The holders of shares of Series C Preferred Stock as of the close of business on a record date fixed for the payment of a dividend on the Series C Preferred Stock will be entitled to receive such dividend on the corresponding payment date, notwithstanding the redemption of the Series C Preferred Stock between such record date and the corresponding payment date. If less than all of the outstanding shares of Series C Preferred Stock are to be redeemed pursuant to either the optional redemption right or the special optional redemption rights discussed above (except for redemption necessary to assist us in preserving our status as a REIT), the shares of Series C Preferred Stock to be redeemed will be determined pro rata (as nearly as practicable without creating fractional shares) or by lot. If the redemption is to be by lot, and if, as a result of the redemption, any holder of Series C Preferred Stock would own, or be deemed by virtue of certain attribution provisions of the Code to own, in excess of 9.8% in value or in number of shares (whichever is more restrictive) of our issued and outstanding stock (which includes the Series C Preferred Stock but does not include any shares of excess stock), or violate any other restriction or limitation of our stock set forth in our charter, then, except as otherwise permitted in our charter, we will redeem the requisite number of shares of Series C Preferred Stock of that holder such that the holder will not own or be deemed by virtue of certain attribution provisions of the Code to own, subsequent to the redemption, in excess of 9.8% in value or in number of shares (whichever is more restrictive) of our issued and outstanding stock or violate any other restriction or limitation of our stock set forth in our charter. 7 Notwithstanding the foregoing, unless full cumulative dividends on all outstanding shares of Series C Preferred Stock have been or contemporaneously are paid, or declared and set apart for payment, for all past dividend periods, no shares of Series C Preferred Stock may be redeemed unless all outstanding shares of Series C Preferred Stock are simultaneously redeemed, and we will not purchase or otherwise acquire directly or indirectly any Series C Preferred Stock, except by (i) conversion or exchange for shares of our common stock or any other class or series of our stock ranking junior to the Series C Preferred Stock as to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (ii) redemption, purchase or other acquisition of shares of stock pursuant to the provisions of our charter relating to the restrictions on ownership and transfer of our stock, or (iii) purchase or other acquisition of shares of the Series C Preferred Stock or shares of any other class or series of our stock ranking on a parity with the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series C Preferred Stock. All shares of the Series C Preferred Stock that we redeem or repurchase will be retired and restored to the status of authorized but unissued shares of common stock, without designation as to class or series. Conversion Rights. Upon the occurrence of a Delisting Event or a Change of Control, unless, before the date fixed for such conversion, we provide notice of redemption of such shares of Series C Preferred Stock as described above under “- Optional Redemption” or “– Special Optional Redemption” and subject to the restrictions on ownership and transfer of our stock set forth in our charter, then, unless holders of the Series C Preferred Stock will receive the Alternative Form Consideration as described below, each holder of Series C Preferred Stock will have the right to convert all or part of the Series C Preferred Stock held by such holder into a number of shares of common stock per share of Series C Preferred Stock to be so converted, or the Common Share Conversion Consideration, equal to the lesser of: ● the quotient obtained, which we refer to as the Conversion Rate, by dividing (i) the sum of $25.00 plus the amount of any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the applicable date fixed for conversion (unless the applicable conversion date is after a record date set for the payment of a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be included in this sum), by (ii) the Common Share Price (as defined below); and ● 3.41997, the Share Cap, subject to certain adjustments described below. The “Common Share Price” for any Change of Control will be (i) if the consideration to be received in the Change of Control by holders of shares of common stock is solely cash, the amount of cash consideration per share of common stock, and (ii) if the consideration to be received in the Change of Control by holders of shares of common stock is other than solely cash, the average of the closing sales price per share of common stock on the NYSE, the NYSE American or the NASDAQ, or an exchange or quotation system that is a successor to the NYSE, the NYSE American or the NASDAQ, for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control. The “Common Share Price” for any Delisting Event will be the average of the closing sale prices per share of common stock on the NYSE, the NYSE American or the NASDAQ, or an exchange or quotation system that is a successor to the NYSE, the NYSE American or the NASDAQ, for the ten consecutive trading days immediately preceding, but not including, the effective date of the Delisting Event. 8 The Share Cap will be subject to pro rata adjustments for any stock splits (including those effected pursuant to a distribution of common stock), subdivisions or combinations with respect to our common stock as follows: the adjusted Share Cap as the result of such an event will be the number of shares of common stock that is equivalent to the product of (i) the Share Cap in effect immediately before such event multiplied by (ii) a fraction, the numerator of which is the number of shares of common stock outstanding after giving effect to such event and the denominator of which is the number of shares of common stock outstanding immediately before such event. In the case of a Delisting Event or Change of Control pursuant to, or in connection with, which shares of common stock will be converted into cash, securities or other property or assets (including any combination thereof), or the Alternative Form Consideration, a holder of shares of Series C Preferred Stock will receive upon conversion of a share of Series C Preferred Stock the kind and amount of Alternative Form Consideration which such holder would have owned or been entitled to receive had such holder held a number of shares of common stock equal to the Common Share Conversion Consideration immediately before the effective time of the Delisting Event or Change of Control. If the holders of shares of common stock have the opportunity to elect the form of consideration to be received in connection with the Delisting Event or Change of Control, the form of consideration that holders of the Series C Preferred Stock will receive will be in the form of consideration elected by the holders of a plurality of the shares of common stock held by stockholders who participate in the election and will be subject to any limitations to which all holders of shares of common stock are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in connection with the Delisting Event or Change of Control. We will not issue fractional shares of common stock upon the conversion of the Series C Preferred Stock. Instead, we will pay the cash value of any such fractional share based on the Common Share Price. Within 15 days after the occurrence of a Delisting Event or Change of Control, we will provide to holders of record of outstanding shares of Series C Preferred Stock, at the addresses for such holders shown on our share transfer books, a notice of the occurrence of the Delisting Event or Change of Control. This notice will state the following: ● the events constituting the Delisting Event or Change of Control; ● the date of the Delisting Event or Change of Control; ● the last date on which the holders of shares of Series C Preferred Stock may exercise their conversion rights in connection with the Delisting Event or Change of Control, as applicable; ● the method and period for calculating the Common Share Price; ● the date fixed for conversion in connection with the Delisting Event or Change of Control, or the conversion date, which will be a business day fixed by our board of directors that is not fewer than 20 and not more than 35 days after the date of the notice; ● that if, before the applicable conversion date, we provide notice of our election to redeem all or any portion of the shares of Series C Preferred Stock, holders of the Series C Preferred Stock will not be able to convert the shares of Series C Preferred Stock so called for redemption, and such shares of Series C Preferred Stock will be redeemed on the related redemption date, even if they have already been tendered for conversion in connection with the Delisting Event or Change of Control, as applicable; 9 ● if applicable, the type and amount of Alternative Conversion Consideration entitled to be received per share of Series C Preferred Stock converted; ● the name and address of the paying agent and the conversion agent; and ● the procedures that the holders of shares of Series C Preferred Stock must follow to exercise their conversion rights in connection with the Delisting Event or Change of Control, as applicable. A failure to give such notice or any defect in the notice or in its mailing will not affect the sufficiency of the notice or validity of the proceedings for conversion of shares of Series C Preferred Stock in connection with a Delisting Event or Change of Control, as applicable, except as to the holder to whom notice was defective or not given. A notice that has been mailed in the manner provided herein will be presumed to be given on the date it is mailed whether or not the stockholder receives such notice. We will issue a press release for publication on the Dow Jones & Company, Inc., Business Wire, PR Newswire or Bloomberg Business News (or, if these organizations are not in existence at the time of issuance of the press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) containing the information stated in such a notice, and post such a notice on our website, in any event before the opening of business on the first business day after any date on which we provide the notice described above to the holders of record of Series C Preferred Stock. To exercise conversion rights in connection with a Delisting Event or Change of Control, as applicable, a holder of record of Series C Preferred Stock will be required to deliver, on or before the close of business on the applicable conversion date, the certificates, if any, representing any certificated shares of Series C Preferred Stock to be converted, duly endorsed for transfer, together with a completed written conversion notice and any other documents we reasonably require in connection with such conversion, to our conversion agent. The conversion notice must state: ● the relevant conversion date; and ● the number of shares of Series C Preferred Stock to be converted. A holder of Series C Preferred Stock may withdraw any notice of exercise of such holder’s conversion rights in connection with a Delisting Event or Change of Control, as applicable, in whole or in part, by a written notice of withdrawal delivered to our conversion agent before the close of business on the business day before the applicable conversion date. The notice of withdrawal must state: ● the number of withdrawn shares of Series C Preferred Stock; ● if certificated shares of Series C Preferred Stock have been tendered for conversion and withdrawn, the certificate numbers of the withdrawn certificated shares of Series C Preferred Stock; and ● the number of shares of Series C Preferred Stock, if any, which remain subject to the conversion notice. 10 Notwithstanding the foregoing, if the Series C Preferred Stock is held in global form, the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures of DTC. Shares of Series C Preferred Stock as to which the holder’s conversion right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable form of consideration on the applicable conversion date unless, before the applicable conversion date, we provide notice of our election to redeem such shares of Series C Preferred Stock, whether pursuant to our optional redemption right or our special optional redemption rights. If we elect to redeem shares of Series C Preferred Stock that would otherwise be converted into the applicable form of consideration on a conversion date, such shares of Series C Preferred Stock will not be so converted and the holders of such shares will be entitled to receive on the applicable redemption date the redemption price for such shares. We will deliver amounts owed upon conversion no later than the third business day after the applicable conversion date. In connection with the exercise of conversion rights in connection with any Delisting Event or Change of Control, we will comply with all U.S. federal and state securities laws and stock exchange rules in connection with any conversion of shares of Series C Preferred Stock into shares of common stock. Notwithstanding any other provision of the terms of the Series C Preferred Stock, no holder of Series C Preferred Stock will be entitled to convert such Series C Preferred Stock into shares of common stock to the extent that receipt of such shares of common stock would cause such holder (or any other person) to violate the restrictions on ownership and transfer of our stock contained in our charter. See “—Restrictions on Ownership and Transfer.” The conversion and redemption features of the Series C Preferred Stock may make it more difficult for a party to take over our company or discourage a party from taking over our company. Except as provided above in connection with a Delisting Event or Change of Control, the Series C Preferred Stock is not convertible into or exchangeable for any other property or securities, except that shares of Series C Preferred Stock may be exchanged for shares of our excess stock pursuant to the provisions of our charter relating to restrictions on ownership and transfer of our stock. Voting Rights. Except as described below, holders of Series C Preferred Stock will generally have no voting rights. On any matter in which the Series C Preferred Stock may vote (as expressly provided in our charter), each share of Series C Preferred Stock shall be entitled to cast one vote. If dividends on the Series C Preferred Stock are in arrears, whether or not declared, for six or more quarterly dividend periods, whether or not these quarterly dividend periods are consecutive, the holders of the Series C Preferred Stock and the holders of all other classes and series of our preferred stock ranking on a parity with the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, upon which like voting rights have been conferred and are exercisable, or voting preferred stock, and with which the holders of Series C Preferred Stock are entitled to vote together as a single class, voting together as a single class, will have the exclusive power to elect two additional directors, or the preferred directors, to serve on our board of directors, until all dividends accumulated on the outstanding shares of Series C Preferred Stock for all past dividend periods and the then- current dividend period shall have been fully paid. Unless the number of our directors has previously been increased pursuant to the terms of any class or series of voting preferred stock with which the holders of the Series C Preferred Stock are entitled to vote together as a single class in the election of preferred directors (and has not subsequently been decreased), the number of our directors will automatically increase by two at such time as holders of the Series C Preferred Stock become entitled to vote in the election of preferred directors. Unless shares of voting preferred stock remain outstanding and entitled to vote in the election of preferred directors, the term of office of preferred directors will terminate, and the number of our directors will automatically decrease by two, when all accumulated dividends on the Series C Preferred Stock for all past dividend periods and the then-current dividend period have been fully paid. If the right of holders of the Series C Preferred Stock to elect the preferred directors terminates after the record date for the determination of holders of shares of Series C Preferred Stock entitled to vote in any election of preferred directors but before the closing of the polls in such election, holders of the Series C Preferred Stock outstanding as of such record date will not be entitled to vote in such election of preferred directors. The right of the holders of the Series C Preferred Stock to elect preferred directors will again vest if and whenever dividends are in arrears for six quarterly periods, as described above. In no event will the holders of the Series C Preferred Stock be entitled to nominate or elect an individual as a preferred director, and no individual shall be qualified to be nominated for election or to serve as a preferred director, if the individual’s service as a director would cause us to fail to satisfy a requirement relating to director independence of any national securities exchange on which any class or series of our stock is listed or quoted. 11 At any time that holders of Series C Preferred Stock have the right to elect preferred directors, but such preferred directors have not been elected, we must call a special meeting of our stockholders for the purpose of electing preferred directors upon the written request of the holders of record of at least 10% of the outstanding shares of the Series C Preferred Stock and any other class or series of voting preferred stock with which the holders of the Series C Preferred Stock are entitled to vote together as a single class in the election of preferred directors, unless such request is received fewer than 90 days before the date fixed for the next annual or special meeting of our stockholders, in which case, the election of preferred directions will be held at the earlier of the next annual or special meeting of our stockholders. The preferred directors will be elected by a plurality of the votes cast in the election of preferred directors, and each preferred director will serve until the next annual meeting of our stockholders and until his or her successor is duly elected and qualifies, or until such preferred director’s term of office terminates as described above. Preferred directors will not be classified with respect to the terms for which they hold office. Any preferred director elected by the holders of the Series C Preferred Stock and any class or series of voting preferred stock may be removed, with or without cause, by a vote of the holders of record of a majority of the outstanding shares of Series C Preferred Stock and all classes and series of voting preferred stock then entitled to vote in the election of preferred directors, voting together as a single class. Holders of common stock will not be entitled to vote in the election or removal of preferred directors. So long as any shares of Series C Preferred Stock are outstanding, the approval of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock and any equally-affected class or series of voting preferred stock with which the holders of Series C Preferred Stock are entitled to vote as a single class on such matters (voting together as a single class), is required: ● to authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to the Series C Preferred Stock with respect to the payment of dividends or the distribution of assets upon our liquidation, dissolution or winding up, the reclassification of any of our authorized stock into any such senior stock or the creation, authorization or issuance of any obligation or security convertible or exchangeable into or evidencing the right to purchase any such senior stock; or ● except as described below, to amend, alter or repeal any provision of our charter, including the articles supplementary setting forth the terms of the Series C Preferred Stock, whether by merger, consolidation, transfer or conveyance of all or substantially all of our assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock. 12 The following actions will not materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock, and the holders of the Series C Preferred Stock will not be entitled to vote on: ● any increase in the number of authorized or issued shares of common stock, excess stock or preferred stock without further designation as to class or series, or the creation or issuance of any class or series of our stock ranking junior or on a parity with the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; or ● any amendment, alteration or repeal of any provision of our charter, including the articles supplementary setting forth the terms of the Series C Preferred Stock, as a result of a merger, consolidation, transfer or conveyance of all or substantially all of our assets or other business combination, if (i) the Series C Preferred Stock (or the securities into which the Series C Preferred Stock has been converted in any successor person or entity to us) remains outstanding with the terms thereof unchanged in all material respects or is exchanged for securities of the successor person or entity with substantially identical rights (taking into account that, upon the occurrence of such an event, we may not be the surviving entity) or (ii) if the holders of the Series C Preferred Stock receive in connection with such event an amount of cash per share of Series C Preferred Stock equal to the liquidation preference of $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the date of such event (unless such date of such event is after a record date set for the payment of a dividend on the Series C Preferred Stock and before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be included in such sum). The voting provisions above will not apply if, at or before the time when the act with respect to which the vote would otherwise be required would occur, we have duly redeemed or called for redemption upon proper notice and sufficient funds, in cash, shall have been deposited in trust to effect such redemption of all outstanding shares of Series C Preferred Stock. No Maturity, Sinking Fund, Mandatory Redemption or Preemptive Rights. The Series C Preferred Stock has no stated maturity date, will not be subject to any sinking fund or mandatory redemption provisions and will have no preemptive rights to subscribe for any of our securities. Ownership Limits and Restrictions on Transfer. In order to assist us in maintaining our qualification as a REIT, ownership by any person of our outstanding stock, including the Series C Preferred Stock, is restricted under our charter. Any certificates representing shares of Series C Preferred Stock will include a legend regarding restrictions on transfer. For further information regarding restrictions on ownership and transfer of the Series C Preferred Stock, see “Restrictions on Ownership and Transfer”. Information Rights. During any period during which we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and any shares of Series C Preferred Stock are outstanding, we will (i) transmit by mail or other permissible means under the Exchange Act to all holders of Series C Preferred Stock as their names and addresses appear in our record books and without cost to such holders, copies of the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other than any exhibits that would have been required) within 15 days after the respective dates by which we would have been required to file such reports with the SEC if we were subject to Section 13 or 15(d) of the Exchange Act, in each case, based on the dates on which we would be required to file such periodic reports if we were an “accelerated filer” within the meaning of the Exchange Act, and (ii) within 15 days after written request, supply copies of such reports to any prospective holder of the Series C Preferred Stock 13 Listing; Transfer Agent; Distributions Disbursing Agent. Our Series C Preferred Stock is traded on the NYSE under the symbol “MNRprC.” The registrar, transfer agent and distributions disbursing agent for the Series C Preferred Stock is American Stock Transfer & Trust Company. Restrictions on Ownership and Transfer To qualify as a REIT under the Code, we must satisfy a number of statutory requirements, including a requirement that no more than 50% in value of our outstanding shares of stock may be owned, actually or constructively, by five or fewer individuals (as defined by the Code to include certain entities) during the last half of a taxable year. In addition, if we, or an actual or constructive owner of 10% or more of us, actually or constructively owns 10% or more of a tenant of ours (or a tenant of any partnership in which we are a partner), the rent we receive (either directly or through any such partnership) from such tenant will not be qualifying income for purposes of the REIT gross income tests of the Code. Our stock must also be beneficially owned by 100 or more persons during at least 335 days of a taxable year of twelve months or during a proportionate part of a shorter taxable year. Our charter prohibits any transfer of shares of our stock or any other change in our capital structure that would result in: ● any person directly or indirectly acquiring beneficial ownership of more than 9.8%, in value or number of shares, whichever is more restrictive, of the outstanding shares of our stock (other than shares of excess stock); ● outstanding shares of our stock (other than shares of excess stock) being constructively or beneficially owned by fewer than 100 persons; ● our being “closely held” within the meaning of Section 856 of the Code; or ● our otherwise failing to qualify as a REIT under the Code. We refer to these restrictions, collectively, as the “ownership limits.” Subject to certain limitations, our board of directors may, in its sole discretion, exempt one or more persons from the ownership limits, on such terms and subject to such conditions as our board of directors may require, including a ruling from the Internal Revenue Service or an opinion of counsel that such exemption will not cause us to fail to qualify as a REIT. 14 Our charter requires that any person who acquires or attempts to acquire shares of our stock (other than shares of excess stock) in violation of the ownership limits give immediate, or in the event of a proposed or attempted transfer, at least 15 days’ prior, written notice to us. If any person attempts to transfer shares of our stock, or attempts to cause any other event to occur that would result in a violation of the ownership limits, then: ● any proposed transfer will be void ab initio, the purported transferee of such shares will acquire no interest in the shares and the shares that were subject to the attempted transfer or other event will, effective as of the close of business on the business day before the date of the attempted transfer or other event, automatically, without action by us or any other person, be converted into and exchanged for an equal number of shares of excess stock; ● we may redeem any shares of excess stock and, before the attempted transfer or other event that results in a conversion into and exchange for shares of excess stock, any shares of our stock of any other class or series that are attempted to be owned or transferred in violation of the ownership limits, at a price equal to the lesser of the price per share paid in the attempted transfer or other event that violated the ownership limits and the last reported sale price of shares of such class of our stock on the NYSE on the day we give notice of redemption or, if shares of such class of our stock are not then traded on the NYSE, the market price of such shares determined in accordance with our charter; and ● our board of directors may take any action it deems advisable to refuse to give effect to, or to prevent, any such attempted transfer or other event. Shares of excess stock will be held in book entry form in the name of a trustee appointed by us to hold the shares for the benefit of one or more charitable beneficiaries appointed by us and a beneficiary designated by the purported transferee, which we refer to as the designated beneficiary, whose ownership of the shares of our stock that were converted into and exchanged for shares of excess stock does not violate the ownership limits. The purported transferee may not receive consideration in exchange for designating the designated beneficiary in an amount that exceeds the price per share that the purported transferee paid for the shares of our stock converted into and exchanged for shares of excess stock or, if the purported transferee did not give value for such shares, the market price of the shares on the date of the purported transfer or other event resulting in the conversion and exchange. Any excess amounts received by the purported transferee as consideration for designating the designated beneficiary must be paid to the trustee for the benefit of the charitable beneficiary. Upon the written designation of a designated beneficiary and the waiver by us of our right to redeem the shares of excess stock, the trustee will transfer the shares of excess stock to the designated beneficiary and, upon such transfer, the shares of excess stock will automatically be converted into and exchanged for the same number and class or series of shares of our stock as were converted into and exchanged for such shares of excess stock. Shares of excess stock are not otherwise transferable. If the purported transferee attempts to transfer shares of our stock before discovering that the shares have been converted into and exchanged for shares of excess stock, the shares will be deemed to have been sold on behalf of the trust, and any amount received by the purported transferee in excess of what the purported transferee would have been entitled to receive as consideration for designating a designated beneficiary will be paid to the trustee on demand. Holders of shares of excess stock are not entitled to vote on any matter submitted to a vote at a meeting of our stockholders. Upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of our company, the trustee must distribute to the designated beneficiary any amounts received as distributions on the shares of excess stock that do not exceed the price per share paid by the purported transferee in the transaction that created the violation or, if the purported transferee did not give value for such shares, the market price of the shares of our stock that were converted into and exchanged for shares of excess stock, on the date of the purported transfer or other event that resulted in such conversion and exchange. Any amount received upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of our company not payable to the designated beneficiary, and any other dividends or distributions paid on shares of excess stock, will be distributed by the trustee to the charitable beneficiary. 15 Every holder of more than 5% of the number or value of outstanding shares of our stock must give written notice to us stating the name and address of such owner, the number of shares of stock beneficially or constructively owned and a description of the manner in which the shares are owned. Our board of directors may, in its sole and absolute discretion, exempt certain persons from the ownership limitations contained in our charter if ownership of shares of stock by such persons would not disqualify us as a REIT under the Code. The Board of Directors Our board of directors is currently comprised of thirteen directors. Our charter and bylaws provide that the board may alter the number of directors to a number not more than 15 or less than three. Our charter provides that the directors shall be divided, as evenly as possible, into three classes, with approximately one-third of the directors elected by the stockholders annually. Each director will serve for a three year term and until his or her successor is duly elected and has qualified. Holders of shares will have no right to cumulative voting in the election of directors. Our directors are elected by a plurality of the votes cast; however, our Corporate Governance Guidelines require that a director will offer to resign if the director receives a greater number of votes “withheld” than votes “for” such election in an uncontested election of directors. Business Combinations Under the Maryland Business Combination Act, business combinations between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as: ● any person who beneficially owns 10% or more of the voting power of the corporation’s shares; or ● an affiliate or associate of the corporation who, at any time within the two-year period before the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approves in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board. After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: ● 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and ● two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or shares held by an affiliate or associate of the interested stockholder. 16 These supermajority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under the MGCL, for their shares of common stock in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. The MGCL permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Pursuant to the act, our charter exempts any business combination between us and UMH Properties, Inc., or UMH. Consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and UMH. Control Share Acquisitions The provisions of the Maryland Control Share Acquisition Act provide that a holder of control shares of a Maryland corporation acquired in a control share acquisition has no voting rights with respect to those shares except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: ● one-tenth or more but less than one-third; ● one-third or more but less than a majority; or ● majority or more of all voting power. Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A control share acquisition means, subject to certain exceptions, the acquisition of issued and outstanding control shares. A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders’ meeting. If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or, if a meeting of stockholders at which the voting rights of the shares are considered and not approved, as of the date of that meeting. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition. 17 The control share acquisition statute does not apply to (a) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) acquisitions approved or exempted by the charter or bylaws of the corporation. Our bylaws contain a provision exempting from the provisions of the Control Share Acquisition Act any and all acquisitions by any person of shares of our stock. There can be no assurance that our board of directors will not eliminate this provision at any time in the future. Unsolicited Takeovers Act Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions: ● a classified board; ● a two-thirds vote requirement for removing a director; ● a requirement that the number of directors be fixed only by vote of the directors; ● a requirement that a vacancy on the board be filled only by the affirmative vote of a majority of the remaining directors in office and for the remainder of the full term of the class of directors in which the vacancy occurred; and ● a requirement for the calling of special meeting of stockholders may occur if a majority of stockholders request such in writing. Through provisions in our charter and bylaws unrelated to Subtitle 8, we already (a) have a classified board, (b) require a two-thirds vote for the removal of any director from the board, (c) vest in the board the exclusive power to fix the number of directors and (d) require, unless called by our president, the chairman of the board or a majority of the board of directors, the request of stockholders entitled to cast a majority of the votes entitled to be cast at such meeting to call a special meeting of stockholders. We have elected to be governed by the provision of Subtitle 8 providing that a vacancy on our board of directors may be filled only by the remaining directors, for the remainder of the full term of the class of directors in which the vacancy occurred. Advance Notice of Director Nominations and New Business Our bylaws provide that, with respect to an annual meeting of our stockholders, nominations of individuals for election to our board of directors and the proposal of business to be considered by stockholders at an annual meeting may be made only (i) by or at the discretion of our board of directors or a duly authorized committee thereof or (ii) by any stockholder of record as of the date of the notice required by our bylaws, the record date for the meeting and the meeting date and who has provided the information required pursuant to the advance notice procedures of the bylaws. With respect to special meetings of our stockholders, only the business specified in the notice of the meeting may be brought before the meeting. Nominations of individuals for election to our board of directors at a special meeting of our stockholders may be made only (i) by our board of directors or a duly authorized committee thereof or (ii) provided that directors or a duly authorized committee thereof will be elected at the meeting, by a stockholder of record as of the date of the notice required by our bylaws, the record date for the meeting and the meeting date and who has provided the information required pursuant to the advance notice provisions of the bylaws. 18 Meetings of Stockholders Under our bylaws, annual meetings of stockholders are to be held each year at a date and time as determined by our board of directors. Special meetings of stockholders may be called only by a majority of the directors then in office, by the chairman of our board of directors or by the president and must be called by the secretary upon the written request of stockholders entitled to cast a majority of the votes entitled to be cast at the meeting. Amendment of Charter and Bylaws Our charter generally may be amended only if advised by the board of directors and approved by the affirmative vote of stockholders entitled to cast not less than two-thirds of all the votes entitled to be cast on the matter. Under the MGCL, certain charter amendments may be effected by the board of directors, without stockholder approval, such as an amendment changing the name of the corporation or an amendment increasing or decreasing the number of authorized shares of our stock. Our bylaws may be amended only by vote of a majority of the board of directors. Extraordinary Transactions We may merge or consolidate with another entity, convert into another form of entity, engage in a statutory share exchange or sell all or substantially all of our assets generally only if advised by our board of directors and approved by the affirmative vote of stockholders entitled to cast not less than two-thirds of all the votes entitled to be cast on the matter. Maryland law also permits a Maryland corporation to transfer all or substantially all of its assets without the approval of its stockholders to an entity owned, directly or indirectly, by the corporation. Because our operating assets may be held by our wholly owned subsidiaries, these subsidiaries may be able to merge or transfer all or substantially all of their assets without the approval of our stockholders. Dissolution Our dissolution must be advised by a majority of our entire board of directors and approved by the affirmative vote of stockholders entitled to cast not less than two-thirds of all of the votes entitled to be cast on the matter. Removal of Directors Our charter provides that a director may be removed only for cause, as defined in the charter, and only by the affirmative vote of stockholders entitled to cast not less than two-thirds of the votes entitled to be cast in the election of directors, generally. This provision, when coupled with the Subtitle 8 election vesting in our board of directors the sole power to fill vacant directorships, precludes stockholders from removing incumbent directors except for cause and by a substantial affirmative vote and from filling the vacancies created by the removal with their own nominees. Exclusive Forum Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any of our directors, officers or other employees to us or to our stockholders, (c) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws or (d) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine. 19 Indemnification and Limitations on Liability We are incorporated under the laws of the State of Maryland. The MGCL permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages, except for liability resulting from (i) actual receipt of an improper benefit or profit in money, property or services or (ii) active and deliberate dishonesty that was established by a final judgment and was material to the cause of action. Our charter contains a provision that eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law. The MGCL requires a Maryland corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits a Maryland corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (i) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) the director or officer actually received an improper personal benefit in money, property or services or (iii) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a suit by or on behalf of the corporation or for a judgment of liability on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by or on behalf of the corporation, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses. In addition, Maryland law permits a Maryland corporation to advance reasonable expenses to a director or officer upon receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met. Our charter requires us, to the fullest extent permitted by Maryland law as in effect from time to time, to indemnify and advance expenses to our directors and officers, whether serving us or at our request any other entity, who were or are parties or are threatened to be made parties to any threatened or actual suit, investigation or other proceeding, including administrative actions, as a result of their status or actions as directors or officers of us. Our charter authorizes us to provide the same indemnification and advancement of expenses to our employees and agents. 20 EXHIBIT 21 SUBSIDIARIES OF MONMOUTH REAL ESTATE INVESTMENT CORPORATION Monmouth Capital Corporation, a New Jersey corporation MRC I LLC, a Wisconsin limited liability company MREIC Financial, Inc., a Maryland corporation Palmer Terrace Realty Associates, LLC, a New Jersey limited liability company Wheeling Partners, LLC, an Illinois limited liability company MREIC South Carolina, LLC, a South Carolina limited liability company MREIC Illinois, LLC, an Illinois limited liability company MREIC Lebanon, Tennessee, LLC, a Tennessee limited liability company MREIC Edinburg TX, LLC, a Texas limited liability company MREIC El Paso, LLC, a Texas limited liability company MREIC Corpus Christi TX, LLC, a Texas limited liability company BB Streetsboro, LLC, an Ohio limited liability company MREIC Lebanon OH, LLC, an Ohio limited liability company Hemingway at Halfmoon, LLC, an Ohio limited liability company MREIC Olive Branch MS, LLC, a Mississippi limited liability company MREIC Oklahoma City OK, LLC, an Oklahoma limited liability company MREIC Waco TX, LLC, a Texas limited liability company MREIC Livonia MI, LLC, a Michigan limited liability company MREIC Olive Branch MS II, LLC, a Mississippi limited liability company MREIC Buckner KY, LLC, a Kentucky limited liability company MREIC Rochester MN, LLC, a Delaware limited liability company MREIC Green Bay WI, LLC, a Delaware limited liability company MREIC Spring TX, LLC, a Texas limited liability company MREIC Edwardsville KS, LLC, a Kansas limited liability company MREIC O’Fallon MO, LLC, a Missouri limited liability company MREIC Richland MS, LLC, a Mississippi limited liability company MREIC Ridgeland MS, LLC, a Mississippi limited liability company MREIC Urbandale IA, LLC, an Iowa limited liability company MREIC Winston Salem NC, LLC, a North Carolina limited liability company MREIC PA Altoona, LLC, a Delaware limited liability company MREIC Richfield OH, LLC, an Ohio limited liability company MREIC Tulsa OK, LLC, a Delaware limited liability company MREIC Roanoke VA, LLC, a Virginia limited liability company MREIC PA Monaca, LLC, a Pennsylvania limited liability company MREIC Indianapolis IN, LLC, a Delaware limited liability company MREIC Sauget IL, LLC, a Delaware limited liability company MREIC Tyler TX, LLC, a Delaware limited liability company MREIC Jacksonville FLA, LLC, a Florida limited liability company MREIC Kansas City MO, LLC, a Missouri limited liability company MREIC Frankfort KY, LLC a Kentucky limited liability company MREIC Rockford IL, LLC an Illinois limited liability company MREIC Indianapolis IN II, LLC, an Illinois limited liability company MREIC Monroe OH, LLC, an Ohio limited liability company MREIC Fort Worth TX, LLC, a Delaware limited liability company MREIC Cincinnati OH LLC, an Ohio limited liability company MREIC Concord NC, LLC, a North Carolina limited liability company MREIC Covington LA, LLC, a Delaware limited liability company MREIC PA Pittsburgh, LLC, a Pennsylvania limited liability company MREIC Everett WA, LLC, a Delaware limited liability company MREIC Colorado Springs CO, LLC, a Colorado limited liability company MREIC Louisville KY, LLC, a Kentucky limited liability company MREIC Orlando FL, LLC, a Delaware limited liability company MREIC Olathe KS, LLC, a Delaware limited liability company MREIC Buffalo NY, LLC, a Delaware limited liability company MREIC Fort Myers FL, LLC, a Delaware limited liability company MREIC Grand Rapids MI, LLC, a Delaware limited liability company MREIC Concord NC II, LLC, a North Carolina limited liability company MREIC Miami FL, LLC, a Florida limited liability company MREIC Aiken SC, LLC, a Delaware limited liability company MREIC Kenton OH, LLC, an Ohio limited liability company MREIC Oklahoma City OK II, LLC, an Oklahoma limited liability company MREIC Mesquite TX, LLC, a Delaware limited liability company MREIC Charleston SC, LLC, a South Carolina limited liability company MREIC Chattanooga TN, LLC, a Tennessee limited liability company MREIC OKC 3 LLC, an Oklahoma limited liability company Stow Prosper MT, LLC, an Ohio limited liability company MREIC Daytona FL, LLC, a Florida limited liability company MREIC Savannah GA, LLC, a Georgia limited liability company MREIC Charleston SC II, LLC, a South Carolina limited liability company MREIC Mobile AL, an Alabama limited liability company MREIC Braselton GA, LLC, a Georgia limited liability company MREIC Sav GA 2, LLC, a Georgia limited liability company MREIC Trenton NJ, LLC, a New Jersey limited liability company MREIC Greensboro NC, LLC, a North Carolina limited liability company MREIC Lafayette IN, LLC, an Indiana limited liability company MREIC Indy IN 3, LLC, an Indiana limited liability company MREIC Columbus OH, LLC, an Ohio limited liability company MREIC Columbus OH II, LLC, an Ohio limited liability company MREIC Ogden UT, LLC, a Utah limited liability company MREIC Locust Grove, GA, LLC, a Georgia limited liability company MREIC OKC 4, LLC, an Oklahoma limited liability company MREIC Burlington VT, LLC, a Vermont limited liability company MREIC Vance AL, LLC, an Alabama limited liability company MREIC Kodak TN, LLC, a Tennessee limited liability company MREIC Augusta GA, LLC, a Georgia limited liability company MREIC Birmingham AL, LLC, an Alabama limited liability company MREIC Carlstadt, LLC, a New Jersey limited liability company Exhibit 23 Consent of Independent Registered Public Accounting Firm The Board of Directors Monmouth Real Estate Investment Corporation We consent to the incorporation by reference in the registration statements on Form S-8 (File No. 333-219236) and on Form S-3 (File Nos. 333-226511 and 333- 225374) of Monmouth Real Estate Investment Corporation of our reports dated November 12, 2021, with respect to the consolidated financial statements and financial statement schedule of Monmouth Real Estate Investment Corporation, and the effectiveness of internal control over financial reporting included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2021. /s/ PKF O’Connor Davies, LLP November 12, 2021 * * * * * Exhibit 31.1 CERTIFICATION I, Michael P. Landy, certify that: 1. I have reviewed this Annual Report on Form 10-K of Monmouth Real Estate Investment Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 12, 2021 /s/ Michael P. Landy Michael P. Landy President and Chief Executive Officer principal executive officer Exhibit 31.2 CERTIFICATION I, Kevin S. Miller, certify that: 1. I have reviewed this Annual Report on Form 10-K of Monmouth Real Estate Investment Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 12, 2021 /s/ Kevin S. Miller Kevin S. Miller Chief Financial Officer Principal financial officer and principal accounting officer. Exhibit 32.1 CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of Monmouth Real Estate Investment Corporation (the “Company”) for the year ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael P. Landy, as President and Chief Executive Officer of the Company, and Kevin S. Miller, as Chief Financial Officer, each hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Michael P. Landy Name: Michael P. Landy Title: President and Chief Executive Officer, principal executive officer Date: November 12, 2021 By: /s/ Kevin S. Miller Name: Kevin S. Miller Title: Chief Financial Officer, principal financial officer and principal accounting officer Date: November 12, 2021