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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~December 3031, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from __________ 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 number)

101 Crawfords Corner Road, Suite 1405, Holmdel,		NJ 07733
(Address of Principal Executive Offices)		(Zip Code)

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

(Former name, former address and former fiscal year, if changed since last report.)

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 ~~NYSE~~
6.125% Series C Cumulative Redeemable Preferred Stock	MNR-PC	New York Stock Exchange ~~NYSE~~

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares outstanding of the issuer’s common stock, $0.01 par value per share, as of ~~July~~February 301, ~~2021~~2022: 98,~~302~~486,~~207~~382

MONMOUTH REAL ESTATE INVESTMENT CORPORATION

AND SUBSIDIARIES

FOR THE QUARTER ENDED ~~JUNE~~DECEMBER 3031, 2021

~~C O N T E N T S~~CONTENTS

		Page No
PART I	FINANCIAL INFORMATION	3
Item 1 -	Financial Statements (Unaudited):	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income (Loss)	5
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income (Loss)	7
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Shareholders’ Equity	8
	Consolidated Statements of Cash Flows	109
	Notes to Consolidated Financial Statements	1110
Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2825
Item 3 -	Quantitative and Qualitative Disclosures About Market Risk.	4441
Item 4 -	Controls and Procedures.	4441
PART II -	OTHER INFORMATION	45
Item 1 -	Legal Proceedings.	4542
Item 1A -	Risk Factors.	4543
Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds.	4543
Item 3 -	Defaults Upon Senior Securities.	4543
Item 4 -	Mine Safety Disclosures.	4543
Item 5 -	Other Information.	4543
Item 6 -	Exhibits.	4543
SIGNATURES		4644

Table of Contents

PART I:

FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF ~~JUNE~~DECEMBER 3031, 2021 AND SEPTEMBER 30, ~~2020~~2021

(in thousands except per share amounts)

	June 30, 2021 (Unaudited)			September 30, 2020
	December 31, 2021 (Unaudited)			September 30, 2021
ASSETS
Real Estate Investments:
Land	$	~~266~~282,~~791~~290		$	~~250~~277,~~497~~846
Buildings and Improvements		12,~~942~~059,~~840~~683			12,~~793~~025,~~367~~844
Total Real Estate Investments		2,~~209~~341,~~631~~973			2,~~043~~303,~~864~~690
Accumulated Depreciation		(~~332~~359,~~725~~659	)		(~~296~~345,~~020~~988	)
Real Estate Investments		1,~~876~~982,~~906~~314			1,~~747~~957,~~844~~702
Cash and Cash Equivalents		9017,~~896~~713			2348,~~517~~618
Securities Available for Sale at Fair Value		~~148~~160,~~382~~275			~~108~~143,~~832~~505
Tenant and Other Receivables		36,~~201~~567			5,~~431~~083
Deferred Rent Receivable		1516,~~066~~283			1215,~~856~~679
Prepaid Expenses		914,~~191~~475			78,~~554~~502
Intangible Assets, net of Accumulated Amortization of $19,061 and $17,330, respectively		19,939			16,832
Intangible Assets, net of Accumulated Amortization of $20,272 and $19,669, respectively		20,873			20,959
Capitalized Lease Costs, net of Accumulated Amortization of $4,614 and $4,286, respectively		5,817			5,631
Capitalized Lease Costs, net of Accumulated Amortization of $4,633 and $4,435, respectively		6,065			5,719
Financing Costs, net of Accumulated Amortization of $648 and $356, respectively		1,088			1,380
Financing Costs, net of Accumulated Amortization of $939 and $745, respectively		1,279			991
Other Assets		75,~~592~~486			9,~~906~~125
TOTAL ASSETS	$	2,~~178~~231,~~078~~330		$	12,~~939~~215,~~783~~883

See Accompanying Notes to the Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – CONTINUED

AS OF ~~JUNE~~DECEMBER 3031, 2021 AND SEPTEMBER 30, ~~2020~~2021

(in thousands except per share amounts)

	June 30, 2021 (Unaudited)			September 30, 2020
	December 31, 2021 (Unaudited)			September 30, 2021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs	$	~~848~~808,~~994~~722		$	~~799~~832,~~507~~184
Loans Payable		~~165~~300,000			75250,000
Accounts Payable and Accrued Expenses		56,~~532~~169			38,~~998~~231
Other Liabilities		2227,~~705~~667			2330,~~673~~734
Total Liabilities		1,~~042~~142,~~231~~558			~~902~~1,~~178~~121,149
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 June 30, 2021 and September 30, 2020, respectively; 21,986 and 18,880 Shares Issued and Outstanding as of June 30, 2021 and September 30, 2020, respectively		549,640			471,994
6.125% Series C Cumulative Redeemable Preferred Stock, $0.01 Par Value Per Share: 26,600 Shares Authorized as of December 31, 2021 and September 30, 2021; 21,986 Shares Issued and Outstanding as of December 31, 2021 and September 30, 2021		549,640			549,640
Common Stock, $0.01 Par Value Per Share: 300,000 and 200,000 Shares Authorized as of June 30, 2021 and September 30, 2020, respectively; 98,302 and 98,054 Shares Issued and Outstanding as of June 30, 2021 and September 30, 2020, respectively		983			981
Common Stock, $0.01 Par Value Per Share: 300,000 Shares Authorized as of December 31, 2021 and September 30, 2021; 98,486 and 98,333 Shares Issued and Outstanding as of December 31, 2021 and September 30, 2021, respectively		985			983
Excess Stock, $0.01 Par Value Per Share: 200,000 Shares Authorized as of June 30, 2021 and September 30, 2020; No Shares Issued or Outstanding as of June 30, 2021 and September 30, 2020		-0-			-0-
Excess Stock, $0.01 Par Value Per Share: 200,000 Shares Authorized as of December 31, 2021 and September 30, 2021; No Shares Issued or Outstanding as of December 31, 2021 and September 30, 2021		0			0
Additional Paid-In Capital		~~587~~539,~~730~~259			~~568~~546,~~998~~341
Accumulated Other Comprehensive Loss		(21,~~506~~112	)		(42,~~368~~230	)
Undistributed Income		-0-			-0-
Total Shareholders’ Equity		1,~~135~~088,~~847~~772			1,~~037~~094,~~605~~734
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	2,~~178~~231,~~078~~330		$	12,~~939~~215,~~783~~883

See Accompanying Notes to the Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (~~LOSS) (~~UNAUDITED)

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~JUNE~~DECEMBER 3031, 2021 AND 2020

(in thousands)

		6/30/2021			6/30/2020			6/30/2021			6/30/2020
	12/31/2021			12/31/2020
	Three Months Ended						~~Nine Months Ended~~
		6/30/2021			6/30/2020			6/30/2021			6/30/2020
	12/31/2021			12/31/2020
INCOME:
Rental Revenue	$	3940,~~032~~999		$	3536,~~427~~846		$	~~115,123~~		$	~~105,410~~
Reimbursement Revenue		67,~~962~~475			6,~~348~~737			~~20,818~~			~~19,772~~
Lease Termination Income		-0-			~~-0-~~377			~~377~~			~~-0-~~
TOTAL INCOME		4548,~~994~~474			4143,~~775~~960			~~136,318~~			~~125,182~~
EXPENSES:
Real Estate Taxes		5,~~402~~956			5,~~140~~318			~~16,324~~			~~15,205~~
Operating Expenses		1,~~688~~762			1,~~590~~736			~~5,361~~			~~5,344~~
General & Administrative Expenses		2,~~246~~442			2,~~198~~272			~~6,363~~			~~6,858~~
Non-recurring Strategic Alternatives & Proxy Costs		812,~~657~~274			0			~~10,896~~			0
Non-recurring Severance Expense		0			0			0			786
Depreciation		13,728			12,078
Depreciation		13,016			11,743			38,158			34,650
Amortization of Capitalized Lease Costs and Intangible Assets		894			809
Amortization of Capitalized Lease Costs and Intangible Assets		1,031			788			2,718			2,308
TOTAL EXPENSES		37,056			22,213
TOTAL EXPENSES		32,040			21,459			79,820			65,151
OTHER INCOME (EXPENSE):
OTHER INCOME (EXPENSE):
Dividend Income		1,729			1,607
Dividend Income		1,486			2,344			4,681			8,987
Unrealized Holding Gains Arising During the Periods		16,508			19,721
Realized Gain on Sale of Real Estate Investment		6,376			0			6,376			0
Interest Expense, including Amortization of Financing Costs		(9,822	)		(9,159	)
Realized Gain on Sale of Securities Transactions		0			0			2,248			0
TOTAL OTHER INCOME (EXPENSE)		8,415			12,169
Unrealized Holding Gains (Losses) Arising During the Periods		16,471			19,610			55,377			(67,100	)
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS		19,833			33,916
Interest Expense, including Amortization of Financing Costs		(9,685	)		(8,975	)		(28,231	)		(27,235	)
Less: Preferred Dividends		8,416			8,170
TOTAL OTHER INCOME (EXPENSE)		14,648			12,979			40,451			(85,348	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	11,417		$	25,746
NET INCOME (LOSS)		28,602			33,295			96,949			(25,317	)
Less: Net Income (Loss) Attributable to Non-Controlling Interest		2,894			(163	)		2,996			(86	)
NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS		25,708			33,458			93,953			(25,231	)
Less: Preferred Dividends		8,416			6,607			25,003			19,469
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	17,292		$	26,851		$	68,950		$	(44,700	)

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (~~LOSS) (~~UNAUDITED)

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~JUNE~~DECEMBER 3031, 2021 AND 2020 – CONTINUED

		6/30/2021			6/30/2020			6/30/2021			6/30/2020
	Three Months Ended
	Three Months Ended						Nine Months Ended
	12/31/2021			12/31/2020
		6/30/2021			6/30/2020			6/30/2021			6/30/2020
BASIC INCOME – PER SHARE
BASIC INCOME (LOSS) – PER SHARE
Net Income Attributable to Shareholders	$	0.20		$	0.34
Net Income (Loss)	$	0.29		$	0.34		$	0.99		$	(0.26	)
Less: Preferred Dividends		(0.08	)		(0.08	)
Net Income (Loss), Basic	$	0.29		$	0.34		$	0.99		$	(0.26	)
Net Income Attributable to Common Shareholders – Basic	$	0.12		$	0.26
Less: Net Income (Loss) Attributable to Non-Controlling Interest		(0.03	)		-0-			(0.03	)		-0-
DILUTED INCOME – PER SHARE
Net Income (Loss) Attributable to Shareholders - Basic		0.26			0.34			0.96			(0.26	)
Net Income Attributable to Shareholders	$	0.20		$	0.34
Less: Preferred Dividends		(0.0908	)		(0.0708	)		~~(0.25~~	)		~~(0.20~~	)
Net Income (Loss) Attributable to Common Shareholders - Basic	$	0.17		$	0.27		$	0.71		$	(0.46	)
Net Income Attributable to Common Shareholders - Diluted	$	0.12		$	0.26
DILUTED INCOME (LOSS) – PER SHARE
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Net Income (Loss)	$	0.29		$	0.34		$	0.99		$	(0.26	)
Basic		98,388			98,105
Net Income (Loss), Diluted	$	0.29		$	0.34		$	0.99		$	(0.26	)
Diluted		98,479			98,211
Less: Net Income (Loss) Attributable to Non-Controlling Interest		(0.03	)		-0-			(0.03	)		-0-
Net Income (Loss) Attributable to Shareholders – Diluted		0.26			0.34			0.96			(0.26	)
Less: Preferred Dividends		(0.09	)		(0.07	)		(0.25	)		(0.20	)
Net Income (Loss) Attributable to Common Shareholders - Diluted	$	0.17		$	0.27		$	0.71		$	(0.46	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands)
Basic		98,302			97,906			98,234			97,548
Diluted		98,539			97,962			98,415			97,626

See Accompanying Notes to Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~JUNE~~DECEMBER 3031, 2021 AND 2020

(in thousands)

		6/30/2021		6/30/2020			6/30/2021		6/30/2020
	12/31/2021		12/31/2020
	Three Months Ended					~~Nine Months Ended~~
		6/30/2021		6/30/2020			6/30/2021		6/30/2020
	12/31/2021		12/31/2020
Net Income (Loss)	$	28,602	$	33,295		$	96,949	$	(25,317	)
Net Income Attributable to Shareholders	$	19,833	$	33,916
Other Comprehensive Income:
Change in Fair Value of Interest Rate Swap Agreement		661,118		~~-0-~~433			~~1,862~~		~~-0-~~
TOTAL COMPREHENSIVE INCOME (LOSS)		28,668		33,295			98,811		(25,317	)
TOTAL COMPREHENSIVE INCOME		20,951		34,349
Less: Net Income (Loss) Attributable to Non-Controlling Interest		2,894		(163	)		2,996		(86	)
Less: Preferred Dividends		8,416		8,170
COMREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS		25,774		33,458			95,815		(25,231	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	12,535	$	26,179
Less: Preferred Dividends		8,416		6,607			25,003		19,469
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	17,358	$	26,851		$	70,812	$	(44,700	)

See Accompanying Notes to Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED ~~JUNE~~DECEMBER 3031, 2021 AND 2020

(in thousands, except per share data)

	Common Stock		Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance March 31, 2021	$	983	$	549,640	$	588,049		$	-0-		$	(2,572	)	$	1,136,100
Balance September 30, 2021	$	983	$	549,640	$	546,341		$	0		$	(2,230	)	$	1,094,734
Shares Issued in Connection with the DRIP (1)		0		0		73			0			0			73
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs
Shares Repurchased through the Common Stock Repurchase Plan
Stock Compensation Expense		0		0		94			0			0			94
Shares Issued Through the Exercise of Stock Options
Distributions To Common Shareholders ($0.18 per share)		0		0		(6,284	)		(11,417	)		0			(17,701	)
Stock Compensation Expense		0		0		77			0			0			77
Stock Option Exercise		1		0		662			0			0			663
Distributions To Common Shareholders ($0.18 per share)		0		0		(403	)		(17,292	)		0			(17,695	)
Shares Withheld for Employee Taxes in Connection with the Net Exercise of Employee Stock Options		1		0		(1,557	)		0			0			(1,556	)
Net Income Attributable to Shareholders		0		0		0			2519,~~708~~833			0			2519,~~708~~833
Preferred Dividends ($0.3828125 per share)		0		0		0			(8,416	)		0			(8,416	)
Change in Fair Value of Interest Rate Swap Agreement		0		0		0			0			661,118			661,118
Balance June 30, 2021	$	983	$	549,640	$	587,730		$	0		$	(2,506	)	$	1,135,847
Balance December 31, 2021	$	985	$	549,640	$	539,259		$	0		$	(1,112	)	$	1,088,772

	Common Stock			Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			~~Total~~Accumulated ~~Shareholders’~~Other ~~Equity~~Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance March 31, 2020	$	980		$	429,215	$	578,648		$	0		$	1,008,843
Balance September 30, 2020	$	981		$	471,994	$	568,998		$	0		$	(4,368	)	$	1,037,605
Shares Issued in Connection with the DRIP (1)		1			-0-		1,~~171~~257			0			~~1,172~~0			1,258
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs		0			477,~~635~~646		(~~107~~1,688	)		0			~~4,528~~0			75,958
Shares Repurchased through the Common Stock Repurchase Plan		(1	)		0		(1,065	)		0			(1,066	)
Stock Compensation Expense		0			0		57			0			0			57
Stock Compensation Expense		0			0		98			0			98
Distributions To Common Shareholders ($0.17 per share)		0			0		9,075			(25,746	)		0			(16,671	)
Distributions To Common Shareholders ($0.17 per share)		0			0		10,210			(26,851	)		(16,641	)
Distributions To Common Shareholders		0			0		9,075			(25,746	)		0			(16,671	)
Net Income Attributable to Shareholders		0			0		0			33,458			33,458
Stock Option Exercise		1			0		1,565			0			0			1,566
Preferred Dividends ($0.3828125 per share)		0			0		0			(6,607	)		(6,607	)
Net Income Attributable to Shareholders		0			0		0			33,916			0			33,916
Balance June 30, 2020	$	980		$	433,850	$	588,955		$	0		$	1,023,785
Preferred Dividends ($0.3828125 per share)		0			0		0			(8,170	)		0			(8,170	)
Change in Fair Value of Interest Rate Swap Agreement		0			0		0			0			433			433
Balance December 31, 2020	$	983		$	549,640	$	579,264		$	0		$	(3,935	)	$	1,125,952

(1)

Dividend Reinvestment and Stock Purchase Plan

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE NINE MONTHS ENDED JUNE 30, 2021 AND 2020

(in thousands, except per share data)

	Common Stock		Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance September 30, 2020	$	981	$	471,994	$	568,998		$	0		$	(4,368	)	$	1,037,605
Shares Issued in Connection with the DRIP (1)		1		0		1,354			0			0			1,355
Shares Issued in Connection with At-The-Market Sales Agreement Program of 6.125% Series C Preferred Stock, net of offering costs		0		77,646		(1,688	)		0			0			75,958
Stock Compensation Expense		0		0		210			0			0			210
Distributions To Common Shareholders ($0.53 per share)		0		0		16,891			(68,950	)		0			(52,059	)
Shares Issued Through the Exercise of Stock Options		1		0		1,965			0			0			1,966
Net Income Attributable to Shareholders		0		0		0			93,953			0			93,953
Preferred Dividends ($1.1484375 per share)		0		0		0			(25,003	)		0			(25,003	)
Change in Fair Value of Interest Rate Swap Agreement		0		0		0			0			1,862			1,862
Balance June 30, 2021	$	983	$	549,640	$	587,730		$	0		$	(2,506	)	$	1,135,847

	Common Stock			Preferred Stock Series C		Additional Paid in Capital			Undistributed Income (Loss)			Total Shareholders’ Equity
Balance September 30, 2019	$	964		$	347,678	$	662,401		$	0		$	1,011,043
Shares Issued in Connection with the DRIP (1)		19			0		25,281			0			25,300
Shares Issued in Connection with At-The-Market Offerings of 6.125% Series C Preferred Stock, net of offering costs		0			86,172		(1,357	)		0			84,815
Shares Issued Through the Exercise of Stock Options		1			0		1,015			0			1,016
Shares Repurchased through the Common Stock Repurchase Plan		(4	)		0		(4,272	)		0			(4,276	)
Stock Compensation Expense		0			0		368			0			368
Distributions To Common Shareholders ($0.51 per share)		0			0		(94,481	)		44,700			(49,781	)
Distributions To Common Shareholders		0			0		(94,481	)		44,700			(49,781	)
Net Loss Attributable to Shareholders		0			0		0			(25,231	)		(25,231	)
Preferred Dividends ($1.1484375 per share)		0			0		0			(19,469	)		(19,469	)
Preferred Dividends		0			0		0			(19,469	)		(19,469	)
Balance June 30, 2020	$	980		$	433,850	$	588,955		$	0		$	1,023,785

(1) Dividend Reinvestment and Stock Purchase Plan

See Accompanying Notes to the Consolidated Financial Statements

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JUNE~~DECEMBER 3031, 2021 AND 2020

(in thousands)

		6/30/2021			6/30/2020
	12/31/2021			12/31/2020
	Nine Months Ended
	Three Months Ended
		6/30/2021			6/30/2020
	12/31/2021			12/31/2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	96,949		$	(25,317	)
Net Income Attributable to Shareholders	$	19,833		$	33,916
Noncash Items Included in Net Income (Loss):
Noncash Items Included in Net Income Attributable to Shareholders:
Depreciation & Amortization		4115,~~919~~050			3813,~~043~~217
Deferred Straight Line Rent		(~~2,378~~617	)		(~~1,459~~618	)
Stock Compensation Expense		~~210~~94			~~368~~57
Securities Available for Sale Received as Dividend Income		(~~752~~262	)		(~~977~~239	)
Realized Gain on Sale of Real Estate Investment		(6,376	)		0
Unrealized Holding Gains Arising During the Periods		(16,508	)		(19,721	)
Realized Gain on Sale of Securities Transactions		(2,248	)		0
Unrealized Holding (Gains) Losses Arising During the Periods		(55,377	)		67,100
Changes In:
Tenant & Other Receivables		2(1,~~307~~467	)		(1,~~153~~400	)
Prepaid Expenses		(15,~~637~~973	)		(24,~~242~~546	)
Other Assets & Capitalized Lease Costs		~~803~~730			~~(1,999~~824	)
Accounts Payable, Accrued Expenses & Other Liabilities		3(2,~~348~~487	)		25,~~600~~402
NET CASH PROVIDED BY OPERATING ACTIVITIES		768,~~768~~393			7429,~~964~~692
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Real Estate & Intangible Assets		(~~171~~31,~~082~~812	)		(~~160~~170,~~023~~568	)
Capital Improvements		(58,~~384~~500	)		(42,~~726~~256	)
Net Proceeds from Sale of Real Estate Investment		12,303			0
Return of Deposits on Real Estate		2,200			5,000
Return of Deposits on Real Estate		5,060			2,000
Deposits Paid on Acquisitions of Real Estate		0			(1,450	)
Deposits Paid on Acquisitions of Real Estate		(4,970	)		(550	)
Proceeds from Securities Available for Sale Called for Redemption		0			2,500
Proceeds from the Sale of Securities Available for Sale		16,327			0
NET CASH USED IN INVESTING ACTIVITIES		(38,112	)		(166,774	)
Proceeds from Securities Available for Sale Called for Redemption		2,500			250
NET CASH USED IN INVESTING ACTIVITIES		(145,246	)		(163,049	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (Repayments) Draws on Loans Payable		90,000			(15,000	)
Net Draws on Loans Payable		50,000			0
Proceeds from Fixed Rate Mortgage Notes Payable		~~104,000~~0			~~100~~104,~~560~~000
Principal Payments on Fixed Rate Mortgage Notes Payable		(5423,696	)		(4114,~~166~~923	)
Financing Costs Paid on Debt		(~~569~~483	)		(~~2,397~~569	)
Proceeds from the Exercise of Stock Options		~~1,966~~663			1,~~016~~566
Net Distributions to Non-Controlling interest		(5,491	)		(32	)
Proceeds from At-The-Market 6.125% Series C Preferred Stock, net of offering costs		0			75,958
Proceeds from At-The-Market 6.125% Series C Preferred Stock, net of offering costs		75,958			84,815
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments		0			237
Proceeds from Issuance of Common Stock in the DRIP, net of Dividend Reinvestments		320			18,641
Preferred Dividends Paid		(8,416	)		(7,774	)
Shares repurchased through the Common Stock Repurchase Plan		0			(4,276	)
Payment of Taxes for Shares of Common Stock Withheld for Employee Taxes in Connection with the Net Exercise of Employee Stock Options		(1,556	)		0
Preferred Dividends Paid		(24,607	)		(19,029	)
Common Dividends Paid, net of Reinvestments		(17,698	)		(15,650	)
Common Dividends Paid, net of Reinvestments		(51,024	)		(43,122	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,186	)		142,845
NET CASH PROVIDED BY FINANCING ACTIVITIES		135,857			80,010
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(30,905	)		5,763
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		67,379			(8,075	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		48,618			23,517
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		23,517			20,179
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	17,713		$	29,280
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	90,896		$	12,104

See Accompanying Notes to Consolidated Financial Statements

109

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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~JUNE~~DECEMBER 3031, 2021

NOTE 1 – ORGANIZATION AND ACCOUNTING POLICIES

Monmouth Real Estate Investment Corporation, a Maryland corporation, together with its consolidated subsidiaries (we, our, us, the Company, Monmouth 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 are one of the oldest public equity REITs in the world. As of ~~June~~December 3031, 2021, we owned ~~120~~123 properties with total ~~rentable~~ rentable square footage of 2425.52 million, as compared to ~~119~~122 properties with total rentable square footage of 2324.49 million as of September 30, ~~2020~~ 2021. Our 99.7% overall occupancy rate remained unchanged at the end of the quarter ~~was 99.7%~~ as compared to 99September 30, 2021 and has been 98.49% asor ofabove ~~September~~for ~~30,~~over ~~2020~~six consecutive years. Our properties are located in 3132 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 the quarter ended ~~June~~December 3031, 2021, our weighted average lease term was 7.21 years and our annualized average base rent per occupied square foot was $6.5069. As of ~~June~~December 3031, 2021, the weighted average building age, based on the square footage of our buildings, was 10.12 years.

~~Subsequent~~As topreviously ~~quarter end~~announced, on ~~July~~November 295, 2021, we ~~purchased~~entered into a ~~newly~~definitive ~~constructed~~merger ~~144~~agreement with Industrial Logistics Properties Trust,~~000~~ a ~~square~~Maryland ~~foot~~real ~~industrial~~estate ~~building~~investment trust (“ILPT”), ~~situated~~under which, on ~~43.4~~the ~~acres,~~terms ~~located~~ and subject to the conditions set forth in the merger ~~Burlington~~agreement, VTILPT ~~Metropolitan~~will ~~Statistical~~acquire ~~Area~~us ~~(MSA)~~in an all-cash transaction, with our common shareholders receiving $21.00 ~~The~~in ~~building~~cash isper ~~100%~~share ~~net-leased~~upon the consummation of the transaction. ILPT’s acquisition of us is subject to ~~FedEx~~obtaining ~~Ground~~the ~~Package~~requisite ~~System~~approval of our common shareholders, the ~~Inc.~~special meeting of shareholders for ~~15 years~~which ~~through~~is ~~May~~scheduled ~~2036~~to take place on February 17, 2022, and the satisfaction of other customary closing conditions. ~~The~~Upon ~~property~~closing ~~was~~of ~~acquired~~the ~~for~~merger awith ~~purchase~~ILPT, ~~price~~holders of ~~$54~~our outstanding 6.8125% ~~million~~Series C Cumulative Redeemable Preferred Stock (“6.125% ~~Annual~~Series ~~rental~~C ~~revenue~~Preferred ~~over~~Stock”) ~~the~~will ~~remaining~~receive ~~term~~$25.00 in cash per share plus accumulated and unpaid dividends to, ofbut not including, the ~~lease~~date ~~averages~~the ~~$3.2~~merger ~~million~~is completed. ~~With~~As permitted by the ~~addition~~merger ofagreement ~~this new~~with ~~acquisition~~ILPT, we ~~currently~~plan ~~have~~to ~~121~~continue to pay our regular ~~properties~~quarterly ~~consisting~~common ofstock 24dividend and our 6.~~7 million~~125% ~~rentable~~Series ~~square~~C ~~feet~~Preferred ~~which~~Stock ~~are~~dividend ~~located~~for each full quarterly dividend period completed prior to the closing of the transaction, in 32amounts ~~states~~not exceeding $0.18 per share for our common stock and equal to $0.3828125 per share for our 6.125% Series C Preferred Stock. This transaction with aILPT ~~weighted~~represents ~~average~~the ~~lease~~culmination ~~term~~of the publicly announced comprehensive strategic alternatives review processes conducted by our Board of 7Directors (“Board of Directors” or the “Board”) during 2021.2 Our Board re-initiated its strategic alternatives review process in September 2021 after a previous agreement for a stock-for-stock ~~years~~merger ~~and~~that anwe ~~annualized~~entered ~~average~~into ~~base~~with ~~rent~~another party, following a strategic alternatives review process in the first half of calendar year ~~per~~2021, ~~occupied~~did ~~square~~not ~~foot~~receive the requisite approval of $6our shareholders.~~59.~~

As ~~previously~~discussed ~~announced,~~ in ~~January~~Note ~~2021~~10, ~~our~~subsequent ~~Board of Directors unanimously decided~~ to ~~explore~~quarter ~~strategic alternatives to maximize shareholder value. Following a comprehensive strategic alternatives process~~end, on ~~May~~January 428, ~~2021~~2022, we ~~entered~~purchased ~~into~~ a ~~definitive~~newly ~~merger~~constructed ~~agreement with Equity~~530,000 ~~Commonwealth~~square ~~(“EQC”),~~foot aindustrial ~~New York Stock Exchange traded real estate investment trust~~building, ~~under~~situated ~~which,~~ on ~~the terms and subject~~ to53.5 acres, ~~the~~located ~~conditions set forth~~ in the ~~merger agreement~~Birmingham, weAL ~~will merge with and into a new wholly-owned subsidiary of Equity Commonwealth,~~Metropolitan ~~resulting~~Statistical inArea ~~Equity~~(MSA). ~~Commonwealth~~The ~~acquiring~~building usis ~~in an all~~100% net-~~stock~~leased ~~transaction.~~to ~~The~~Mercedes ~~merger~~Benz ~~agreement~~US ~~provides that~~International, ~~upon~~Inc. ~~closing~~for ~~of the merger,~~10 ~~our~~years ~~common~~through ~~stockholders will be entitled to receive 0.67~~November ~~shares~~2031. ofThe ~~Equity~~property ~~Commonwealth~~was ~~common~~acquired ~~stock~~ for ~~every~~ ~~share~~a ofpurchase price ~~our common stock they own and the outstanding shares~~ of ~~our common stock will be extinguished~~$51. ~~We plan to continue to~~7 ~~pay our regular quarterly common stock dividend and our quarterly Series C Cumulative Redeemable Preferred Stock dividend until closing of the merger~~million. ~~Under~~Annual ~~the~~rental ~~terms~~revenue ofover the ~~definitive~~remaining term ~~merger agreement, upon closing~~ of the ~~merger,~~lease ~~each~~averages ~~holder of our 6.125% Series C Preferred Stock will be entitled to receive an amount in cash equal to~~ $253.003 ~~per share plus accumulated and unpaid dividends and the outstanding shares of our 6~~million.~~125%~~ ~~Series~~With ~~C Cumulative Redeemable Preferred Stock will be extinguished. The merger transaction is expected to close during~~ the ~~second~~addition ~~half~~ of ~~calendar~~this ~~2021,~~new ~~subject to customary closing conditions~~acquisition, we ~~including~~currently ~~approval~~have by124 properties ~~common~~consisting ~~stockholders~~ of ~~both Equity Commonwealth and MREIC~~25.7 million ~~Equity~~rentable ~~Commonwealth~~square ~~and~~feet ~~MREIC~~which ~~stockholders~~ are ~~expected to own approximately 65%~~located ~~and~~in ~~35%, respectively,~~32 ofstates ~~the~~with ~~pro~~a ~~forma~~weighted ~~company~~average ~~following~~lease ~~the~~term ~~close~~ of ~~the transaction~~7. ~~On July 23, 2021, we filed with the SEC, and shortly thereafter~~2 ~~began~~years ~~distributing to our stockholders, a definitive joint proxy statement/prospectus of MREIC~~ and ~~EQC~~an ~~pursuant~~annualized toaverage ~~which~~base ~~both~~rent ~~MREIC and~~per ~~EQC~~occupied ~~are~~square ~~seeking~~foot ~~approval~~ of ~~the merger from their respective stockholders at special stockholder meetings that have been called for August 24, 2021~~$6.69.

This proposed merger represents the culmination of the comprehensive strategic alternatives review conducted by our Board. As part of the review, our Board of Directors, working with our legal and financial advisors, carefully considered a full range of strategic alternatives. We and our advisors engaged with and solicited proposals from a broad range of highly reputable strategic and financial counterparties, all with significant access to capital, comprising of more than 90 qualified potential interested parties, including financial sponsors, real estate investment trusts, sovereign wealth funds, pension funds, real estate managers and other financial and strategic investors. At the conclusion of this process, the Board unanimously concluded that the merger with Equity Commonwealth is the best outcome to maximize long-term value for our stockholders. Our Board reaffirmed this conclusion and its support for the merger with Equity Commonwealth on July 21, 2021 following receipt and consideration of an unsolicited acquisition proposal from Starwood Real Estate Income Trust, Inc. (“Starwood”), a private investment firm which had previously participated in our strategic alternatives review process. Our Board, in consultation with our financial and legal advisors, carefully considered Starwood’s unsolicited proposal of July 8, 2021, as amended on July 15, 2021, to purchase 100% of our common stock for net cash consideration of $18.88 per common share and unanimously determined that the pending merger with EQC represents the best opportunity to maximize value for our stockholders. As noted above, we are in the process of soliciting approval of the merger with EQC from stockholders holding two-thirds of our outstanding common shares, as required by Maryland law. Starwood has filed definitive proxy materials with the SEC for the purpose of soliciting proxies from our stockholders in opposition to the pending merger, and Blackwells Capital LLC, one of our stockholders, has filed its own preliminary proxy materials with the SEC for the same purpose.10

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We invest in modern single-tenant, industrial buildings, leased primarily to investment-grade tenants or their subsidiaries on long-term net-leases. Our investments are exclusively situated in the continental United States, and are primarily located in strategic locations that are mission-critical to our tenants’ needs. In many cases our buildings are highly automated in order to better 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.

~~The~~Our ~~future~~portfolio ~~effects~~ of ~~the~~modern, ~~evolving impact of the COVID~~net-19leased ~~Pandemic~~industrial ~~are~~properties ~~uncertain~~continues ~~however,~~to atprovide ~~this~~shareholders ~~time~~with ~~COVID-19~~reliable ~~has~~and ~~not~~predictable ~~had~~income ~~a material adverse~~streams. ~~effect~~Our onresilient ~~our~~high ~~financial~~occupancy ~~condition.~~rates ~~For~~and ~~many~~rent ~~years,~~collection ~~ecommerce~~results ~~demand~~highlight ~~has~~the ~~increased,~~mission-critical ~~and~~nature itof ~~has~~our ~~now~~assets ~~become~~and anunderscore ~~integral part of~~ the ~~retail~~ ~~landscape.~~essential ~~The~~need ~~COVID-19~~for ~~Pandemic~~our ~~created~~tenants’ anoperations. ~~even~~Furthermore, ~~greater~~because ~~move~~our ~~towards~~weighted ~~on-line~~average ~~shopping.~~lease Asterm ais ~~result~~7.1 ofyears ~~state~~ and ~~local~~our ~~government-mandated~~weighted ~~shutdowns,~~average ~~public~~fixed ~~health~~rate ~~guidance~~mortgage ~~and~~debt ~~changing~~maturity ~~consumer~~is ~~demand~~10.7 years, ~~ecommerce~~we ~~sales~~expect asour acash ~~percentage~~flow ofto ~~total~~remain ~~retail~~resilient ~~sales~~over ~~has~~long ~~substantially increased~~periods ~~during~~of ~~the past year~~time. ~~The~~Throughout the COVID-19 Pandemic, ~~also~~our ~~created~~overall aoccupancy ~~need~~rate ~~for~~has ~~supply~~been ~~chain~~over ~~reconfiguration.~~99% Itand is ~~estimated~~99.7% ~~that~~as ~~ecommerce sales~~of ~~require three times~~ the ~~warehouse~~quarter ~~space~~end. ~~relative~~Our tobase ~~brick~~rent ~~and~~collections ~~mortar~~remained strong, ~~retail~~averaging ~~sales~~99.9% ~~Increased~~throughout ~~inventory~~the ~~stocking~~COVID-19 isPandemic, ~~currently~~and ~~taking place~~we ~~across~~expect ~~many~~future ~~industries~~months ~~and~~to itbe ~~appears~~consistent ~~that~~with this trend ~~will continue in order to accommodate surges in demand~~.

~~Our~~US ~~portfolio~~industrial ofreal ~~modern,~~estate ~~net-leased~~market ~~industrial~~conditions ~~properties~~are ~~continues~~as tostrong ~~provide~~as ~~shareholders~~they have ever been with ~~reliable~~record ~~and~~high ~~predictable~~asking ~~income~~rents, ~~streams.~~a robust development pipeline, ~~Our~~and ~~resilient~~an all-time high occupancy ~~rates~~rate ~~and~~of ~~rent~~97%. ~~collection~~Companies ~~results~~are ~~during~~leasing ~~these~~space ~~challenging~~at ~~times~~record ~~highlight~~levels to handle the ~~mission-critical~~large ~~nature~~increase ofin ~~our~~ecommerce sales ~~assets~~as ~~and~~well ~~underscore~~as the ~~essential~~ need for ~~our~~safety ~~tenants’~~stock ~~operations~~to counter supply chain disruptions. ~~Furthermore,~~Construction ~~because~~costs ~~our~~are ~~weighted~~rising ~~average~~dramatically ~~lease~~due ~~term~~to isthe ~~7.2~~long ~~years~~lead ~~and~~times ~~our~~for ~~weighted~~sourcing ~~average~~materials. ~~fixed~~The ~~rate~~amount ~~mortgage~~of ~~debt~~new ~~maturity~~construction isfor ~~11.1~~US industrial real estate has been increasing for several years, as wemore ~~expect~~industrial ~~our~~space ~~cash~~is ~~flow~~needed to ~~remain~~handle ~~resilient~~direct-to-consumer ~~over~~distribution. ~~long~~It is estimated that ecommerce sales require three times ~~periods~~the amount of ~~time~~warehouse space relative to brick and mortar retail sales. ~~Our~~These ~~overall~~new ~~occupancy~~buildings ~~rate~~are ~~has~~often ~~been~~highly ~~over~~automated ~~99%~~and have much larger truck courts and ~~our~~parking ~~base~~requirements. ~~rent~~Because ~~collections~~modern ~~remained~~industrial ~~strong~~buildings ~~throughout~~are ~~the~~built ~~COVID-19~~to ~~Pandemic. Our~~handle ~~overall~~both ~~occupancy~~wholesale ~~rate~~distribution ~~was~~as well ~~99.7%~~as ~~during~~direct ~~the~~to ~~current~~consumer ~~quarter.~~distribution, ~~Our~~they ~~base~~are ~~rent~~known ~~collections~~as ~~averaged~~omni-channel 99facilities.9% ~~throughout~~The ~~the~~West ~~COVID-19~~coast ~~Pandemic~~ports are continuing to experience severe bottlenecks in processing imports and weas ~~expect~~a ~~future~~result ~~months~~much tocontainer betraffic ~~consistent~~is ~~with~~being diverted towards the Gulf and East coast ports. Given our geographic footprint, this trend is a very favorable one for us.

Income Tax

We have elected to be taxed as a REIT under Sections 856-860 of the ~~Internal Revenue~~ Code ~~of 1986~~, ~~as amended (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, ~~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~~ years beginning after December 31, 2017 and before January 1, 2026. Under the TCJA, subject to certain income limitations, an individual ~~taxpayer~~ taxpayers and ~~estates~~trusts and ~~trusts~~estates may deduct 20% of the aggregate amount of qualified REIT dividends they receive from their taxable income. ~~Qualified~~ Qualified REIT dividends do not include any portion of a dividend received from a REIT that is classified as a capital gain dividend or ~~non-~~qualified dividend income.

12We 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 December 31, 2021. We record interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of December 31, 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.

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WeThe ~~follow~~interim ~~the~~Consolidated ~~provisions~~Financial ofStatements ~~ASC~~furnished ~~Topic~~herein ~~740,~~have ~~Income~~been ~~Taxes,~~prepared ~~that,~~in ~~among~~accordance ~~other~~with ~~things,~~Accounting ~~defines~~Principles aGenerally ~~recognition threshold and measurement attribute~~Accepted ~~for~~in the ~~financial~~United ~~statement~~States ~~recognition~~of ~~and~~America ~~measurement~~(U.S. ofGAAP) aapplicable ~~tax~~to ~~position~~interim ~~taken~~financial orinformation, ~~expected~~the instructions to beForm ~~taken~~10-Q, inand aArticle ~~tax~~10 of ~~return~~Regulation S-X. ~~ASC~~Accordingly, ~~Topic~~they ~~740 also~~do ~~provides~~not ~~guidance~~include onall ~~de-recognition,~~of ~~classification,~~the ~~interest~~information and ~~penalties,~~footnotes ~~accounting~~required inby ~~interim~~U.S. ~~periods,~~GAAP ~~disclosure,~~for ~~and~~complete ~~transition.~~financial ~~Based~~statements. onIn our ~~evaluation~~opinion, weall ~~determined~~adjustments ~~that~~(consisting weof ~~have~~normal norecurring ~~uncertain~~accruals) ~~tax~~considered ~~positions~~necessary ~~and~~for noa ~~unrecognized~~fair ~~tax~~presentation, ~~benefits~~have been asincluded. ofOperating ~~June~~results 30for the three months ended December 31, 2021~~. We~~ ~~record~~are ~~interest~~not ~~and~~necessarily ~~penalties~~indicative ~~relating~~of tothe ~~unrecognized~~results ~~tax~~that ~~benefits,~~may be ifexpected ~~any,~~for asthe ~~interest~~fiscal ~~expense.~~year Asending ofSeptember ~~June~~ 30, ~~2021,~~2022. ~~the~~For ~~fiscal tax~~further ~~years~~information, ~~2017~~refer ~~through~~to ~~and~~the ~~including~~Consolidated ~~2020~~Financial ~~remain~~Statements ~~open~~and footnotes tothereto ~~examination~~included byin ~~the~~our ~~Internal~~Annual ~~Revenue~~Report ~~Service.~~on ~~There~~Form ~~are~~10-K ~~currently~~for nothe ~~federal tax~~fiscal ~~examinations~~year inended ~~progress~~September 30, 2021.

The interim Consolidated Financial Statements furnished herein have been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP) applicable to interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation, have been included. Operating results for the three and nine months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

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 ~~and related disclosure of contingent assets and liabilities~~. Actual results could differ from these estimates and assumptions.

Reclassification

Certain prior period amounts in the accompanying Consolidated Financial Statements have been reclassified to conform to the current period’s presentation.

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 $7794,000 and $9857,000 for the three months ended ~~June~~December 3031, 2021 and 2020, respectively ~~and amounted to $210,000 and $368,000 for the nine months ended June 30, 2021 and 2020, respectively~~.

During the ~~nine~~three months ended ~~June~~December 3031, 2021 ~~and 2020~~, the following stock ~~options~~option, which ~~vest~~by its terms vests one year after grant date, ~~were~~was granted under our Stock Option Plan:

SUMMARY OF STOCK OPTIONS ~~OUTSTANDING~~GRANTED DURING PERIOD

Date of Grant		~~Number of Employees~~	Number of ~~Shares (in thousands)~~Employees		~~Option Price~~		Number of Shares (in thousands)		~~Expiration Date~~	Option Price		Expiration Date
1/13/21		1	65		$	16.46			1/13/29
	10/1/21			1				65		$	18.89	10/1/29
1/13/20		1	65		$	14.55			1/13/28

13During the three months ended December 31, 2020, no stock options were granted.

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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~~the instock ~~the~~option ~~fiscal~~grant ~~year~~in ~~indicated~~fiscal 2022:

	Fiscal 2021			Fiscal 2020
	Fiscal 2022
Dividend yield		43.3781	%		~~4.67~~	%
Expected volatility		2019.1766	%		~~18.40~~	%
Risk-free interest rate		01.8026	%		~~1.76~~	%
Expected lives (years)		8			8
Estimated forfeitures		0			0

The weighted average fair value of ~~options~~the option granted during the ~~nine~~three months ended ~~June~~December 3031, 2021 ~~and 2020~~ was $12.4905 ~~and $1.24~~ per share subject to the option~~, respectively~~.

During the ~~nine~~three months ended ~~June~~December 3031, 2021 and 2020, no shares of restricted stock were granted. During the ~~nine~~three months ended ~~June 30~~December 31, 2021, ~~three~~ two participants exercised options to purchase ~~159~~71,000 shares of common stock at a weighted average price of $129.3734 per share for total proceeds of $2662,940.0 ~~million~~In addition, during the three months ended December 31, 2021, two participants exercised a net exercise of stock options. The two participants received 81,819 shares of common stock from the net exercise of options to purchase 449,978 shares of common stock at a weighted average exercise price of $13.68. During the ~~nine~~three months ended ~~June~~December 3031, 2020, two participants exercised options to purchase 95130,000 shares of common stock at a weighted average price of $1012.6905 per share for total proceeds of $1.06 million. As of ~~June~~December 3031, 2021, a total of 1.2 1 million shares were available for grant as stock, stock options, restricted stock, or other equity-based awards, plus any shares subject to outstanding options that expire or are forfeited without being exercised. As of ~~June~~December 3031, 2021, there were outstanding options to purchase ~~856~~ 370,000 shares with an aggregate intrinsic value of $42.42 million.

Under the terms of the definitive merger agreement with ~~EQC~~ILPT, upon closing of the merger, each outstanding stock option ~~outstanding~~, whether vested or or unvested, ~~will~~and beeach ~~canceled~~restricted ~~and~~stock ~~the~~award ~~holder~~outstanding will ~~then~~ become ~~entitled~~fully tovested ~~receive~~and ~~the~~converted ~~common~~into ~~stock~~the ~~consideration~~right ofto ~~0.67~~receive, ~~EQC common shares~~ in ~~respect of each net option share. The number of net option shares in respect of a stock option is calculated by dividing (i)~~ the ~~aggregate intrinsic~~case ~~value~~ of ~~such~~ stock ~~option~~options, ~~less applicable tax withholdings by (ii)~~ the ~~volume~~spread ~~weighted~~between ~~average~~$21.00 ~~price~~ per ~~Monmouth common~~ share on ~~the~~in ~~NYSE~~cash ~~for~~and the ~~five~~exercise ~~consecutive~~price ~~trading~~and, ~~days~~in ~~immediately preceding~~ the ~~fifth~~case ~~trading day prior to the closing date~~ of ~~the merger. In addition, all outstanding~~ restricted stock awards ~~will be canceled~~, ~~and the holder will then become entitled to receive the common~~$21.00 ~~stock~~per ~~consideration~~share ~~of 0.67 EQC common shares~~ in ~~respect of each net share covered by such restricted stock award~~cash. ~~The~~All ~~number~~outstanding ~~of net shares in respect of a restricted~~ stock ~~award~~options ishave ~~calculated~~an byexercise ~~dividing~~price ~~(i) the aggregate value~~ of ~~such restricted stock award~~ less ~~applicable tax~~than ~~withholdings~~$21.00 ~~by (ii) the volume weighted average price~~ per ~~MNR common~~ share ~~on the NYSE for the five consecutive trading days immediately preceding the fifth trading day prior to the closing date of the merger~~.

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~~During ~~October~~the 1three months ended December 31, 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 in 1.2 years 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~~provided 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~~ provided 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.

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Only ~~four~~three of our ~~120~~123 properties have leases that contain an early termination provision. These ~~four~~three properties contain ~~260~~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, ~~our 83,000 square foot location in Roanoke, VA~~ 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 for the tenant to exercise ~~each~~the 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 ~~four~~three tenants with leases that have a termination provision amounts to $21.05 million.

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.

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.

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.

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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~~our 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 5 – Debt”, 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 7 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 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 throughout the hedging period. As of June 30, 2021, the Company has 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 $2.5 million and $4.4 million as of June 30, 2021 and September 30, 2020, respectively, was recorded as a component of Accumulated Other Comprehensive Loss in the Consolidated Balance Sheets, with the corresponding liability included in Other Liabilities. The change in the fair value of the interest rate swap agreement is reflected in the Consolidated Statement of Comprehensive Income (Loss) and amounted to $66,000 and $1.9 million for the three and nine months ended June 30, 2021, respectively.14

NOTE 2 – NET INCOME (LOSS) 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 237,000 and 56,000 shares are included in the diluted weighted average shares outstanding for the three months ended June 30, 2021 and 2020, respectively, and common stock equivalents of 181,000 and 78,000 shares are included in the diluted weighted average shares outstanding for the nine months ended June 30, 2021 and 2020, respectively. For the diluted weighted average shares outstanding for the three months ended June 30, 2021 and 2020, 0 and 625,000 options to purchase shares of common stock were antidilutive. For the diluted weighted average shares outstanding for the nine months ended June 30, 2021 and 2020, 65,000 and 315,000 options to purchase shares of common stock, respectively, were antidilutive.

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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 7 for information on the determination of fair value). The effective portion of the gain or loss on this hedge is reported as a component of Accumulated Other Comprehensive 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 throughout the hedging period. As of December 31, 2021, the Company has 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 $1.1 million and $2.2 million as of December 31, 2021 and September 30, 2021, respectively, was recorded as a component of Accumulated Other Comprehensive Loss in the Consolidated Balance Sheets, with the corresponding liability included in Other Liabilities. The change in the fair value of the interest rate swap agreement is reflected in the Consolidated Statement of Comprehensive Income and amounted to $1.1 million and $433,000 for the three months ended December 31, 2021 and December 31, 2020, respectively.

NOTE 2 – NET INCOME PER SHARE

Basic Net Income per Common Share is calculated by dividing Net Income Attributable to Common Shareholders by the weighted average number of common shares outstanding during the period. Diluted Net Income per Common Share is calculated by dividing Net Income 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 92,000 and 106,000 shares are included in the diluted weighted average shares outstanding for the three months ended December 31, 2021 and 2020, respectively. For the diluted weighted average shares outstanding for the three months ended December 31, 2021 and 2020, 0 and 65,000 options to purchase shares of common stock were antidilutive and therefore excluded.

NOTE 3 – REAL ESTATE INVESTMENTS

Acquisitions

On ~~December~~October 1727, ~~2020~~2021, we purchased a newly constructed ~~500~~291,000 square foot industrial building, situated on ~~100~~46.0 acres, located in the ~~Columbus~~ Birmingham, AL OH MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through ~~September~~July ~~2035~~2036. The ~~purchase price~~property was ~~$73.3~~acquired for ~~million. We obtained~~ a 15purchase ~~year,~~price ~~fully-amortizing mortgage loan~~ of $4730.02 million ~~at a fixed interest rate of 2~~.~~95%.~~ Annual rental revenue over the remaining term of the lease averages $41.67 million.

OnFedEx ~~December~~Ground ~~24,~~Package ~~2020~~System, weInc.’s ~~purchased~~ultimate ~~a newly constructed 658~~parent,~~000~~ ~~square~~FedEx ~~foot~~Corporation ~~industrial~~is ~~building,~~a ~~situated~~publicly-listed oncompany ~~130.2~~and ~~acres,~~financial ~~located~~information ~~in the~~related ~~Atlanta,~~to GAthis ~~MSA.~~entity ~~The building~~ is ~~100%~~available ~~net-leased~~at tothe ~~Home~~SEC’s ~~Depot~~website, Uwww.Ssec.Agov., ~~Inc.~~The ~~for~~references 20in ~~years~~this ~~through~~report ~~November~~to ~~2040.~~the ~~The~~SEC’s ~~purchase price was~~website ~~$95.9~~are ~~million.~~not Weintended ~~obtained~~to aand 17do ~~year~~not include, ~~fully-amortizing~~or ~~mortgage~~incorporate ~~loan~~by ofreference ~~$57.0~~into ~~million~~this atreport, ~~a fixed interest rate of 3.25%. Annual rental revenue over~~ the ~~remaining~~information ~~term~~on of the ~~lease averages $5~~www.5sec.gov ~~million~~website.

~~FedEx~~We ~~Ground~~evaluated ~~Package~~the ~~System,~~property ~~Inc.’s~~acquisition ~~ultimate~~that ~~parent,~~took ~~FedEx~~place ~~Corporation,~~during ~~and~~the ~~Home~~three ~~Depot~~months ~~U.S.A.,~~ended ~~Inc’s~~December ~~ultimate~~31, ~~parent~~2021, ~~Home~~to ~~Depot,~~determine whether an integrated ~~Inc.~~set of assets and activities meets the definition of a business, ~~are~~pursuant ~~publicly~~to ASU 2017-~~listed~~01. ~~companies~~Acquisitions ~~and~~that ~~financial~~do ~~information~~not ~~related~~meet tothe ~~these~~definition of ~~entities~~a business are ~~available~~accounted atfor ~~the~~as ~~SEC’s~~asset ~~website, www~~acquisitions.~~sec.gov.~~ ~~The~~Accordingly, ~~references~~we inaccounted ~~this~~for ~~report~~the toproperty ~~the~~purchased ~~SEC’s~~during ~~website~~fiscal ~~are~~2022 ~~not~~as ~~intended~~an asset toacquisition and doallocated ~~not~~the ~~include~~total cash consideration, orincluding ~~incorporate~~transaction ~~by reference~~costs ~~into~~of ~~this~~approximately ~~report~~$29,000, to the ~~information~~individual asset acquired on ~~the~~a ~~www~~relative fair value basis.~~sec.gov~~ ~~website~~There were no liabilities assumed in this acquisition. The financial information set forth below summarizes our purchase price allocation for this property acquired during the three months ended December 31, 2021 that was accounted for as an asset acquisition (in thousands):

We evaluated the property acquisitions which took place during the nine months ended June 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 the properties purchased during fiscal 2021 as asset acquisitions and allocated the total cash consideration, including transaction costs of approximately $576,000, 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 properties acquired during the nine months ended June 30, 2021 that is accounted for as an asset acquisition (in thousands):

Land	$	162,~~222~~837
Building		~~148~~26,~~756~~850
In-Place Leases		~~4,838~~517

~~The following table summarizes the operating results included in our Consolidated Statements of Income for the properties acquired during the nine months ended June 30, 2021 (in thousands):~~15

SUMMARY OF CONSOLIDATED STATEMENTS OF INCOME FOR PROPERTIES ACQUIRED

	Three Months Ended 6/30/2021		Nine Months Ended 6/30/2021
Rental Revenues	$	2,496	$	5,326
Net Income Attributable to Common Shareholders		687		1,920

Subsequent to quarter end, 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.

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The following table summarizes the operating results included in our Consolidated Statements of Income for the property acquired during the three months ended December 31, 2021 (in thousands):

	Three Months Ended 12/31/2021

Rental Revenues	$	312
Net Income Attributable to Common Shareholders		181

Subsequent to quarter end, on January 28, 2022, we purchased a newly constructed 530,000 square foot industrial building, situated on 53.5 acres, located in the Birmingham, AL MSA. The building is 100% net-leased to Mercedes Benz US International, Inc. for 10 years through November 2031. The property was acquired for a purchase price of $51.7 million. Annual rental revenue over the remaining term of the lease averages $3.3 million.

Expansions

During ~~the~~fiscal ~~nine months ended June 30,~~ 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 ~~which resulted~~ in aan ~~$340,000~~initial increase in ~~annualized~~annual rent effective November 5, 2020 ~~increasing~~of ~~the~~approximately ~~annualized~~$340,000 ~~rent~~ from approximately $2.214 million, or $6.83 per square foot, to approximately $2.648 million, or $7.91 Weper ~~recently~~square ~~began~~foot. ~~construction~~Furthermore, annual rent increased by 2.1% on ~~the~~June 1, ~~second~~2021 ~~phase~~and ofwas ~~this~~to ~~parking~~continue ~~expansion~~to ~~project~~increase at2.1% ~~this~~every ~~location~~five years, ~~which~~ ~~will~~resulting ~~increase~~in ~~the~~an ~~rental~~annualized ~~rate~~rent ~~further~~of ~~and~~$2.56 ~~extend~~million, or $8.15 per square foot, from November 5, 2020 through May 2031, the ~~lease~~remaining term of the lease. InDuring ~~addition,~~the ~~effective~~three ~~June~~months 4ended December 31, 2021, we completed ~~a parking lot~~ ~~expansion~~the ~~for~~second ~~UPS~~phase atof ~~our~~this ~~property~~parking ~~located~~expansion inproject ~~Halfmoon~~at ~~(Albany),~~this NYlocation for a total cost of ~~approximately~~ $~~835~~2.3 million,~~000,~~ resulting in an initial increase in annual rent effective onNovember ~~the~~19, ~~date~~2021 of ~~completion of~~ approximately $52185,000 from approximately $~~510~~2.53 million,~~000,~~ or $68.8008 per square foot, to ~~approximately~~ approximately $~~562~~2.72 million,~~000,~~ or $78.5067 per square foot. ~~Furthermore~~In addition, ~~annual~~the ~~rent~~expansion ~~will~~resulted ~~continue~~in toa ~~increase~~new ~~each~~14.5 year bylease ~~2.0%~~which ~~resulting~~extended inthe anprior lease ~~annualized~~expiration ~~rent~~date from ~~June~~May 42031 to May 2036. Furthermore, ~~2021~~annual ~~through~~rent ~~the~~will ~~remaining~~increase ~~term~~by of1.9% ~~the~~on ~~lease~~June 1, 2026 resulting in an annualized rent of approximately $~~622~~2.76 million,~~000,~~ or $8.2978 per square foot from November 19, 2021 through the remaining term of the lease.

~~Disposition~~During the three months ended December 31, 2021, we completed a parking expansion project for FedEx Ground Package System, Inc. at our property located in Wheeling, IL for a total cost of $1.0 million, resulting in an initial increase in annual rent effective October 28, 2021 of approximately $105,000 from approximately $1.27 million, or $10.34 per square foot, to approximately $1.38 million, or $11.19 per square foot. In addition, the expansion resulted in a new 9.8 year lease which extended the prior lease expiration date from May 2027 to August 2031.

OnDuring ~~April~~the 15three months ended December 31, 2021, we ~~sold~~completed ~~our~~a 60parking expansion project for FedEx Ground Package System,~~400~~ ~~square~~Inc. ~~foot~~at ~~building~~our property located in ~~Carlstadt~~Sauget (St. Louis, NJMO), ~~which~~IL isfor a total cost of $3.8 million, resulting in ~~the~~an ~~New~~initial ~~York~~increase in annual rent effective November 10, NY2021 ~~MSA~~of approximately $346,000 ~~for~~from approximately $131.004 million, or $5. ~~Prior~~21 toper ~~the~~square ~~sale~~foot, weto ~~owned~~approximately a$1.38 ~~51%~~million, ~~interest~~or in$6.95 per ~~this~~square ~~property~~foot. ~~Our~~In ~~51%~~addition, ~~portion of~~ the ~~sale~~expansion ~~proceeds~~ resulted in a Unew 13.S.8 ~~GAAP~~year ~~net~~lease ~~realized~~which extended the prior lease expiration date from May ~~gain~~2029 ofto ~~approximately~~August $32035.3 ~~million~~Furthermore, ~~representing~~annual arent ~~159%~~will ~~gain~~increase ~~over~~by ~~the~~3.7% ~~depreciated~~on ~~U.S.~~June ~~GAAP~~1, ~~basis~~2029 ~~and~~resulting ain ~~net~~an ~~realized~~annualized ~~gain~~rent ~~over~~from ~~our~~November ~~historic~~10, ~~undepreciated~~2021 ~~cost~~through ~~basis~~the remaining term of the lease of approximately $21.640 million, ~~representing~~or a$7.07 ~~96%~~per ~~net~~square ~~gain over our historic undepreciated cost basis~~foot.

~~Prior~~During to the ~~sale~~three months ended December 31, ~~the~~2021, ~~49%~~we ~~Non-controlling~~completed ~~interest~~a ~~(NCI)~~parking ~~did~~expansion ~~not~~project ~~have~~for aFedEx ~~material~~Ground ~~impact~~Package onSystem, Inc. at our ~~financial~~property located ~~position~~in orOrion, ~~results~~MI for a total cost of ~~operations and~~$6.5 ~~accordingly~~million, ~~was~~resulting ~~not~~in ~~separately~~an ~~presented~~initial increase in ~~the~~annual ~~financial~~rent ~~statements.~~effective ~~However~~November 24, ~~upon~~2021 ~~the~~of approximately ~~sale~~$651,000 offrom ~~the~~approximately ~~property~~$1.91 onmillion, ~~April~~or 15$7.77 per square foot, ~~2021~~to approximately $2.56 million, ~~we presented~~or ~~the~~$10.42 ~~effects~~per ofsquare foot. In addition, the ~~NCI~~expansion resulted in a new 9.9 year lease which extended the ~~Statement~~prior oflease ~~Income~~expiration ~~for~~date ~~all~~from ~~periods~~June ~~presented~~2023 to October 2031.

Since the sale of this property sold 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. The following table summarizes the results of operations of this property (in thousands), prior to its sale on April 15, 2021, that are included in the accompanying Consolidated Statements of Income.16

SCHEDULE OF DISPOSITION AND REAL ESTATE CLASSIFIED AS HELD FOR SALE

		6/30/2021			6/30/2020			6/30/2021			6/30/2020
	Three Months Ended						Nine Months Ended
		6/30/2021			6/30/2020			6/30/2021			6/30/2020
Rental and Reimbursement Revenue	$	38		$	154		$	467		$	503
Real Estate Taxes		(7	)		(28	)		(62	)		(85	)
Operating Expenses		(162	)		(401	)		(218	)		(423	)
Depreciation & Amortization		(169	)		(38	)		(244	)		(112	)
Interest Expense (6/30/21 includes prepayment penalty)		(170	)		(18	)		(205	)		(58	)
Income (Loss) from Operations		(470	)		(331	)		(262	)		(175	)
Realized Gain on Sale of Real Estate Investment		6,376			0			6,376			0
Net Income (Loss)		5,906			(331	)		6,114			(175	)
Less: Net Income (Loss) Attributable to Non-Controlling Interest		2,894			(163	)		2,996			(86	)
Net Income (Loss) Attributable to Shareholders	$	3,012		$	(168	)	$	3,118		$	(89	)

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The four parking expansions completed this quarter, as described above, totaled $13.7 million and resulted in total increased rent of $1.3 million and a weighted average lease extension of 6.7 years. In addition to these four parking expansions completed this quarter, we have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are six parking expansion projects underway, which we expect to cost approximately $31.4 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 seven 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.

Proforma information

The following unaudited pro-forma condensed financial information has been prepared utilizing our historical financial statements and 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~~through ~~fiscal~~December ~~2021~~31, ~~to date~~2021, and during ~~fiscal~~ ~~2020~~fiscal 2021, assuming that the property acquisitions, and completed expansions ~~and the sale of one property~~ had occurred as of October 1, ~~2019~~ 2020, 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~~2020. 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~~ 2020. 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.

SCHEDULE OF PRO FORMA INFORMATION

	Three Months Ended (in thousands, except per share amounts)
		6/30/2021				6/30/2020
	12/31/2021				12/31/2020
	As Reported	~~As Reported~~	Pro-forma	~~Pro-forma~~	As Reported	~~As Reported~~	Pro-forma	~~Pro-forma~~
Rental Revenue	$	3940,~~032~~999	$	3941,~~814~~302	$	3536,~~427~~846	$	3940,~~479~~987
Net Income Attributable to Common Shareholders	$	1711,~~292~~417	$	1411,~~439~~388	$	2625,~~851~~746	$	26,~~610~~059
Basic and Diluted Net Income per Share Attributable to Common Shareholders	$	0.1712	$	0.1512	$	0.2726	$	0.2726

	Nine Months Ended (in thousands, except per share amounts)
		6/30/2021				6/30/2020
		As Reported		Pro-forma		As Reported			Pro-forma
Rental Revenue	$	115,123	$	119,468	$	105,410		$	118,356
Net Income (Loss) Attributable to Common Shareholders	$	68,950	$	66,841	$	(44,700	)	$	(47,052	)
Basic and Diluted Net Income (Loss) per Share Attributable to Common Shareholders	$	0.71	$	0.68	$	(0.46	)	$	(0.48	)

Tenant Concentration

We have a concentration of properties leased to FedEx Corporation (FDX) and FDX subsidiaries, consisting of 63 separate stand-alone leases covering 11.2 million square feet as of June 30, 2021 and 62 separate stand-alone leases covering 10.7 million square feet as of June 30, 2020. FDX is experiencing record demand due to the continued strong growth in ecommerce. Additionally, in periods of unprecedented turbulence, the services of FedEx are essential in keeping supply chains moving and in delivering critically needed supplies throughout the world. As of June 30, 2021, the 63 separate stand-alone leases we have with FDX and FDX subsidiaries are located in 26 different states and have a weighted average lease maturity of 7.5 years. The percentage of FDX and its subsidiaries leased square footage to the total of our rental space was 46% (5% to FDX and 41% to FDX subsidiaries) as of June 30, 2021 and 46% (5% to FDX and 41% to FDX subsidiaries) as of June 30, 2020.

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AsTenant of June 30, 2021, the only tenants, other than FDX and its subsidiaries, that leased 5% or more of our total square footage were subsidiaries of Amazon.com, Inc (Amazon), which consists of 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.Concentration

~~Annualized~~We ~~Rental~~have ~~and~~a ~~Reimbursement~~concentration ~~Revenue~~of ~~from~~properties leased to FedEx Corporation (FDX) and ~~its~~FDX subsidiaries, isconsisting ~~estimated~~of to66 beseparate ~~approximately~~stand-alone ~~55%~~leases covering ~~(5%~~11.9 tomillion ~~FDX~~square ~~and~~feet ~~50%~~as ~~to FDX subsidiaries)~~ of ~~total~~December ~~Rental~~31, 2021 and ~~Reimbursement~~63 ~~Revenue~~separate ~~for~~stand-alone ~~fiscal~~leases ~~2021,~~covering ~~and~~11.2 ~~was~~million ~~58%~~square ~~(5%~~feet toas ~~FDX~~of December ~~and~~31, ~~53%~~2020. to FDX ~~subsidiaries)~~is ofexperiencing ~~total~~record ~~Rental~~demand ~~and~~due ~~Reimbursement Revenue~~to ~~for~~the ~~fiscal~~continued ~~2020.~~strong ~~The~~growth ~~only~~in ~~tenants~~ecommerce. Additionally, ~~other~~in ~~than~~periods ~~FDX~~of ~~and its subsidiaries~~unprecedented turbulence, ~~that~~the weservices ~~estimate~~of ~~will~~FedEx ~~comprise~~are 5%essential orin ~~more~~keeping ofsupply ~~our~~chains ~~total Rental~~moving and ~~Reimbursement~~in ~~Revenue~~delivering ~~for~~critically ~~fiscal~~needed ~~2021~~supplies ~~are~~throughout the ~~subsidiaries~~world. As of ~~Amazon~~December 31, ~~which~~2021, isthe ~~estimated~~66 toseparate bestand-alone 7%leases ofwe ~~our~~have ~~Annualized~~with ~~Rental~~FDX and ~~Reimbursement~~ ~~Revenue~~FDX ~~for~~subsidiaries ~~fiscal~~are ~~2021~~located in 27 different states and ~~was~~have 6%a ~~for~~weighted average lease maturity of ~~our~~8.1 ~~Annualized~~years. ~~Rental~~The percentage of FDX and ~~Reimbursement~~its ~~Revenue~~subsidiaries ~~for~~leased ~~fiscal~~square ~~2020.~~footage ~~For~~to the ~~nine~~ ~~months~~total ~~ended~~of ~~June~~our ~~30,~~rental ~~2021,~~space nowas ~~other~~47% ~~tenant~~(4% ~~accounted~~to ~~for~~FDX 5and 43% orto ~~more~~FDX subsidiaries) as of ~~our~~December ~~total~~31, ~~Rental~~2021 and ~~Reimbursement~~46% ~~Revenue~~(5% to FDX and 41% to FDX subsidiaries) as of December 31, 2020.

As of December 31, 2021, the only tenants, other than FDX and its subsidiaries, that leased 5% or more of our total square footage were subsidiaries of Amazon.com, Inc (Amazon), which consists of 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.

Annualized Rental and Reimbursement Revenue from FDX and its subsidiaries is estimated to be approximately 57% (4% to FDX and 53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2022, and was 57% (5% to FDX and 52% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2021. The only tenants, other than FDX and its subsidiaries, that we estimate will comprise 5% or more of our total Rental and Reimbursement Revenue for fiscal 2022 are subsidiaries of Amazon, which is estimated to be 6% of our Annualized Rental and Reimbursement Revenue for fiscal 2022 and was 6% for of our Annualized Rental and Reimbursement Revenue for fiscal 2021.

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 “A2”, respectively by Moody’s (www.moodys.com), which are both considered “Investment Grade” ratings.

NOTE 4 – SECURITIES AVAILABLE FOR SALE AT FAIR VALUE

Our Securities Available for Sale at Fair Value consists primarily of marketable common and preferred stock of other REITs with a fair value of $~~148~~160.43 million as of ~~June~~December 3031, 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. Total assets excluding accumulated depreciation were $2.~~5 billion~~6 billion as of ~~June~~December 3031, 2021. 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 $~~148~~160.43 million investment in marketable REIT securities as of ~~June~~December 3031, 2021 represented 56.92% of our undepreciated assets. We normally hold REIT securities long-term and intend to hold these securities to recovery.

We recognized dividend income on our investments in securities of $1.~~5 million and $4.~~7 million for the three ~~and nine~~ months ended ~~June 30,~~December ~~2021~~31, ~~respectively~~2021. There have been no open market purchases or sales of securities during the ~~nine~~three months ended ~~June~~December 3031, 2021. We owned a total of 1.4 ~~million~~ million common shares in UMH Properties, Inc. (UMH), a related REIT, as of ~~June~~December 3031, 2021, at a total cost of $1415.6 1 million and a fair value of $2938.9 0 million, representing a ~~104~~151% unrealized gain. Dividends received from our UMH common shares are reinvested through UMH’s Dividend Reinvestment and Stock Purchase Plan. ~~During~~On ~~the~~January ~~nine months ended June 30~~12, ~~2021,~~2022 UMH ~~redeemed~~announced ~~all~~a ~~of its outstanding 8~~5.003% ~~Series~~ Bdividend ~~Cumulative~~increase ~~Redeemable~~on ~~Preferred~~its ~~Stock~~common ~~at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends, of which we owned 100,000~~ shares ~~at a total cost of $2~~.~~5 million.~~

InAs ~~addition~~of toDecember ~~the~~31, ~~$2.5~~2021, ~~million~~we ofhad ~~UMH~~total ~~8.00%~~net ~~Series~~unrealized Bholding ~~Cumulative~~losses ~~Redeemable~~on ~~Preferred~~our ~~Stock~~securities ~~that~~portfolio ~~was~~of ~~redeemed~~$60.1 ~~during~~million. ~~the~~As ~~nine~~a ~~months~~result ~~ended~~of the adoption ~~June~~of ~~30,~~ASU ~~2021~~2016-01, we ~~also~~recognized ~~sold~~net ~~marketable~~Unrealized ~~REIT~~Holding ~~securities~~Gains ~~for~~Arising ~~gross~~During ~~proceeds~~the ~~totaling~~Periods ~~$16.3~~in ~~million~~the ~~with~~accompanying anConsolidated ~~original~~Statements ~~cost~~of Income ~~basis~~for ofthe ~~$14.1 million,~~three ~~resulting~~months inended aDecember ~~realized~~31, ~~gain~~2021 of $216.25 million.

2018

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As of June 30, 2021, we had total net unrealized holding losses on our securities portfolio of $71.4 million. As a result of the adoption of ASU 2016-01, we recognized Unrealized Holding Gains (Losses) Arising During the Periods in the accompanying Consolidated Statements of Income for the three and nine months ended June 30, 2021 of $16.5 million and $55.4 million, respectively. The components of the Unrealized Holding Gains (Losses) Arising During the Periods included in the accompanying Consolidated Statements of Income are as follows:

SCHEDULE OF COMPONENTS OF THE UNREALIZED HOLDING GAINS (LOSSES)

		6/30/2021		6/30/2020		6/30/2021			6/30/2020
	Three Months Ended				Nine Months Ended
		6/30/2021		6/30/2020		6/30/2021			6/30/2020
Unrealized Holding Gains (Losses)	$	16,471	$	19,610	$	57,625		$	(67,100	)
Reclassification Adjustment for Net Gains Realized in Income		0		0		(2,248	)		0
Unrealized Holding Gains (Losses) Arising During the Period	$	16,471	$	19,610	$	55,377		$	(67,100	)

NOTE 5 – DEBT

For the three months ended ~~June~~December 3031, 2021 and 2020, amortization of financing costs included in interest expense was $~~367~~428,000 and $~~326~~331,000, respectively. ~~For the nine months ended June 30, 2021 and 2020, amortization of financing costs included in interest expense was $1.0 million and $1.1 million, respectively.~~

As of ~~June~~December 3031, 2021, we owned ~~120~~123 properties, of which 6159 carried Fixed Rate Mortgage Notes Payable with outstanding principal balances totaling $~~856~~815.79 million. The following is a summary of our Fixed Rate Mortgage Notes Payable as of ~~June~~December 3031, 2021 and September 30, ~~2020~~ 2021 (in thousands):

6/30/2021

9/30/2020

12/31/2021

9/30/2021

Amount

Weighted Average Interest Rate (1)

Amount

Weighted Average Interest Rate (1)

Fixed Rate Mortgage Notes Payable

~~856~~815,~~675~~925

3.8685

~~807~~839,~~371~~622

3.9886

Debt Issuance Costs

12,~~725~~434

12,~~377~~643

Accumulated Amortization of Debt Issuance Costs

(5,~~044~~231

)

(45,~~513~~205

)

Unamortized Debt Issuance Costs

7,~~681~~203

7,~~864~~438

Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs

~~848~~808,~~994~~722

~~799~~832,~~507~~184

(1)

Weighted average interest rate excludes amortization of debt issuance costs.

As of ~~June~~December 3031, 2021, interest payable on these mortgages were at fixed rates ranging from 2.95% to 6.~~875~~75%, with a weighted average interest rate of 3.8685%. This compares to a weighted average interest rate of 3.9886% as of September 30, ~~2020~~2021 and 43.0088% as of ~~June~~December 3031, 2020. As As of ~~June~~December 3031, 2021, the weighted average loan maturity of the Fixed Rate Mortgage Notes Payable was 1110.17 years. This compares to a weighted average loan maturity of the Fixed Rate Mortgage Notes Payable of 1110.19 years as of September 30, ~~2020~~2021 and 11.25 years as of December ~~June 30~~31, 2020.

InOn ~~connection~~November ~~with the two properties acquired during the nine months ended June 30~~1, 2021, ~~which are located in the Columbus, OH and Atlanta, GA MSAs (as described in Note 3),~~ we ~~obtained a 15 year~~ fully~~-amortizing~~ ~~mortgage~~repaid ~~loan and~~ a ~~17 year fully-amortizing loan, respectively~~$7. ~~The~~3 ~~two~~million mortgage ~~loans~~loan ~~originally~~for ~~totaled~~our ~~$104.0~~property ~~million~~located ~~with~~in aStreetsboro ~~weighted~~(Cleveland), ~~average maturity of 16~~OH.1 ~~years~~The ~~and~~loan ahad an ~~weighted average~~ interest rate of 35.115%.

21On December 15, 2021, we entered into a New Term Loan Agreement (the “New Term Loan”), that provides for a $175.0 million, unsecured, delayed-draw term loan facility. The borrowings under the New 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 the Federal Reserve Board’s Prime Rate plus 30 basis points to 100 basis points, depending on our leverage ratio. The New Term Loan matures on June 15, 2022 with two options to extend for additional three-month periods. Availability under the New Term Loan is limited to 60% of the value of the unencumbered real estate 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 Term Loan the capitalization rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties is 6.25%. Currently, our borrowings bear interest at LIBOR plus 140 basis points, which results in an interest rate of 1.51%. As of the quarter end, we did not have any amounts drawn down under our New Term Loan. Subsequent to the quarter end, on January 28, 2022 we drew down $60.0 million, resulting in $115.0 million being currently available.

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OnOur ~~January~~existing 26line of credit facility (the “Facility”), ~~2021~~entered into on November 15, we2019, ~~fully~~consists ~~prepaid~~of a $6225.2 0 million ~~mortgage~~unsecured line ~~loan~~of ~~for~~credit ~~our~~facility ~~property~~(the ~~located~~“Revolver”) inand ~~Kansas~~a ~~City, MO~~$75.0 ~~The~~million unsecured term loan ~~was~~(the ~~originally~~“Term ~~set~~Loan”), toresulting in ~~mature~~the ontotal ~~December 1,~~potential ~~2021~~availability ~~and~~under ~~had~~both anthe ~~interest~~Revolver ~~rate~~and the Term Loan of 5$300.~~18%~~0 million. On ~~February~~In 26addition, ~~2021,~~the weRevolver ~~fully~~includes ~~prepaid~~an accordion afeature that will allow the total potential availability under the Facility to further increase to $~~159~~400.0 million,~~000~~ under certain ~~mortgage~~conditions. ~~loan~~The ~~for~~$225.0 ~~our~~million ~~property~~Revolver ~~located~~matures in ~~Topeka,~~January KS2024 with two options to extend for additional six-month periods. Availability under the Facility is limited to 60% of the value of the borrowing base properties. The ~~loan~~value of the borrowing base properties is determined ~~was~~by ~~originally~~applying ~~set~~a capitalization rate to ~~mature~~the onNOI ~~August~~generated 10by our unencumbered, ~~2021 and~~wholly-owned ~~had~~industrial anproperties. ~~interest~~Under the Facility the capitalization rate ofapplied to our NOI generated by our unencumbered, wholly-owned industrial properties is 6.5025%. In addition, borrowings ~~During~~under the ~~quarter~~Revolver will, onat ~~April~~our 15election, ~~2021,~~either wei) ~~sold~~bear ~~our~~interest ~~60,400 square~~at ~~foot~~LIBOR ~~building~~plus ~~located~~135 inbasis ~~Carlstadt,~~points ~~NJ, which~~to is205 inbasis ~~the~~points ~~New~~depending ~~York,~~on NYour leverage ~~MSA~~ratio, ~~and~~or weii) ~~paid~~bear ~~off~~interest ~~its~~at ~~mortgage~~Bank ~~loan~~of inMontreal’s ~~the~~(BMO) ~~amount~~prime oflending ~~$1.1 million~~rate ~~that~~plus ~~was~~35 ~~originally~~basis ~~set~~points to ~~mature~~105 onbasis points, depending ~~May~~on 15our leverage ratio. Currently, ~~2026~~our ~~and had~~borrowings anbear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of 51.2554%. ~~Subsequent~~ toAs of the quarter end and currently, onwe ~~July~~have ~~15,~~the ~~2021,~~full we$225.0 ~~fully~~million ~~prepaid~~drawn adown under our Revolver. The $~~622,000~~75.0 ~~mortgage~~million ~~loan~~Term Loan matures January 2025. The interest rate for ~~our~~borrowings ~~property~~under ~~located~~the inTerm ~~Houston~~Loan will at our election, either i) bear interest ~~TX.~~at ~~The~~LIBOR ~~loan~~plus ~~was~~130 ~~originally~~basis ~~set~~points to ~~mature~~200 basis points, depending on ~~August~~our leverage ratio, or ii) bear interest at BMO’s prime lending 10rate plus 30 basis points to 100 basis points, ~~2022~~depending ~~and~~on ~~had~~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 6the Term Loan resulting in an all-in rate of 2.~~875~~92%.

OnFrom ~~November~~time ~~15,~~to ~~2019,~~time we ~~entered~~may ~~into~~use a ~~new~~margin ~~line~~loan offor ~~credit~~temporary ~~facility~~funding ~~(the “New Facility”) consisting~~ of aacquisitions ~~$225.0 million unsecured line of credit facility (the “Revolver”)~~ and a new $75.0 million unsecured term loan (the “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~~working ~~six-month~~capital ~~periods~~purposes. ~~Availability~~This ~~under~~loan ~~the New Facility~~ is ~~limited~~due toon ~~60% of~~demand ~~the~~and ~~value of the borrowing base properties. The value of the borrowing base properties~~ is ~~determined~~collateralized by ~~applying a capitalization rate to the NOI generated by~~ our ~~unencumbered,~~securities ~~wholly-owned industrial properties~~portfolio. ~~Under~~We ~~the~~must ~~New~~maintain ~~Facility~~a ~~the~~coverage ~~capitalization~~ratio ~~rate applied to our NOI generated by our unencumbered, wholly-owned industrial properties was lowered from 6.5% under the former line~~ of ~~credit~~approximately ~~facility to 6.25~~50%~~, thus increasing the value of the borrowing base properties under the terms of the New Facility~~. InThe ~~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,~~charged ~~at our election, either i) bear interest at LIBOR plus 135 basis points to 205 basis points, depending~~ on ~~our~~the ~~leverage~~margin ~~ratio,~~loan oris ~~ii) bear~~the ~~interest at Bank of Montreal~~bank’s ~~(BMO)~~margin ~~prime lending~~ rate ~~plus~~and 35was ~~basis points to 105 basis points, depending on our leverage ratio~~0. ~~Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of 1.53~~75%. Asas of ~~the~~December ~~quarter end~~31, we2021 ~~have~~and ~~$90~~2020.0 ~~million~~At ~~drawn~~December ~~down under our Revolver~~31, ~~resulting~~2021 inand ~~$135.0 million being currently available. The $75.0 million Term Loan matures January 2025. The interest rate for borrowings under the Term Loan will at our election~~2020, ~~either i)~~there ~~bear~~were ~~interest~~no atamounts ~~LIBOR~~drawn ~~plus~~down 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~~margin ~~Loan, we also entered into an interest rate swap agreement to fix LIBOR on the entire $75~~loan.~~0 million for the full duration of the Term Loan resulting in an all-in rate of 2.92%.~~

~~From~~As ~~time~~noted toin ~~time~~Note we9, ~~may~~in ~~use~~the aabsence ~~margin~~of ~~loan~~waivers ~~for~~or ~~temporary~~consents ~~funding~~from holders of ~~acquisitions~~our ~~and~~indebtedness, ~~for~~which ~~working~~we, ~~capital~~in ~~purposes.~~consultation ~~This~~with ~~loan~~ILPT, isare ~~due on demand~~currently ~~and~~seeking, isthe ~~collateralized~~consummation byof our ~~securities~~merger ~~portfolio.~~with WeILPT ~~must~~and ~~maintain~~resulting a“change ~~coverage ratio~~ of ~~approximately~~control” ~~50%.~~is ~~The~~expected ~~interest~~to ~~rate~~result ~~charged on~~in ~~the~~a ~~margin~~default ~~loan~~or similar isevent ~~the~~under ~~bank’s~~substantially ~~margin~~all ~~rate and was 0.75% as~~ of ~~June~~our 30outstanding indebtedness, ~~2021~~permitting ~~and~~the ~~2020.~~holders Atof ~~June~~such ~~30,~~indebtedness ~~2021,~~to ~~there~~accelerate ~~were no amounts~~such ~~drawn~~indebtedness ~~down~~and ~~under~~demand ~~the~~immediate ~~margin~~repayment ~~loan.~~at ~~At June 30~~par, ~~2020,~~together ~~there~~with ~~was~~the ~~$5.0~~applicable ~~million~~“make-whole” ~~drawn~~premium, ~~down~~if ~~under~~any, following the ~~margin loan~~merger.

As noted in Note 9, in the absence of waivers or consents from holders of our indebtedness, which we, in consultation with Equity Commonwealth, are currently seeking, the consummation of our merger with Equity Commonwealth and resulting “change of control” is expected to result in a default or similar event under substantially all of our outstanding indebtedness, permitting the holders of such indebtedness to accelerate such indebtedness and demand immediate repayment at par, together with the applicable ‘make-whole’ premium, if any, following the merger.

NOTE 6 – SHAREHOLDERS’ EQUITY

Our authorized stock as of ~~June~~December 3031, 2021 consisted of 300.0 million shares of common stock, of which 98.35 million shares were issued ~~and~~ 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.

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Common Stock

WeDuring ~~raised $1.4 million (including dividend reinvestments of $1.0 million) from~~ the ~~issuance~~three ~~of 87,000 shares of common stock under our DRIP during the nine~~ months ended ~~June~~December 3031, 2021~~. During the nine months ended June 30~~, ~~2021,~~ we paid $5217.17 million in total cash dividends, or $0.5318 per share, to common shareholders~~, of which $1~~.~~0 million was reinvested in the DRIP.~~ As previously announced, in January 2021, when our Board of Directors unanimously decided to explore strategic alternatives to maximize shareholder value, the Board also determined to temporally suspend our DRIP program during this process. ~~The~~As of the date of this report, the DRIP program remains suspended.

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~~represented the third dividend increase in ~~the~~six ~~past five~~ years, representing a total increase of 20%. We have maintained or increased our common stock cash dividend for 3031 consecutive years. We are one of the few REITs that maintained our dividend throughout the Global Financial Crisis.

On July 1, 2021, our Board of Directors declared a cash dividend on our Common Stock of $0.18 per share. The common stock dividend will be payable to shareholders of record at the close of business on August 16, 2021 and will be paid on September 15, 2021, except that if our pending merger with Equity Commonwealth is completed prior to September 15, 2021, the dividend payment will be accelerated and paid immediately prior to the effective time of the merger.20

On February 6, 2020, we entered into a Common Stock ATM Program with BMO Capital Markets Corp., 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 established 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.

Our Common Stock Repurchase Program (the “Program”) authorizes us to purchase up to $50.0 million of shares of our common stock. The Program does not have a termination date and may be suspended or discontinued at our discretion without prior notice.

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 are 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 Program as of June 30, 2021 is $45.7 million.

As discussed in Note 1, upon consummation of our pending merger with Equity Commonwealth, holders of our outstanding common stock will become entitled to receive 0.67 shares of Equity Commonwealth common stock for each share of our common stock they own and the outstanding shares of our common stock will be extinguished.

6.125% Series C Cumulative Redeemable Preferred Stock

During the nine months ended June 30, 2021, we paid $24.6 million in Preferred Dividends, or $1.1484375 per share, on our outstanding 6.125% Series C Preferred Stock for the period September 1, 2020 through May 31, 2021. As of June 30, 2021, we had accrued Preferred Dividends of $2.8 million covering the period June 1, 2021 to June 30, 2021. Dividends on the 6.125% Series C Preferred Stock are cumulative and payable quarterly at an annual rate of $1.53125 per share. The 6.125% Series C Preferred Stock has no maturity date and will remain outstanding indefinitely unless redeemed or otherwise repurchased. Except in limited circumstances relating to our qualification as a REIT, or in connection with a change of control, the 6.125% Series C Preferred Stock is not redeemable prior to September 15, 2021. On and after September 15, 2021, at any time, and from time to time, the 6.125% Series C Preferred Stock will be 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, but not including, the date of redemption.

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OnOur ~~July~~Common ~~1, 2021, our Board of Directors declared a cash dividend on our 6.125% Series C Cumulative Redeemable Preferred~~ Stock. ~~The~~Repurchase ~~preferred stock~~Program ~~dividend will cover~~ (the ~~period~~“Program”) ~~from~~authorizes ~~June~~us ~~1, 2021~~ to ~~August~~purchase ~~31,~~up ~~2021 unless the pending merger with Equity Commonwealth closes prior~~ to ~~August 31, 2021~~$50.0 Ifmillion ~~the~~of ~~merger~~shares isof ~~completed~~our ~~prior~~common ~~to August 31, 2021, then the preferred~~ stock. The ~~dividend~~Program ~~period~~does ~~will end on, but~~ not ~~include,~~ ~~the~~have ~~closing~~a termination date ~~of the merger~~ and ~~the~~may ~~dividend will~~ be ~~paid~~suspended ~~immediately~~or ~~prior~~discontinued toat ~~the~~our ~~effective~~discretion ~~time~~without ofprior ~~the merger~~notice. IfThe ~~the merger~~remaining ismaximum ~~not~~dollar ~~completed~~value ~~prior~~that tomay ~~August~~be ~~31,~~purchased ~~2021,~~under the ~~preferred~~Program ~~dividend~~as ~~will~~of beDecember ~~paid on August~~ 31, 2021. ~~The~~is ~~quarterly preferred stock dividend payment of~~ $045.~~3828125~~7 ~~per share will be prorated if the merger is completed prior to August 31, 2021~~million. ~~Regardless~~No ofrepurchases ~~whether~~have ~~the~~occurred ~~merger~~under ~~closes prior to August 31, 2021,~~ the ~~preferred~~Program ~~stock~~since ~~dividend~~April ~~will be payable to shareholders of record as of the close of business on August 16, 2021~~2020.

~~Also, under the terms of our merger agreement with Equity Commonwealth, upon closing of the merger, each holder of our~~ 6.125% Series C ~~Preferred Stock,~~Cumulative ~~will~~Redeemable ~~be entitled to receive an amount in cash equal to $25.00 per share plus accumulated and unpaid dividends and the outstanding shares of our 6.125% Series C~~ Preferred Stock ~~will be extinguished.~~

~~At-~~During the~~-Market~~ three months ended December 31, 2021, we paid $8.4 million in Preferred Dividends, or $0.3828125 per share, on our outstanding 6.125% ~~Sales~~Series ~~Agreement~~C ~~Program~~Preferred Stock for ~~our~~the period September 1, 2021 through November 30, 2021. As of December 31, 2021, we had accrued Preferred Dividends of $2.8 million covering the period December 1, 2021 to December 31, 2021. Dividends on the 6.125% Series C ~~Cumulative~~Preferred ~~Redeemable~~Stock are cumulative and payable quarterly at an annual rate of $1.53125 per share. The 6.125% Series C Preferred Stock has no maturity date 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, but not including, the date of redemption.

OnUnder ~~June~~the ~~29,~~terms ~~2017,~~of weour ~~entered~~merger ~~into~~agreement awith ~~Preferred~~ILPT, ~~Stock~~upon closing ~~At-The-Market~~of ~~Sales~~the ~~Agreement~~merger, ~~Program~~each ~~with~~holder Bof our 6.125% ~~Riley~~Series ~~FBR,~~C ~~Inc.~~Preferred Stock, orwill Breceive $25.00 ~~Riley~~in ~~(formerly FBR~~cash ~~Capital~~per ~~Markets~~share &plus ~~Co.)~~accumulated and unpaid dividends to, ~~that~~but ~~provided~~not ~~for~~including, the ~~offer~~date the merger is completed and ~~sale~~the ofoutstanding shares of our 6.125% Series C Preferred Stock, ~~having~~will anbe ~~aggregate sales price of up to $100~~extinguished.~~0 million.~~

OnAs ~~August~~of 2December 31, ~~2018~~2021, ~~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~~22.0 million shares of our 6.125% Series C Preferred Stock, ~~representing~~were ~~an additional $96~~outstanding.~~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 replaced the Preferred Stock At-The-Market Sales Agreement Program entered into on December 4, 2019 with another new Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and sale from time to time of up to $150.0 million of our 6.125% Series C Preferred Stock, representing an additional $149.3 million, with $747,000 being carried over from the Preferred Stock At-The-Market Sales Agreement Program entered into on December 4, 2019.

Sales of shares of our 6.125% Series C Preferred Stock under the 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 these programs on July 3, 2017. Since inception through June 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 nine months ended June 30, 2021 at a weighted average price of $24.88 per share, generating net proceeds after offering expenses of $76.0 million. As of June 30, 2021, there is $108.3 million remaining that may be sold under the Preferred Stock ATM Program. No shares have been sold pursuant to the Preferred Stock ATM Program since December 2020.

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As of June 30, 2021, 22.0 million shares of our 6.125% Series C Preferred Stock were outstanding.

NOTE 7 - 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 at Fair Value. Our financial assets consist mainly of marketable REIT securities. The fair value of these financial assets was determined using the following inputs at ~~June~~December 3031, 2021 and September 30, ~~2020~~2021 (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)
As of June 30, 2021:
As of December 31, 2021:
Equity Securities – Preferred Stock	$	53,~~098~~738		$	53,~~098~~738	$	0		$	0
Equity Securities – Common Stock		~~143~~156,~~283~~536			~~143~~156,~~283~~536		0			0
Mortgage Backed Securities		1			1		0			0
Interest Rate Swap		(21,~~506~~112	)		0		(21,~~506~~112	)		0
Total Securities Available for Sale at Fair Value	$	~~145~~159,~~876~~163		$	~~148~~160,~~382~~275	$	(21,~~506~~112	)	$	0
As of September 30, 2020:
As of September 30, 2021:
Equity Securities – Preferred Stock	$	5,~~860~~750		$	5,~~860~~750	$	0		$	0
Equity Securities – Common Stock		~~102~~137,~~971~~754			~~102~~137,~~971~~754		0			0
Mortgage Backed Securities		1			1		0			0
Interest Rate Swap		(42,~~368~~230	)		0		(42,~~368~~230	)		0
Total Securities Available for Sale at Fair Value	$	~~104~~141,~~464~~275		$	~~108~~143,~~832~~505	$	(42,~~368~~230	)	$	0

In addition to our investments in Securities Available for Sale at Fair Value, we are required to disclose certain information about fair values of 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 financial instruments. 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 the control of management. 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.21

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 yearend 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 June 30, 2021, the Fixed Rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $898.9 million and the carrying value amounted to $856.7 million. When we acquired a property, we allocated the 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 upon independent third-party appraisals and fell within level 3 of the fair value hierarchy.

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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 yearend 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 December 31, 2021, the Fixed Rate Mortgage Notes Payable fair value (estimated based upon expected cash outflows discounted at current market rates) amounted to $860.5 million and the carrying value amounted to $815.9 million. When we acquired a property, we allocated the 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 upon independent third-party appraisals and fell within level 3 of the fair value hierarchy.

NOTE 8 - SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest during the ~~nine~~three months ended ~~June~~December 3031, 2021 and 2020 was $279.28 million and $268.28 million, respectively.

~~During~~Since the ~~nine~~start ~~months~~of our strategic alternative process in early 2021, the DRIP program has been suspended and therefore, during the three months ended ~~June~~December 3031, 2021, ~~and~~we had no dividend reinvestments. During the three months ended December 31, 2020, we had dividend reinvestments of $1.0 million ~~and $6.7 million~~, ~~respectively,~~ which required no cash transfers.

NOTE 9 – CONTINGENCIES, COMMITMENTS AND ~~COMMITMENTS~~LEGAL MATTERS

In addition to the property purchased subsequent to the quarter end, as described in ~~July~~Note ~~2021~~10, we have entered into agreements to purchase ~~five~~ two, new build-to-suit, industrial buildings that are currently being developed in ~~Alabama (2),~~ Georgia, ~~Tennessee~~ and Texas., ~~These five~~totaling ~~future~~563,000 ~~acquisitions~~square ~~total 1~~feet.6 Both ~~million~~of ~~square~~these ~~feet,~~future ~~with~~acquisitions have net-leased terms ~~ranging~~ ~~from~~of ~~10 to~~ 15 ~~years,~~ ~~resulting in a weighted average lease term of 13.4~~ years ~~and are expected to generate $10~~.~~5 million~~ ~~in annual rent.~~ The ~~aggregate~~total purchase price for these ~~five~~two properties is $~~183~~78.6 8 million. ~~Four~~ Both of these ~~five~~ properties, ~~consisting of approximately 1.1 million square feet, or 68%,~~ are leased ~~for 15 years~~ to FedEx Ground Package System, Inc., ~~with~~Subject to satisfactory due diligence and other customary closing ~~the~~conditions ~~remaining~~and ~~property~~requirements, ~~consisting~~we anticipate closing both of ~~approximately~~these ~~530,000 square~~transactions ~~feet~~during orthe ~~32%, leased~~third ~~for~~quarter ~~10 years~~of tofiscal ~~Mercedes~~2022. ~~Benz~~FedEx USGround ~~International~~Package System, Inc. ~~All~~’s ~~properties~~ultimate ~~are leased to companies~~parent, orFedEx ~~subsidiaries~~Corporation ofis ~~companies,~~a ~~that~~publicly-listed ~~are~~company ~~considered~~and ~~Investment~~financial ~~Grade~~information byrelated ~~S&P~~to ~~Global~~this ~~Ratings~~entity ~~(www.standardandpoors.com)~~is ~~and~~available byat ~~Moody~~the SEC’s (website, www.~~moodys~~sec.~~com)~~gov. ~~Subject~~The references in this report to ~~satisfactory~~the ~~due~~SEC’s ~~diligence~~website ~~and~~are ~~other~~not ~~customary~~intended ~~closing~~to ~~conditions~~ and ~~requirements,~~do wenot ~~anticipate~~include, ~~closing~~or ~~two~~incorporate ofby ~~these~~reference ~~transactions~~into ~~during~~this ~~fiscal 2021~~report, ~~two in~~ the ~~first~~information ~~half of~~on ~~fiscal 2022 and one in~~ the ~~second~~www.sec.gov ~~half of fiscal 2022~~website.

We have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are eight parking expansion projects underway which we expect to cost approximately $37.3 million. In addition, the first phase of a parking expansion project was completed during the prior quarter at our property located in Olathe (Kansas City), KS for a total project cost of $3.4 million. This first phase of the expansion resulted in a $340,000 increase in annualized rent effective November 5, 2020 increasing the annualized rent from $2.2 million to $2.6 million. We recently began construction on a second phase on this parking expansion project at this location. We expect this second phase to be completed in November 2021 and cost approximately $2.3 million which will increase the annual rental rate by approximately $185,000 and extend the lease term approximately 14.6 years from the date of completion. 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 nine additional locations bringing the total recently completed and potential parking lot expansion projects to 18 currently.22

As noted above, pursuant to our merger agreement with Equity Commonwealth, upon consummation of the pending merger, the 22.0 million outstanding shares of our 6.125% Series C Preferred Stock will be extinguished and the holders of such shares will be entitled to receive the preferred stock merger consideration in the amount of $25.00 per share plus accrued and unpaid dividends.

In addition, in the absence of waivers or consents from holders of our indebtedness, which we, in consultation with Equity Commonwealth, are currently seeking, the consummation of the merger and resulting “change of control” is expected to result in a default or similar event under substantially all of our outstanding indebtedness, permitting the holders of such indebtedness to accelerate such indebtedness and demand immediate repayment at par, together with the applicable “make-whole” premium, if any, following the merger.

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~~Consummation~~In ofaddition to the ~~merger~~four ~~will~~recently ~~also~~completed ~~result~~FedEx inGround ~~the~~parking ~~vesting~~expansion ofprojects, ~~unvested~~as ~~equity~~described ~~awards~~in ~~held~~Note by3, ~~certain~~we ~~executive~~have ~~officers~~several ~~and~~FedEx ~~employees~~Ground parking ~~and~~expansion ~~the~~projects ~~payment of~~in ~~amounts~~progress ~~provided~~with ~~for~~more under ~~change~~discussion. ofCurrently ~~control~~there orare ~~similar~~six ~~agreements~~parking orexpansion ~~arrangements~~projects ~~with~~underway, ~~certain~~which we ~~executive~~expect ~~officers~~to ~~and~~cost ~~employees~~approximately $31. ~~Information~~4 ~~about~~million. ~~amounts~~These ~~payable~~parking toexpansion ~~our~~projects ~~executive~~will ~~officers~~enable ~~and~~us ~~employees~~to incapture ~~connection~~additional ~~with~~rent while lengthening the ~~merger~~terms isof ~~contained~~these leases. We are also in discussions to expand the ~~definitive joint~~parking ~~proxy~~at ~~statement/prospectus~~seven weadditional ~~filed~~locations ~~with~~bringing the ~~SEC~~total onrecently completed ~~July~~and ~~23,~~likely ~~2021~~future inparking ~~connection~~lot ~~with~~expansion ~~the~~projects ~~merger~~to 18 currently.

~~Our~~As ~~merger~~described ~~with~~in ~~Equity~~Note ~~Commonwealth is the subject of three lawsuits commenced by purported shareholders~~6, ~~all~~pursuant ofto ~~which allege generally that we and the members of~~ our ~~Board of Directors violated provisions of the federal securities laws by preparing and disseminating a registration statement relating to the~~ merger ~~that~~agreement ~~misstates~~with ~~or omits certain allegedly material information. The lawsuits seek~~ILPT, ~~among~~upon ~~other things, injunctive relief enjoining the~~ consummation of the ~~merger,~~pending ~~or, if the~~ merger ~~is consummated~~, ~~rescission or rescissory damages, and an award of~~ the ~~plaintiff’s costs, including attorneys’ and experts’ fees~~22.0 million Weoutstanding ~~believe~~shares ~~that all~~ of ~~the~~our ~~claims asserted~~6.125% inSeries ~~these~~C ~~lawsuits~~Preferred ~~are~~Stock ~~without~~will ~~merit~~be ~~and~~extinguished ~~intend to defend against them vigorously. However, litigation is inherently uncertain~~ and ~~there can be no assurance regarding~~ the ~~likelihood~~holders ~~that the defense~~ of ~~the~~such ~~actions~~shares will bereceive ~~successful~~$25.00 Ifin ~~any~~cash ofper ~~these~~share ~~lawsuits is successful,~~plus ~~the~~accrued ~~lawsuit(s) could prevent or delay completion of the merger~~ and ~~result~~unpaid individends ~~costs~~ to, usbut ~~and~~not ~~Equity~~including, ~~Commonwealth.~~the ~~Additional~~date ~~lawsuits relating to~~ the merger ~~may~~is ~~also be filed in the future~~completed.

In addition, in the absence of waivers or consents from holders of our indebtedness, which we, in consultation with ILPT, are currently seeking, the consummation of the merger with ILPT and resulting “change of control” is expected to result in a default or similar event under substantially all of our outstanding indebtedness, permitting the holders of such indebtedness to accelerate such indebtedness and demand immediate repayment at par, together with the applicable “make-whole” premium, if any, following the merger.

Consummation of the merger will also result in the vesting of unvested equity awards held by certain executive officers, directors and employees and the payment of amounts provided for under change of control or similar agreements or arrangements with certain executive officers, directors and employees. Information about amounts payable to our executive officers, directors and employees in connection with the merger is contained in the definitive proxy statement we filed with the SEC on December 21, 2021 in connection with the merger.

We and the members of our Board of Directors are defendants in several lawsuits filed by purported shareholders whereby they allege, among other things, that we and our directors violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by causing the filing of a proxy statement with the SEC relating to the proposed merger with ILPT that misstates or omits certain allegedly material information. We and the members of our Board of Directors are also defendants in a purported class action lawsuit filed by a purported shareholder that alleges, among other things, that the defendants violated fiduciary duties by misrepresenting or omitting allegedly material information in the proxy statement relating to the proposed merger with ILPT and seeks attorneys’ fees and expenses in connection with disclosures related to a previous merger agreement we had entered into with another party which was terminated after it failed to receive approval from our shareholders. We believe that the claims asserted in these lawsuits are without merit. We intend to vigorously defend against these actions. However, litigation is inherently uncertain and there can be no assurance regarding the likelihood that the defense of the actions will be successful.

On November 4, 2021, we entered into a Release and Settlement Agreement with our former general counsel and Blackwells Capital LLC (“Blackwells”) resolving legal proceedings that we had commenced against our former general counsel and Blackwells in the Superior Court of New Jersey relating to, among other things, our former general counsel having been named as a nominee of Blackwells for election to our Board of Directors at our 2021 annual meeting, and also resolving our former general counsel’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 in fiscal 2021. In addition, the parties agreed to mutual partial reimbursement of litigation expenses, with net reimbursement payment by us to Blackwells of $4 million, which was reflected in our income statement for the quarter ended September 30, 2021.

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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 our 2021 annual meeting of shareholders (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 each annual and special meeting of shareholders until December 31, 2029 in favor of all of the Board’s director nominees and in support of all Board-recommended proposals. Blackwells also agreed to comply with certain additional standstill, non-disparagement and affirmative solicitation commitments and terms through December 31, 2029. The Cooperation Agreement also provides for us to provide partial expense reimbursement to Blackwells of $3.85 million for certain of its documented, actual out-of-pocket third party professional fees and expenses, which reimbursement expense was reflected in our income statement for the quarter ended September 30, 2021.

From time to time, we may 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 the Consolidated Balance Sheets or results of operations.

NOTE 10 – SUBSEQUENT EVENTS

Subsequent to the quarter end, on ~~July~~January 1528, ~~2021,~~2022 we ~~fully~~drew ~~prepaid~~down a $~~622,000~~60.0 million ~~mortgage~~from ~~loan for~~ our ~~property~~New ~~located~~Term ~~in Houston~~Loan, ~~TX.~~resulting ~~The loan was~~in ~~originally~~$115.0 million ~~set~~being tocurrently ~~mature on August 10, 2022 and had an interest rate of 6~~available.~~875%.~~

On July 1, 2021, our Board of Directors declared a cash dividend on our 6.125% Series C Cumulative Redeemable Preferred Stock. The preferred stock dividend will cover the period from June 1, 2021 to August 31, 2021 unless the pending merger with Equity Commonwealth closes prior to August 31, 2021. If the merger is completed prior to August 31, 2021, then the preferred stock dividend period will end on, but not include, the closing date of the merger and the dividend will be paid immediately prior to the effective time of the merger. If the merger is not completed prior to August 31, 2021, the preferred dividend will be paid on August 31, 2021. The quarterly preferred stock dividend payment of $0.3828125 per share will be prorated if the merger is completed prior to August 31, 2021. Regardless of whether the merger closes prior to August 31, 2021, the preferred stock dividend will be payable to shareholders of record as of the close of business on August 16, 2021. Also, under the terms of the definitive merger agreement, upon closing of the merger, each holder of our 6.125% Series C Preferred Stock, will be entitled to receive an amount in cash equal to $25.00 per share plus accumulated and unpaid dividends and the outstanding shares of our 6.125% Series C Preferred Stock will be extinguished.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectations or forecasts of future events. 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. 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.

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 are described under the above heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above and the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020~~2021. 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 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; ● 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;

28● 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;

●

the availability of other debt and equity financing alternatives;

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● the effect of COVID-19 on our business and general economic conditions; ● our ability to qualify as a REIT for federal income tax purposes; ● potential adverse effects on our business as a result of a publicly announced proxy contest for the election of directors at our annual meeting or other shareholder activism; ● inability to complete the proposed transaction with Equity Commonwealth 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 transaction; ● potential adverse effects or changes toin ~~relationships~~interest ~~with Equity Commonwealth’s or Monmouth’s respective tenants~~rates, ~~employees,~~including ~~service providers or other parties resulting from~~ the ~~announcement~~replacement ~~or completion~~ of the ~~proposed~~LIBOR ~~transaction;~~reference ● 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 transaction that could harm Equity Commonwealth’s or Monmouth’s respective businessrate, ~~including~~under our current ~~plans~~credit ~~and~~facility ~~operations; ● unexpected costs, charges or expenses resulting from the proposed transaction;~~ and ●under ~~uncertainty~~any ofadditional ~~the~~variable ~~expected~~rate ~~financial~~debt ~~performance~~arrangements ~~of Equity Commonwealth following completion of the proposed transaction, including the possibility~~ that ~~the~~we ~~benefits~~may ~~anticipated~~enter ~~from~~into ~~the~~in ~~proposed transaction will not be realized or will not be realized within~~ the ~~expected time period.~~future;

~~You should~~● ~~not~~our ~~place~~ability ~~undue~~to ~~reliance~~successfully onimplement ~~these~~our ~~forward-looking~~selective ~~statements,~~acquisition as events described or implied in such statements may not occur. Although we have entered into the merger agreement with Equity Commonwealth, there can be no assurance that the merger and other transactions contemplated by the merger agreement will be completed.strategy;

~~Merger~~ ● 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 ~~Equity~~all ~~Commonwealth~~rules and regulations, and any potential fraud or embezzlement is thwarted or detected;

~~As previously~~● ~~announced,~~changes in ~~January~~federal ~~2021,~~or ~~our~~state ~~Board~~tax ofrules ~~Directors~~or ~~unanimously~~regulations decided to explore strategic alternatives to maximize shareholder value. Following a comprehensive strategic alternatives process, on May 4, 2021, we entered into a definitive merger agreement with Equity Commonwealth (“EQC”), a New York Stock Exchange traded real estate investment trust, under which, on the terms and subject to the conditions set forth in the merger agreement, we will merge with and into a new wholly-owned subsidiary of Equity Commonwealth, resulting in Equity Commonwealth acquiring us in an all-stock transaction. The merger agreement provides that, ~~upon~~could closing of the merger, our common stockholders will be entitled to receive 0.67 shares of Equity Commonwealth common stock for every share of our common stock they own and the outstanding shares of our common stock will be extinguished. We plan to continue to pay our regular quarterly common stock dividend and our quarterly Series C Cumulative Redeemable Preferred Stock dividend until closing of the transaction. Under the terms of the definitive merger agreement, upon closing of the merger, each holder of our 6.125% Series C Preferred Stock, will be entitled to receive an amount in cash equal to $25.00 per share plus accumulated and unpaid dividends and the outstanding shares of our 6.125% Series C Preferred Stock will be extinguished. The merger transaction is expected to close during the second half of calendar 2021, subject to customary closing conditions, including approval by common stockholders of both Equity Commonwealth and MREIC. Equity Commonwealth and MREIC shareholders are expected to own approximately 65% and 35%, respectively, of the pro forma company following the close of the transaction. On July 23, 2021, we filed with the SEC, and shortly thereafter began distributing to our stockholders, a definitive joint proxy statement/prospectus of MREIC and EQC pursuant to which both MREIC and EQC are seeking approval of the merger from their respective stockholders at special stockholder meetings that have ~~been~~adverse ~~called~~tax ~~for August 24, 2021.~~consequences;

~~This proposed~~● ~~merger~~declines ~~represents~~in the ~~culmination~~market ofprices ~~the comprehensive strategic alternatives review conducted by our Board. As part~~ of ~~the review,~~ our Board of Directors, working with our legal and financial advisors, carefully considered a full range of strategic alternatives. We and our advisors engaged with and solicited proposals from a broad range of highly reputable strategic and financial counterparties, all with significant access to capital, comprising of more than 90 qualified potential interested parties, including financial sponsors, real estate investment trusts, sovereign wealth funds, pension funds, real estate managers and other financial and strategic investors. At the conclusion of this process, the Board unanimously concluded that the merger with Equity Commonwealth is the best outcome to maximize long-term value for our stockholders. Our Board reaffirmed this conclusion and its support for the merger with Equity Commonwealth on July 21, 2021 following receipt and consideration of an unsolicited acquisition proposal from Starwood, a private investment firm which had previously participated in our strategic alternatives review process. Our Board, in consultation with our financial and legal advisors, carefully considered Starwood’s unsolicited proposal of July 8, 2021, as amended on July 15, 2021, to purchase 100% of our common stock for net cash consideration of $18.88 per common share and unanimously determined that the pending merger with EQC represents the best opportunity to maximize value for our stockholders. As noted above, we are in the process of soliciting approval of the merger with EQC from stockholders holding two-thirds of our outstanding common shares, as required by Maryland law. Starwood has filed definitive proxy materials with the SEC for the purpose of soliciting proxies from our stockholders in opposition to the pending merger, and Blackwells Capital LLC, one of our stockholders, has filed its own preliminary proxy materials with the SEC for the same purpose.securities;

29● 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 Industrial Logistics Properties Trust

As previously announced, on November 5, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with 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 $21.00 per common share, 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.

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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, be 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 issued pursuant to our equity incentive plan, whether vested or unvested, will be cancelled and the holder will be entitled 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 unvested restricted stock award issued pursuant to our equity incentive plan that is outstanding immediately prior to the Effective Time will be cancelled and the holder will be entitled 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 Preferred Stock will receive $25.00 in cash per share plus any accumulated and unpaid dividends to, but not including, the date the merger is completed. The Merger Agreement permits us to, and we plan to, continue to pay our regular quarterly common stock dividend and our Series C Preferred Stock dividend for each full quarterly dividend period completed prior to the closing of the transaction, in amounts not exceeding $0.18 per share for our common stock and equal to $0.3828125 per share for our 6.125% Series C Preferred Stock.

The obligation of the parties to complete the Merger is subject to customary closing conditions, including (i) the approval of the Merger by holders of at least two-thirds of our outstanding shares of Common Stock entitled to vote thereon (the “Company Stockholder Approval”), the special meeting of shareholders for which is scheduled to take place on February 17, 2022 (ii) the absence of any law, regulation, order or injunction of a court or governmental entity of competent jurisdiction making illegal or prohibiting the consummation of the Merger, (iii) the accuracy of the other party’s representations and warranties contained in the Merger Agreement (subject to certain qualifications), (iv) the other party’s performance in all material respects of its obligations under the Merger Agreement that are required to be performed prior to the closing of the Merger and (v) in the case of ILPT, the receipt of customary tax opinion from our tax counsel.

We have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (i) to use our commercially reasonable efforts to conduct our business in all material respects in the ordinary course consistent with past practice 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 our shareholders for the purpose of obtaining the requisite approval of our common shareholders of the Merger. The Merger Agreement contains customary no-shop restrictions that limit our and our representatives’ ability 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 during 2021 by our Board of Directors. Our Board re-initiated its strategic alternatives review process in September 2021 after a previous agreement for a stock-for-stock merger that we entered into with another party, following a strategic alternatives review process in the first half of calendar year 2021, did not receive the requisite approval of our shareholders and was terminated.

Overview and Recent Activity

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and notes thereto provided elsewhere herein and our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020~~2021.

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We operate as a real estate investment trust (REIT). 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. We were founded in 1968 and are one of the oldest public equity REITs in the world.

During the ~~nine~~three months ended ~~June~~December 3031, 2021, we purchased ~~two~~one new built-to-suit, net-leased, industrial ~~properties~~property, located in the ~~Columbus~~Birmingham, ~~OH,~~AL ~~and Atlanta, GA~~ Metropolitan Statistical ~~Areas~~Area (~~MSAs~~MSA) ~~totaling~~with approximately ~~1.2~~291,000 ~~million~~ square feet, for $~~169~~30.2 million. The ~~two properties~~building ~~are~~is 100% net-leased ~~for~~to FedEx ~~terms~~Ground ~~that~~Package ~~range~~System, ~~from~~Inc. for 15 ~~to 20~~ years ~~resulting~~through inJuly ~~a weighted average lease term of 17~~2036.8 ~~years~~Annual ~~and are expected to generate annualized~~ rental ~~income~~revenue over the ~~life~~remaining ofterm ~~their leases~~ of ~~$10.0 million. In connection with~~ the ~~two~~lease ~~properties acquired during~~averages ~~the nine months ended June 30, 2021, we obtained a 15 year, fully-amortizing mortgage loan and a 17 year, fully-amortizing mortgage loan. The two mortgage loans originally totaled~~ $~~104~~1.07 million ~~with a weighted average maturity of 16~~.1 ~~years and a weighted average fixed interest rate of 3.11%.~~ As of ~~June~~December 3031, 2021, we owned ~~120~~123 properties with total square footage of 2425.52 million. These properties are ~~located~~ ~~in 31 states. During the quarter, on April 15, 2021, we sold our 60,400 square foot building~~ located ~~in Carlstadt, NJ, which~~ is in ~~the~~32 ~~New York, NY MSA~~states. As of ~~the~~December ~~quarter ended June 30~~31, 2021, our weighted average lease term was 7.21 years, our occupancy rate was 99.7%, and our annualized average base rent per occupied square foot was $6.5069. As of ~~June~~December 3031, 2021, the weighted average building age, based on the square footage of our buildings, was 10.12 years. In addition, total gross real estate investments, excluding marketable REIT securities investments of $~~148~~160.43 million, were $2.23 billion as of ~~June~~December 3031, 2021.

Subsequent to quarter end, on ~~July~~January 2928, ~~2021~~2022, we purchased a newly constructed ~~144~~530,000 square foot industrial building, situated on 4353.4 5 acres, located in the ~~Burlington~~Birmingham, VT AL Metropolitan Statistical Area (MSA). The building is 100% net-leased to ~~FedEx~~Mercedes ~~Ground~~Benz ~~Package~~US ~~System~~International, Inc. for 1510 years through ~~May 2036~~November 2031. The property was acquired for a purchase price of $5451.87 million. Annual rental revenue over the remaining term of the lease averages $3.23 million. With the addition of this new acquisition, we currently have ~~121~~124 properties consisting of 2425.7 million rentable square feet which are located in 32 states with a weighted average lease term of 7.2 years and an annualized average base rent per occupied square foot of $6.5969.

See PART I, Item 1 – Business in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020~~2021 for a more complete discussion of the economic and industry-wide factors relevant to us and the opportunities, challenges, and risks on which we are focused.

WeOur ~~invest~~portfolio inof modern, ~~single~~net-~~tenant,~~leased industrial ~~buildings,~~properties ~~leased~~continues ~~primarily~~ to ~~investment-grade~~provide ~~tenants~~shareholders orwith ~~their~~reliable ~~subsidiaries~~and onpredictable ~~long-term net-leases.~~income streams. Our ~~investments~~resilient ~~are~~occupancy ~~exclusively~~rates ~~situated~~and inrent ~~the~~collection ~~continental~~results ~~United~~highlight ~~States,~~the ~~and~~mission-critical ~~are~~nature ~~primarily~~of ~~located~~our inassets ~~strategic~~and ~~locations that~~underscore ~~are~~the ~~mission-critical~~essential need tofor our tenants’ ~~needs~~operations. InFurthermore, ~~many~~because ~~cases~~ our ~~buildings~~weighted ~~are~~average ~~highly~~lease ~~automated~~term inis ~~order~~7.1 toyears ~~better~~and ~~serve~~our ~~the omni-channel~~weighted ~~distribution~~average ~~networks~~fixed rate ~~that~~mortgage ~~have~~debt ~~become~~maturity ~~essential~~is ~~today~~10.7 ~~Approximately~~years, ~~83%~~we ofexpect our ~~revenue~~cash isflow ~~derived~~to ~~from~~remain ~~investment-grade tenants,~~resilient orover ~~their~~long ~~subsidiaries~~periods asof ~~defined by S&P Global Ratings (www~~time.~~standardandpoors.com)~~ ~~and~~Our byoverall ~~Moody’s (www.moodys.com).~~occupancy ~~The~~rate ~~references~~has inbeen ~~this~~over ~~report~~99% tothroughout ~~S&P~~the ~~Global~~COVID-19 ~~Ratings~~Pandemic and ~~Moody’s~~is ~~are~~99.7%. ~~not~~as ~~intended~~of tothe ~~and~~quarter doend. ~~not~~Our ~~include,~~base orrent ~~incorporate~~collections byremained ~~reference~~strong, ~~into~~averaging ~~this~~99.9% ~~report,~~throughout the ~~information~~COVID-19 ofPandemic ~~S&P~~and ~~Global~~we ~~Ratings~~expect orfuture ~~Moody’s~~months onto ~~such~~be ~~websites~~consistent with this trend.

30US 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 97%. 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.

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~~The~~We ~~future~~evaluate ~~effects~~our offinancial ~~the~~performance ~~COVID-19~~using ~~Pandemic~~Net ~~are~~Operating ~~uncertain,~~Income ~~however,~~(NOI) atfrom ~~this~~property ~~time~~operations, ~~COVID-19~~which ~~has~~we ~~not~~believe ~~had~~is a ~~material~~useful ~~adverse~~indicator of ~~effect on~~ our ~~financial condition~~operating performance. ~~For~~NOI ~~many~~is ~~years,~~a ~~ecommerce~~non-GAAP ~~demand~~financial ~~has~~measure ~~increased,~~that ~~and~~we itdefine ~~has~~as ~~now~~Net ~~become~~Income anAttributable ~~integral~~to ~~part~~Common ofShareholders ~~the retail landscape. The COVID-19~~plus ~~Pandemic~~Preferred ~~created~~Dividend anExpense, ~~even~~General ~~greater~~and ~~move~~Administrative ~~towards~~Expenses, onNon-~~line~~recurring ~~shopping.~~Strategic AsAlternatives a& ~~result~~Proxy ofCosts, ~~state~~Depreciation, Amortization ~~and~~of ~~local~~Capitalized ~~government-mandated~~Lease ~~shutdowns,~~Costs ~~public health guidance~~ and ~~changing~~Intangible ~~consumer demand~~Assets, ~~ecommerce~~Interest ~~sales~~Expense, asincluding aAmortization ~~percentage~~ of ~~total~~Financing ~~retail~~Costs, ~~sales~~Unrealized Holding ~~has~~Gains ~~substantially~~Arising ~~increased~~During ~~during~~ the ~~past~~Periods, ~~year.~~less ~~The~~Dividend ~~COVID-19~~Income ~~Pandemic~~and ~~also~~Lease ~~created~~Termination aIncome. ~~need~~The ~~for~~components ~~supply~~of ~~chain~~NOI ~~reconfiguration.~~are Itrecurring isRental and ~~estimated~~Reimbursement ~~that~~Revenue, ~~ecommerce~~less ~~sales~~Real ~~require three~~Estate ~~times~~Taxes ~~the~~and ~~warehouse~~Operating ~~space~~Expenses, ~~relative~~such toas ~~brick~~insurance, utilities, and ~~mortar~~repairs ~~retail~~and ~~sales~~maintenance. Other ~~Increased~~REITs ~~inventory~~may ~~stocking~~use isdifferent ~~currently~~methodologies ~~taking~~to ~~place~~calculate ~~across many~~NOI ~~industries~~ and, itaccordingly, ~~appears~~our ~~that~~NOI ~~this~~may ~~trend~~not ~~will~~be ~~continue~~comparable ~~in order~~ to ~~accommodate~~all ~~surges~~other ~~in demand~~REITs.

WeThe ~~evaluate~~following ~~our financial performance using Net Operating Income (NOI) from property operations, which we believe~~ is a ~~useful~~reconciliation ~~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~~our ~~Interest,~~NOI ~~Preferred~~for ~~Dividend~~the ~~Expense,~~three ~~General~~months ~~and~~ended ~~Administrative~~December ~~Expenses~~31, ~~Non-recurring~~ ~~Strategic~~2021 ~~Alternatives & Proxy Costs, Non-recurring Severance Expense, Depreciation, Amortization of Capitalized Lease Costs~~ and ~~Intangible~~ ~~Assets,~~2020 ~~Interest Expense, including Amortization of Financing Costs, Unrealized Holding~~ (~~Gains)~~in Losses Arising During the Periods, less Dividend Income, Realized Gain on Sale of Securities Transactions, Realized Gain on Sale of Real Estate Investment 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 all other REITs.thousands):

The following is a reconciliation of our Net Income (Loss) Attributable to Common Shareholders to our NOI for the three and nine months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended
		12/31/2021			12/31/2020
Net Income Attributable to Common Shareholders	$	11,417		$	25,746
Plus: Preferred Dividend Expense		8,416			8,170
Plus: General & Administrative Expenses		2,442			2,272
Plus: Non-recurring Strategic Alternatives & Proxy Costs		12,274			-0-
Plus: Depreciation		13,728			12,078
Plus: Amortization of Capitalized Lease Costs and Intangible Assets		894			809
Plus: Interest Expense, including Amortization of Financing Costs		9,822			9,159
Less/Plus: Unrealized Holding Gains Arising During the Periods		(16,508	)		(19,721	)
Less: Dividend Income		(1,729	)		(1,607	)
Less: Lease Termination Income		-0-			(377	)
Net Operating Income- NOI	$	40,756		$	36,529

	Three Months Ended						Nine Months Ended
	6/30/2021			6/30/2020			6/30/2021			6/30/2020
Net Income (Loss) Attributable to Common Shareholders	$	17,292		$	26,851		$	68,950		$	(44,700	)
Plus: Net Income (Loss) Attributable to Non-Controlling Interest		2,894			(163	)		2,996			(86	)
Plus: Preferred Dividend Expense		8,416			6,607			25,003			19,469
Plus: General & Administrative Expenses		2,246			2,198			6,363			6,858
Plus: Non-recurring Strategic Alternatives & Proxy Costs		8,657			-0-			10,896			-0-
Plus: Non-recurring Severance Expense		-0-			-0-			-0-			786
Plus: Depreciation		13,016			11,743			38,158			34,650
Plus: Amortization of Capitalized Lease Costs and Intangible Assets		1,031			788			2,718			2,308
Plus: Interest Expense, including Amortization of Financing Costs		9,685			8,975			28,231			27,235
Less/Plus: Unrealized Holding (Gains) Losses Arising During the Periods		(16,471	)		(19,610	)		(55,377	)		67,100
Less: Dividend Income		(1,486	)		(2,344	)		(4,681	)		(8,987	)
Less: Realized Gain on Sale of Securities Transactions		-0-			-0-			(2,248	)		-0-
Less: Realized Gain on Sale of Real Estate Investment		(6,376	)		-0-			(6,376	)		-0-
Less: Lease Termination Income		-0-			-0-			(377	)		-0-
Net Operating Income- NOI	$	38,904		$	35,045		$	114,256		$	104,633

The components of our NOI for the three months ended December 31, 2021 and 2020 are as follows (in thousands):

	Three Months Ended
		12/31/2021			12/31/2020
Rental Revenue	$	40,999		$	36,846
Reimbursement Revenue		7,475			6,737
Total Rental and Reimbursement Revenue		48,474			43,583
Real Estate Taxes		(5,956	)		(5,318	)
Operating Expenses		(1,762	)		(1,736	)
Net Operating Income- NOI	$	40,756		$	36,529

NOI from property operations increased $4.2 million, or 12%, for the three months ended December 31, 2021 as compared to the three months ended December 31, 2020. This increase was due to the acquisition of four new built-to-suit, net-leased, industrial properties, totaling approximately 1.6 million square feet purchased during fiscal 2021 and the acquisition of one new built-to-suit, net-leased, industrial property with approximately 291,000 square feet purchased during fiscal 2022.

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The components of our NOI for the three and nine months ended June 30, 2021 and 2020 are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	6/30/2021			6/30/2020			6/30/2021			6/30/2020
Rental Revenue	$	39,032		$	35,427		$	115,123		$	105,410
Reimbursement Revenue		6,962			6,348			20,818			19,772
Total Rental and Reimbursement Revenue		45,994			41,775			135,941			125,182
Real Estate Taxes		(5,402	)		(5,140	)		(16,324	)		(15,205	)
Operating Expenses		(1,688	)		(1,590	)		(5,361	)		(5,344	)
Net Operating Income- NOI	$	38,904		$	35,045		$	114,256		$	104,633

NOI from property operations increased $3.9 million, or 11%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. NOI from property operations increased $9.6 million, or 9%, for the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. This increase was due to the acquisition of two new built-to-suit, net-leased, industrial properties, located in the Columbus, OH and Atlanta, GA totaling approximately 1.2 million square feet purchased during the nine-month period ended June 30, 2021 and the fiscal 2020 acquisitions consisting of five new built-to-suit, net-leased, industrial properties, located in the Indianapolis, IN, Columbus, OH, Greensboro, NC, Salt Lake City, UT and Oklahoma City, OK MSAs totaling approximately 1.2 million square feet.

Acquisitions

On ~~December~~October 1727, ~~2020~~2021, we purchased a newly constructed ~~500~~291,000 square foot industrial building, situated on ~~100~~46.0 acres, located in the ~~Columbus~~Birmingham, AL OH MSA. The building is 100% net-leased to FedEx Ground Package System, Inc. for 15 years through ~~September~~July ~~2035~~2036. The ~~purchase~~ ~~price~~property was ~~$73.3~~acquired for ~~million. We obtained~~ a 15purchase ~~year,~~price ~~fully-amortizing mortgage loan~~ of $4730.02 million ~~at a fixed interest rate of 2~~.~~95%.~~ Annual rental revenue over the remaining term of the lease averages $41.67 million.

OnFedEx ~~December~~Ground ~~24,~~Package ~~2020~~System, weInc.’s ~~purchased~~ultimate ~~a newly constructed 658~~parent,~~000~~ ~~square~~FedEx ~~foot~~Corporation ~~industrial~~is ~~building,~~a ~~situated~~publicly-listed oncompany ~~130.2~~and ~~acres,~~financial ~~located~~information ~~in the~~related ~~Atlanta,~~to GAthis ~~MSA.~~entity ~~The building~~ is ~~100%~~available ~~net-leased~~at tothe ~~Home~~SEC’s ~~Depot~~website, Uwww.Ssec.Agov., ~~Inc.~~The ~~for~~references 20in ~~years~~this ~~through~~report ~~November~~to ~~2040.~~the ~~The~~SEC’s ~~purchase~~website ~~price~~are ~~was~~not ~~$95.9~~intended ~~million.~~to Weand ~~obtained~~do anot ~~17 year~~include, ~~fully-amortizing~~or ~~mortgage~~incorporate ~~loan~~by ofreference ~~$57.0~~into ~~million~~this atreport, ~~a fixed interest rate of 3.25%. Annual rental revenue over~~ the ~~remaining~~information ~~term~~on of the ~~lease averages $5~~www.5sec.gov ~~million~~website.

~~FedEx~~Subsequent ~~Ground~~to ~~Package~~quarter ~~System~~end, ~~Inc.’s~~on ~~ultimate~~January ~~parent~~28, ~~FedEx Corporation~~2022, ~~and~~we ~~Home~~purchased ~~Depot~~a ~~U.S.A.~~newly constructed 530,000 ~~Inc’s~~square ~~ultimate~~foot ~~parent~~industrial building, ~~Home~~situated ~~Depot, Inc~~on 53.5 acres, ~~are~~located ~~publicly-listed~~in ~~companies~~the ~~and~~Birmingham, ~~financial~~AL ~~information~~MSA. ~~related~~The tobuilding ~~these~~is ~~entities~~100% ~~are~~net-leased ~~available~~to atMercedes ~~the~~Benz ~~SEC’s~~US ~~website~~International, ~~www~~Inc.~~sec.gov. The~~ ~~references~~for in10 ~~this~~years ~~report~~through November to2031. ~~the~~The ~~SEC’s~~property ~~website~~was ~~are~~acquired ~~not~~for ~~intended~~a topurchase ~~and~~price doof ~~not~~$51.7 ~~include,~~million. orAnnual ~~incorporate~~rental byrevenue ~~reference~~over ~~into~~the ~~this~~remaining term ~~report,~~of the ~~information~~lease onaverages ~~the www~~$3.~~sec.gov~~3 ~~website~~million.

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Expansions

~~Dispositions~~During the three months ended December 31, 2021, we completed a parking expansion project for FedEx Ground Package System, Inc. at our property located in Wheeling, IL for a total cost of $1.0 million, resulting in an initial increase in annual rent effective October 28, 2021 of approximately $105,000 from approximately $1.27 million, or $10.34 per square foot, to approximately $1.38 million, or $11.19 per square foot. In addition, the expansion resulted in a new 9.8 year lease which extended the prior lease expiration date from May 2027 to August 2031.

~~Commitments~~During the three months ended December 31, 2021, we completed a parking expansion project for FedEx Ground Package System, Inc. at our property located in Orion, MI for a total cost of $6.5 million, resulting in an initial increase in annual rent effective November 24, 2021 of approximately $651,000 from approximately $1.91 million, or $7.77 per square foot, to approximately $2.56 million, or $10.42 per square foot. In addition, the expansion resulted in a new 9.9 year lease which extended the prior lease expiration date from June 2023 to October 2031.

In addition to the property purchased subsequent to the quarter end in July 2021, we have entered into agreements to purchase five new build-to-suit, industrial buildings that are currently being developed in Alabama (2), Georgia, Tennessee and Texas. These five future acquisitions total 1.6 million square feet, with net-leased terms ranging from 10 to 15 years, resulting in a weighted average lease term of 13.4 years and are expected to generate $10.5 million in annual rent. The aggregate purchase price for these five properties is $183.6 million. Four of these five properties, consisting of approximately 1.1 million square feet, or 68%, are leased for 15 years to FedEx Ground Package System, Inc., with the remaining property, consisting of approximately 530,000 square feet or 32%, leased for 10 years to Mercedes Benz US International, Inc. All 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 two of these transactions during fiscal 2021, two in the first half of fiscal 2022 and one in the second half of fiscal 2022.30

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The four parking expansions completed this quarter, as described above, totaled $13.7 million and resulted in total increased rent of $1.3 million and a weighted average lease extension of 6.7 years.

Commitments

In addition to the property purchased subsequent to the quarter end, we have entered into agreements to purchase two, new build-to-suit, industrial buildings that are currently being developed in Georgia and Texas, totaling 563,000 square feet. Both of these future acquisitions have net-leased terms of 15 years. The total purchase price for these two properties is $78.8 million. Both of these properties are leased to FedEx Ground Package System, Inc. Subject to satisfactory due diligence and other customary closing conditions and requirements, we anticipate closing both of these transactions during fiscal 2022. FedEx Ground Package System, Inc.’s ultimate parent, FedEx Corporation is a publicly-listed company and financial information related to this entity is 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.

In addition to the four parking expansions completed this quarter, we have several FedEx Ground parking expansion projects in progress with more under discussion. Currently there are six parking expansion projects underway, which we expect to cost approximately $31.4 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 seven additional locations bringing the total recently completed and likely future parking lot expansion projects to 18 currently.

Significant Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (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.

On a regular basis, we evaluate our assumptions, judgments and estimates. We believe that there have been no material changes to the items that we disclosed as our significant accounting policies and estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for fiscal year ended September 30, ~~2020~~2021.

Changes in Results of Operations

As of ~~June~~December 3031, 2021, we owned ~~120~~123 properties with total square footage of 2425.52 million, as compared to ~~118~~121 properties with total square footage of 2324.45 million, as of ~~June~~December 3031, 2020, representing an increase in square footage of 42.97%. At quarter end, the Company’s weighted average lease term was approximately 7.21 years, as compared to 7.25 years at the end of the prior year period. Our occupancy rate ~~was~~has ~~99.7%~~remained assteady ofat ~~June 30, 2021, as compared to~~ 99.47% asfor ofthe ~~June~~quarters ~~30,~~ended ~~2020~~December 31, ~~representing~~2021 anand ~~increase~~December of31, ~~30 basis points~~2020. Our weighted average building age was 10.12 years as of ~~June~~December 3031, 2021, as compared to 9.5 years as of ~~June~~December 3031, 2020.

~~Fiscal 2021 Renewals~~31

~~In fiscal~~Table ~~2021, approximately 5%~~ of our gross leasable area, representing ten leases totaling 1.2 million square feet, were 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.Contents

WeFiscal ~~have~~2022 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 lease term 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.Renewals

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

In fiscal 2022, approximately 5% of our gross leasable area, representing seven leases totaling 1.2 million square feet, are scheduled to expire. Three of these seven leases were renewed thus far, for a weighted average term of 6.7 years, at a rental rate decrease of 3.1% on a GAAP basis and at a rental rate decrease of 7.2% on a cash basis. These three lease renewals represent 277,113 square feet, or 24% of the square footage scheduled to expire in fiscal 2022.

We have incurred or we expect to incur leasing commission costs of $361,000 in connection with two of the three lease renewals and we have incurred or we expect to incur tenant improvement costs of $50,000 in connection with one of the lease renewals. The table below summarizes the terms of the three 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-
Livonia, MI	FedEx Ground		172,688		6.91		6.91	3/31/22		6.17		6.03	10/31/28		6.6		-0-		0.12
	Total		277,113

Weighted Average				$	7.62	$	7.69		$	7.38	$	7.14			6.7	$	0.03	$	0.20

(1)

Amount calculated based on the total cost divided by the square feet, divided by the renewal term.

34Our 105,000 square foot facility located in Cheektowaga (Buffalo), NY was 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 became 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 $6.91 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.

The lease to UPS, along with the three lease renewals in the table above, results in a weighted average lease term of 6.7 years, at a rental rate increase of 1.0% on a GAAP basis and a decrease of 3.7% on a cash basis. These four leases represent 382,000 square feet, or 33% 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 was 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 former 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.

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~~These~~Our ~~ten~~368,000 ~~lease~~square ~~renewals~~foot ~~have~~facility alocated ~~U.S.~~in ~~GAAP~~Streetsboro ~~straight-line~~(Cleveland), ~~lease~~OH ~~rate~~was ofleased ~~$4.77~~to ~~per~~Best ~~square~~Buy ~~foot.~~Warehousing ~~The~~Logistics, ~~renewed~~Inc. ~~initial~~through ~~cash rent per square foot~~January is31, $42022.~~66.~~ This ~~compares~~tenant toinformed ~~the~~us ~~former~~that ~~rent~~they ofwill ~~$4.49~~not ~~per~~be ~~square~~renewing ~~foot~~their onlease ~~a U.S. GAAP straight-line basis~~ and ~~the~~we ~~former~~are ~~cash rent of $4.64 per square foot, resulting~~ in andiscussions ~~increase~~with ofseveral ~~6.2%~~prospective ontenants for athis Uspace.~~S. GAAP straight-line basis and an increase of 0.4% on a cash basis.~~

~~Effective~~Rental ~~October~~Revenue 1,increased ~~2020, we entered into a lease termination agreement with RGH Enterprises, Inc~~$4.2 ~~(Cardinal Health) for our 75~~million,~~000~~ ~~square~~or ~~foot facility located in Halfmoon (Albany)~~11%, NYfor ~~whereby we received a termination fee in~~ the ~~amount~~three ofmonths ~~$377,000~~ended ~~representing~~December ~~approximately 50% of the then remaining rent due under the lease~~31, ~~which~~2021 ~~was~~as ~~set~~compared to ~~expire~~the inthree ~~1.2~~months ~~years~~ended onDecember ~~November 30~~31, ~~2021. We simultaneously entered~~ ~~into a 10.4 year lease agreement with United Parcel Service, Inc. (UPS) which became effective November 1,~~ 2020. ~~The~~This ~~lease~~increase ~~agreement with~~was ~~UPS~~due ~~provides~~to ~~for~~the ~~five~~acquisition ~~months~~ of ~~free~~one ~~rent,~~new ~~after which~~built-to-suit, ~~on April 1~~net-leased, ~~2021,~~industrial ~~initial~~property ~~annual~~located ~~rent~~in ofthe ~~$510~~Birmingham,~~000,~~ ~~representing $6.80 per~~AL ~~square~~MSA ~~foot, will commence,~~ with ~~2.0%~~approximately ~~annual increases thereafter~~291, ~~resulting in a straight-line annualized rent of $541,~~000, ~~representing $7.21 per~~ square ~~foot~~feet ~~over~~during the ~~life~~three ofmonths ~~the~~ended ~~lease,~~December ~~which expires March~~ 31, ~~2031.~~2021 ~~This~~and ~~compares to~~ the ~~former~~fiscal ~~U.S.~~2021 ~~GAAP~~acquisitions ~~straight-line rent~~ of ~~$574,000,~~four 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~~built-to-suit, ~~effective June 4~~net-leased, ~~2021,~~industrial ~~we completed a parking lot expansion at this location for a cost of approximately $835~~properties,~~000~~ ~~resulting~~located in ~~an initial increase in annual rent effective on~~ the ~~date of completion of approximately $52~~Columbus,~~000~~ ~~from approximately $510~~OH,~~000,~~ ~~or $6.80 per square foot~~Atlanta, ~~to approximately $562~~GA,~~000,~~ ~~or $7.50 per square foot. Furthermore~~Burlington, ~~annual~~VT ~~rent~~and ~~will continue to increase each year by 2.0% resulting in an annualized rent from June 4~~Knoxville, ~~2021~~TN ~~through~~MSAs ~~the remaining term of the lease of~~ totaling approximately ~~$622,000, or $8~~1.296 ~~per~~million square ~~foot~~feet.

~~Effective~~Our ~~December~~single-tenant ~~15,~~properties ~~2020,~~are wesubject ~~entered~~to ~~into~~net-leases, awhich ~~10.3~~require ~~year~~the ~~lease~~tenants ~~with~~to ~~Hartford~~reimburse ~~HealthCare~~us ~~Corporation~~ for ~~our~~the ~~previously~~cost ~~vacant~~of ~~55,000~~Real ~~square~~Estate ~~foot~~Taxes as well ~~facility~~as ~~located~~certain inOperating ~~Newington~~Expenses ~~(Hartford),~~such ~~CT. The~~as ~~new~~insurance ~~lease~~and ~~has free~~the ~~rent~~majority ~~for~~of ~~the~~repairs ~~first~~and ~~four~~maintenance. ~~months,~~Reimbursement ~~after~~Revenue ~~which~~increased ~~initial~~$738,000, or ~~annual~~11%, ~~rent~~Real ~~will~~Estate beTax Expense increased $~~288~~638,000, ~~representing~~or ~~$5.25~~12%, ~~per~~and ~~square~~Operating ~~foot~~Expenses ~~with~~increased ~~2.0~~$26,000, or 1% ~~annual~~for the three months ended ~~increases~~December ~~thereafter~~31, ~~resulting~~2021 inas acompared ~~U.S.~~to ~~GAAP~~the ~~straight-line~~three ~~annualized~~months ~~rent~~ended ofDecember ~~$307~~31,~~000,~~ ~~representing $5~~2020.60 ~~per~~Reimbursement ~~square~~Revenue ~~foot~~as ~~over~~a ~~the life~~percentage of Real Estate Taxes and Operating Expenses for the ~~lease.~~three ~~Hartford~~months ~~HealthCare~~ended ~~Corporation~~December is31, ~~rated~~2021 ~~“investment-grade”~~was as97% ~~defined~~compared byto ~~S&P~~95% ~~Global~~for ~~Ratings~~the ~~(www.standardandpoors.com) and~~three bymonths ~~Moody’s~~ended ~~(www~~December 31, 2020.~~moodys.com).~~

~~Rental~~General ~~Revenue~~and Administrative Expenses increased $~~3.6 million~~170,000, or 107%, for the three months ended ~~June~~December 3031, 2021 as compared to the three months ended December ~~June 30~~31, 2020. General and Administrative Expenses, as a percentage of gross revenue (which includes Rental Revenue, ~~increased~~Reimbursement Revenue ~~$9.7~~and ~~million,~~Dividend orIncome) was 4.9%, for the ~~nine~~three months ended ~~June~~December 3031, 2021 as compared to 5.0% for the ~~nine~~three months ended ~~June 30~~December 31, 2020. ~~These~~ ~~increases~~Annualized ~~were~~General ~~due~~and toAdministrative ~~the~~Expenses, ~~acquisition~~as ofa ~~two~~percentage ~~new~~of ~~built-to-suit,~~undepreciated ~~net-leased,~~assets ~~industrial~~(which ~~properties~~is ~~located~~our intotal ~~the~~assets ~~Columbus, OH and~~excluding ~~Atlanta,~~accumulated GAdepreciation) ~~MSAs~~was ~~totaling~~38 ~~approximately~~basis ~~1.2~~points ~~million~~for ~~square feet during~~ the ~~nine~~three months ended ~~June~~December 3031, 2021 ~~and~~as ~~the~~compared ~~increase was due~~ to ~~the~~ ~~fiscal~~37 ~~2020~~basis ~~acquisitions~~points offor ~~five new built-to-suit, net-leased, industrial properties, located in~~ the ~~Indianapolis, IN, Columbus,~~three ~~OH,~~months ~~Greensboro,~~ended ~~NC,~~December ~~Salt Lake City~~31, ~~UT and Oklahoma City, OK MSAs totaling approximately 1~~2020.~~2 million square feet.~~

~~Our~~During ~~single-tenant properties are subject to net-leases, which require~~ the tenants to reimburse us for the cost of Real Estate Taxes as well as certain Operating Expenses such as insurance and the majority of repairs and maintenance. Reimbursement Revenue increased $614,000, or 10%, Real Estate Tax Expense increased $262,000, or 5%, and Operating Expenses increased $98,000, or 6% for the three months ended ~~June~~ ~~30,~~December ~~2021 as compared to the three months ended June 30~~31, ~~2020. For the nine months ended June 30,~~ 2021, ~~Reimbursement~~we ~~Revenue~~incurred ~~increased $1.0~~Non-recurring ~~million,~~Strategic orAlternatives ~~5%,~~& ~~Real~~Proxy ~~Estate~~Costs ~~Tax~~of ~~Expense increased~~ $112.13 million, ~~or 7%, and Operating Expenses increased $17,000, or 0.3% as compared~~related to the ~~nine~~evaluation ~~months ended June 30, 2020. Reimbursement Revenue as a percentage~~ of ~~Real~~strategic ~~Estate~~alternatives ~~Taxes~~approved ~~and~~by ~~Operating~~our ~~Expenses~~Board ~~for the three months ended June 30, 2021 was 98% compared to 94% for the three months ended June 30, 2020. Reimbursement Revenue as a percentage~~ of ~~Real~~ ~~Estate~~Directors ~~Taxes~~ and ~~Operating Expenses for~~ the ~~nine~~related ~~months~~proxy ~~ended June 30, 2021 was 96% compared to 96% for the nine months ended June 30, 2020~~process.

35Depreciation increased $1.7 million, or 14%, for the three months ended December 31, 2021 as compared to the three months ended December 31, 2020. Amortization of Capitalized Lease Costs and Intangible Assets increased $85,000, or 11%, for the three months ended December 31, 2021 as compared to the three months ended December 31, 2020. This increase was primarily due to the acquisition of one industrial property purchased during the first three months of fiscal 2022 and four industrial properties purchased during fiscal 2021. In addition, the increases in depreciation and amortization expenses were also the result of the expansions, capital improvements and leasing costs incurred over the last four quarters.

The recognition of Unrealized Holding Gains (Losses) Arising During the Periods is due to the adoption of ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” whereby the changes in net unrealized holding gains and losses are recognized through net income. Therefore, the implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Net Unrealized Holding Gains arising during the three months ended December 31, 2021 and 2020 were $16.5 million and $19.7 million, respectively.

We recognized dividend income on our investments in securities of $1.7 million and $1.6 million for the three months ended December 31, 2021 and 2020, respectively, representing a $122,000 increase. The REIT securities portfolio’s weighted average yield for the three months ended December 31, 2021 was approximately 4.6% as compared to 5.0% for the three months ended December 31, 2020. We held $160.3 million in marketable REIT securities as of December 31, 2021, representing 6.2% of our undepreciated assets.

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~~General~~Interest ~~and Administrative Expenses increased $48~~Expense,~~000,~~ orincluding ~~2%,~~Amortization ~~for~~of ~~the~~Financing ~~three months ended June 30~~Costs, ~~2021~~increased asby ~~compared to the three months ended June 30, 2020. General and Administrative Expenses decreased~~ $~~495~~663,000, or 7%, for the ~~nine~~three months ended ~~June~~December 3031, 2021 as compared to to the ~~nine~~three months ended ~~June~~December 3031, 2020. ~~General~~The ~~and~~increase ~~Administrative~~in ~~Expenses~~Interest Expense, asincluding aAmortization ~~percentage~~ of ~~gross~~Financing ~~revenue (which includes Rental Revenue~~Costs, ~~Reimbursement~~ ~~Revenue and Dividend Income)~~ was ~~4.7% for the three months ended June 30, 2021 as compared to 5.0% for the three months~~mostly ~~ended~~due ~~June 30, 2020 and was 4.5% for the nine months ended June 30, 2021 as compared~~ to ~~5.1%~~an ~~for~~increase ~~the~~in ~~nine~~Loans ~~months~~Payable ~~ended~~of ~~June 30, 2020~~$225. ~~Annualized~~0 ~~General~~million ~~and~~partially ~~Administrative~~offset ~~Expenses,~~with as a ~~percentage~~decrease ofin ~~undepreciated assets (which is~~ our ~~total~~Fixed ~~assets~~Rate ~~excluding~~Mortgages ~~accumulated depreciation)~~Notes ~~was 34 basis points for the nine months ended June 30~~Payable, ~~2021~~Net of asUnamortized ~~compared~~Debt toIssuance 41Costs ~~basis~~of ~~points~~$79.5 ~~for the nine months ended June 30, 2020~~million.

During the three and nine months ended June 30, 2021, we incurred Non-recurring Strategic Alternatives & Proxy Costs of $8.7 million and $10.9 million, respectively, related to the evaluation of strategic alternatives approved by our Board of Directors and the related proxy process.

On December 23, 2019, our former General Counsel, Allison Nagelberg, announced her retirement effective December 31, 2019. In accordance with her severance package, during the first quarter of fiscal 2020, we incurred a one-time, Non-recurring Severance Expense of $786,000.

Depreciation increased $1.3 million, or 11%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. Depreciation increased $3.5 million, or 10%, for the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. Amortization of Capitalized Lease Costs and Intangible Assets increased $243,000, or 31%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. Amortization of Capitalized Lease Costs and Intangible Assets increased $410,000, or 18%, for the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. These increases were primarily due to the acquisition of two industrial properties purchased during the first nine months of fiscal 2021 and five industrial properties purchased during fiscal 2020. In addition, the increases in depreciation and amortization expenses were also the result of the capital improvements and leasing costs incurred over the last four quarters.

The recognition of Unrealized Holding Gains (Losses) Arising During the Periods was due to the adoption of ASU 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” which became effective at the beginning of the prior fiscal year. With the adoption of ASU 2016-01, the changes in net unrealized holding gains and losses are recognized through net income. Therefore, the implementation of this accounting rule has resulted in increased volatility in our reported earnings and some of our key performance metrics. Unrealized Holding Gains arising during the three and nine months ended June 30, 2021 were $16.5 million and $55.4 million, respectively and Unrealized Holding Gains (Losses) arising during the three and nine months ended June 30, 2020 were $19.6 million and $(67.1) million, respectively. The components of the Unrealized Holding Gains (Losses) Arising During the Periods included in the accompanying Consolidated Statements of Income are as follows:

	Three Months Ended				Nine Months Ended
	6/30/2021		6/30/2020		6/30/2021			6/30/2020
Unrealized Holding Gains (Losses)	$	16,471	$	19,610	$	57,625		$	(67,100	)
Reclassification Adjustment for Net (Gains) Realized in Income		-0-		-0-		(2,248	)		-0-
Unrealized Holding Gains (Losses) Arising During the Period	$	16,471	$	19,610	$	55,377		$	(67,100	)

We recognized dividend income on our investments in securities of $1.5 million and $2.3 million for the three months ended June 30, 2021 and 2020, respectively, representing an $858,000 decrease. We recognized dividend income on our investments in securities of $4.7 million and $9.0 million for the nine months ended June 30, 2021 and 2020, respectively, representing a $4.3 million decrease. This decrease is due to reduced dividends from our REIT securities portfolio. The REIT securities portfolio’s weighted average yield for the nine months ended June 30, 2021 was approximately 4.6% as compared to 7.6% for the nine months ended June 30, 2020. We held $148.4 million in marketable REIT securities as of June 30, 2021, representing 5.9% of our undepreciated assets.

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Interest Expense, including Amortization of Financing Costs, increased by $710,000, or 8%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. Interest Expense, including Amortization of Financing Costs, increased by $996,000, or 4%, for the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. The increase in Interest Expense, including Amortization of Financing Costs, was due to an increase in the Fixed Rate Mortgage Notes Payable balance, which increased by $44.4 million from June 30, 2020 to June 30, 2021. The increase in Fixed Rate Mortgage Notes Payable was offset by a decrease of 14 basis points in the weighted average interest rate of the Fixed Rate Mortgage Notes Payable, which decreased from 4.00% at June 30, 2020 to 3.86% at June 30, 2021.

Preferred Dividend Expense increased $1.8 million, or 27%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $5.5 million, or 28% for the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. These increases were due to the additional $115.8 million of 6.125% Series C Cumulative Redeemable Preferred Stock issued between June 30, 2020 and June 30, 2021.

Changes in Financial Condition

We generated Net Cash from Operating Activities of $~~76.~~8.4 million and $7529.07 million for the ~~nine~~three months ended ~~June~~December 3031, 2021 and 2020, respectively.

Real Estate Investments increased by $~~129~~24.16 million from September 30, ~~2020~~2021 to ~~June~~December 3031, 2021. This increase was mainly due to the purchase of ~~two~~one net-leased industrial ~~properties~~property, located in the ~~Columbus~~Birmingham, OHAL ~~and Atlanta~~MSA, ~~GA MSAs,~~ totaling approximately ~~1.2~~291,000 ~~million~~ square feet, for $~~169~~30.2 million. The increase was partially offset by Depreciation Expense on Real Estate Investments for the ~~nine~~three months ended ~~June~~ 30December 31, 2021 of $3813.27 million.

Securities Available for Sale increased by $3916.68 million from September 30, ~~2020~~2021 to ~~June~~December 3031, 2021. The increase was primarily due to annet Unrealized Holding ~~Gain~~Gains of $5516.45 million for the ~~nine~~three months ended ~~June~~December 3031, 2021. ~~There were also sales and redemptions of securities during the nine month period totaling $18.8 million which resulted in a realized gain of $2.2 million.~~

Fixed Rate Mortgage Notes Payable, net of Unamortized Debt Issuance Costs (Mortgage Notes Payable), ~~increased~~decreased by $4923.5 million from September 30, ~~2020~~2021 to ~~June~~December 3031, 2021. The ~~increase~~decrease was ~~mostly~~mainly due to ~~the~~scheduled ~~origination~~payments of ~~two~~principal ~~fully-amortizing~~of ~~mortgage loans for~~ $~~104~~16.04 million. Additionally, ~~with~~ aon ~~weighted~~November 1, ~~average~~2021, ~~interest~~we ~~rate~~fully ofrepaid 3$7.~~11%,~~3 ~~obtained~~million inmortgage ~~connection~~loan ~~with~~for ~~the~~our ~~two~~property ~~industrial~~located ~~properties~~in ~~purchased~~Streetsboro ~~during~~(Cleveland), ~~the first half of fiscal 2021~~OH. ~~Details~~The onloan ~~these~~had ~~two~~an ~~fixed~~ interest rate ~~mortgages~~of ~~are as follows:~~5.5%.

Property (MSA)	Mortgage amount (in thousands)		Maturity Date	Interest Rate
Columbus, OH	$	47,000	1/1/2036		2.95	%
Atlanta, GA	$	57,000	1/1/2038		3.25	%

Excluding Debt Issuance Costs, the weighted average interest rate on the Fixed Rate Mortgage Notes Payable decreased by 3 basis points from the prior year quarter, from 3.88% at December 31, 2020 to 3.85% at December 31, 2021.

~~The~~We ~~increase~~are inscheduled ~~Mortgage Notes Payable was also partially due~~ to ~~the~~repay ~~amortization~~a oftotal ~~financing costs associated with the Mortgage Notes Payable~~ of ~~approximately~~ $~~751,000~~74.5 ~~This~~million ~~increase~~in ~~was~~mortgage ~~partially~~principal ~~offset by scheduled~~ payments ofover ~~principal~~the ofnext ~~$54.7~~12 ~~million and we fully prepaid three Mortgage loans~~months. ~~One~~We ~~was~~may amake ~~$6.2~~these ~~million~~principal ~~mortgage~~payments from ~~loan~~funds ~~for~~generated ~~our~~from ~~property located in Kansas City~~operations, MOdraws ~~that was originally set to mature~~ on ~~December~~our 1,unsecured ~~2021~~line ~~and had an interest rate~~ of ~~5.18%.~~credit ~~The~~facility ~~second~~and ~~was~~term ~~a $159,000 mortgage~~ loan ~~for our property located in Topeka~~, ~~KS that~~cash ~~was originally set to mature~~ on ~~August 10~~hand, ~~2021~~sales ~~and had an interest rate~~ of ~~6.50%. The third was a $1.1 million mortgage loan that~~marketable ~~was fully repaid in connection with the sale of our property located in Carlstadt~~securities, NJother ~~that~~bank ~~was originally set to mature on May 15~~borrowings, ~~2026 and~~proceeds ~~had~~from ~~an interest rate of 5.25%. Subsequent to~~ the ~~quarter end on July 15~~DRIP, ~~2021,~~proceeds wefrom ~~fully~~the ~~prepaid~~sale ~~a $622,000 mortgage loan for our property located in Houston, TX. The loan was originally set to mature on August 10, 2022 and had an interest rate~~ of ~~6.875%.~~common Instock ~~addition, the increase~~ in ~~Mortgage~~a ~~Notes~~possible ~~Payable~~future ~~was partially offset by~~ at-the ~~addition of deferred financing costs of approximately $569,000, which~~-market ispublic ~~associated~~offering ~~with~~and ~~two~~proceeds ~~mortgages~~from ~~obtained~~private inplacements ~~connection~~and ~~with~~other ~~two~~public ~~industrial~~offerings ~~properties~~of ~~purchased~~additional ~~during~~common ~~the~~or ~~first~~preferred ~~quarter~~stock ofor ~~fiscal~~other ~~2021~~securities.

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Excluding Debt Issuance Costs, the weighted average interest rate on the Fixed Rate Mortgage Notes Payable decreased by 14 basis points from the prior year quarter, from 4.00% at June 30, 2020 to 3.86% at June 30, 2021.

We are scheduled to repay a total of $78.9 million in mortgage principal payments over the next 12 months. We may make these principal payments from the cash on hand, funds generated from Cash from Operations, the DRIP, the At-The-Market Sales Agreement Program (Preferred Stock ATM Program), the Equity Distribution Agreement (Common Stock ATM Program), and draws from the unsecured line of credit facility.

Liquidity and Capital Resources

Net Cash Provided by Operating Activities was $~~76.~~8.4 million and $7529.07 million for the ~~nine~~three months ended ~~June~~December 3031, 2021 and 2020, respectively. Dividends paid on common stock for the ~~nine~~three months ended ~~June~~December 3031, 2021 and 2020 were $5217.17 million and $4916.87 million, respectively (of which $1.-0- ~~million~~ and $61.70 million, respectively, were reinvested). We pay dividends from cash generated from operations.

As of ~~June~~December 3031, 2021, we held $~~148~~160.43 million in marketable REIT securities, representing 56.92% of our undepreciated assets, which we define as total assets excluding accumulated depreciation. Total assets excluding accumulated depreciation were $2.56 billion as of ~~June 30,~~December 31, 2021. In general, we may borrow up to 50% of the value of the marketable securities. The interest rate charged on the margin loan is is the bank’s margin rate and was 0.75% as of ~~June~~December 3031, 2021. At ~~June~~December 3031, 2021, there was no amount drawn down under the margin loan. As of ~~June~~December 3031, 2021, we had net Unrealized Holding Losses on our portfolio of $7160.41 million as compared to net Unrealized Holding Losses of $~~126~~76.86 million as of September 30, ~~2020~~2021, representing annet Unrealized Holding ~~Gain~~Gains of $5516.45 million for the ~~nine~~three months ended ~~June~~December 3031, 2021. There have been no open market purchases or sales of securities during the ~~nine~~three months ended ~~June~~December 3031, 2021. We recognized dividend income on our investments in securities of $1.~~5 million and $4.~~7 million for the three ~~and nine~~ months ended ~~June~~December 3031, 2021~~, respectively~~. During the nine months ended June 30, 2021, UMH Properties, Inc. (UMH), a related REIT, redeemed all of its outstanding 8.00% Series B Cumulative Redeemable Preferred Stock at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends, of which we owned 100,000 shares at a total cost of $2.5 million. In addition to the $2.5 million of UMH 8.00% Series B Cumulative Redeemable Preferred Stock that was redeemed during the nine months ended June 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.

On November 15, 2019, we entered into a new line of credit facility (the “New Facility”) consisting of a $225.0 million unsecured line of credit facility (the “Revolver”) and a new $75.0 million unsecured term loan (the “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 quarter end, we have $90.0 million drawn down under our Revolver, resulting in $135.0 million being currently available. The $75.0 million Term Loan matures January 2025. 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%.34

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AsOn ofDecember ~~June 30~~15, 2021, we ~~owned~~entered ~~120~~into ~~properties,~~a ofNew ~~which~~Term 61Loan ~~carried~~Agreement ~~mortgage~~(the ~~loans~~“New ~~with~~Term ~~outstanding~~Loan”), ~~principal~~that ~~balances~~provides ~~totaling~~for a $~~856~~175.70 million, unsecured, delayed-draw term loan facility. The interest rate for borrowings under the New 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 the Federal Reserve Board’s Prime Rate plus 30 basis points to 100 basis points, depending on our leverage ratio. The 59New Term Loan matures on June 15, 2022 with two options to extend for additional three-month periods. Availability under the New Term Loan is limited to 60% of the value of the unencumbered real estate properties. ~~could~~The bevalue ~~refinanced~~of the borrowing base properties is determined by applying a capitalization rate to ~~raise~~the NOI ~~additional~~generated ~~funds~~by our unencumbered, ~~although~~wholly-owned ~~covenants~~industrial inproperties. ~~our~~Under the New ~~Facility~~Term ~~limit~~Loan the ~~amount~~capitalization rate applied to our ofNOI generated by our unencumbered, wholly-owned industrial properties ~~that~~is ~~can~~6.25%. beCurrently, ~~mortgaged~~our borrowings bear interest at LIBOR plus 140 basis points, which results in an interest rate of 1.51%. As of ~~June~~the ~~30,~~quarter ~~2021~~end, ~~Loans~~we ~~Payable~~did ~~represented~~not ~~$90.0~~have ~~million~~any amounts drawn down under our New Term Loan. Subsequent to the quarter end, on ~~our~~January 28, 2022 we drew down $~~225~~60.0 million, ~~Revolver~~resulting ~~and~~in $75115.0 million being ~~outstanding~~currently ~~under our Term Loan~~available.

AsOur existing line of ~~June~~credit ~~30,~~facility ~~2021~~(the “Facility”), weentered ~~had~~into ~~total~~on ~~assets~~November 15, 2019, consists of a $2225.20 ~~billion~~million ~~and~~unsecured line ~~liabilities~~ of credit facility (the “Revolver”) and a $175.0 ~~billion.~~million ~~Our~~unsecured ~~net~~term ~~debt~~loan (~~net~~the of“Term ~~unamortized~~Loan”), ~~debt issuance~~resulting ~~costs~~in the total potential availability under both the Revolver and ~~net~~the Term Loan of ~~cash~~$300.0 ~~and~~million. ~~cash~~In ~~equivalents)~~addition, tothe Revolver includes an accordion feature that will allow the total ~~market~~potential ~~capitalization~~availability asunder ofthe ~~June~~Facility 30to further increase to $400.0 million, ~~2021~~under ~~was~~certain conditions. ~~approximately~~The ~~27%~~$225.0 ~~and~~million ~~our~~Revolver ~~net~~matures ~~debt,~~in January 2024 with two options to extend for additional six-month periods. Availability ~~less~~under ~~marketable~~the ~~securities~~Facility ~~(net~~is oflimited ~~unamortized~~to ~~debt~~60% ~~issuance~~of ~~costs,~~the ~~net~~value of ~~cash~~the ~~and~~borrowing ~~cash~~base ~~equivalents~~properties. ~~and~~The ~~net~~value of ~~marketable~~the ~~securities)~~borrowing base properties is determined by applying a capitalization rate to ~~total~~the ~~market~~NOI generated by our unencumbered, wholly-owned industrial properties. Under the Facility the capitalization asrate ofapplied ~~June~~to 30our NOI generated by our unencumbered, ~~2021~~wholly-owned ~~was~~industrial ~~approximately~~properties 23is 6.25%. ~~Our~~In ~~debt~~addition, ~~consists~~borrowings under the Revolver 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 ~~84%~~Montreal’s ~~amortizing~~(BMO) ~~fixed~~prime lending rate ~~debt~~plus ~~with~~35 abasis points to 105 basis points, depending ~~weighted~~on ~~average~~our leverage ratio. Currently, our borrowings bear interest under the Revolver at LIBOR plus 145 basis points, which results in an interest rate of 31.8654%. As of the quarter end and acurrently, ~~weighted~~we ~~average~~have ~~loan~~the ~~maturity~~full of$225.0 11million drawn down under our Revolver.1 ~~years~~The $75.0 million WeTerm ~~believe~~Loan ~~that~~matures weJanuary ~~have~~2025. The borrowings under the ~~ability~~Term Loan will at our election, either i) bear interest at LIBOR plus 130 basis points to ~~meet~~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 ~~obligations~~leverage ~~and~~ratio. To reduce floating interest rate exposure under the Term Loan, we also entered into an interest rate swap agreement to ~~generate~~fix ~~funds~~LIBOR on the entire $75.0 million for ~~new~~the ~~investments~~full duration of the Term Loan resulting in an all-in rate of 2.92%.

AsFrom ~~previously~~time ~~announced, in January 2021, our Board of Directors unanimously decided~~ to ~~explore~~time ~~strategic alternatives to maximize shareholder value. Following a comprehensive strategic alternatives process, on May 4, 2021,~~ we ~~entered~~may ~~into~~use a ~~definitive~~margin ~~merger~~loan ~~agreement~~for ~~with~~temporary ~~Equity Commonwealth~~funding ~~(“EQC”),~~of aacquisitions ~~New~~and ~~York~~for ~~Stock~~working ~~Exchange~~capital ~~traded~~purposes. ~~real~~This ~~estate~~loan ~~investment~~is ~~trust,~~due ~~under which,~~ on ~~the terms~~ demand and ~~subject to~~is ~~the~~collateralized ~~conditions~~by ~~set~~our ~~forth~~securities inportfolio. ~~the~~We ~~merger~~must ~~agreement,~~maintain ~~we will merge with and into~~ a ~~new~~coverage ~~wholly-owned~~ratio ~~subsidiary~~ of ~~Equity~~approximately ~~Commonwealth, resulting in Equity Commonwealth acquiring us in an all-stock transaction~~50%. The ~~merger~~interest ~~agreement~~rate ~~provides that, upon closing of the merger,~~charged ~~our~~on ~~common stockholders will be entitled to receive 0.67 shares of Equity Commonwealth common stock for every share of our common stock they own and~~ the ~~outstanding~~margin ~~shares~~loan ofis ~~our common stock will be extinguished. Under~~ the ~~terms~~bank’s ofmargin ~~the~~rate ~~definitive merger agreement, upon closing of the merger, each holder of our 6.125% Series C Preferred Stock, will be entitled to receive an amount in cash equal to $25.00 per share plus accumulated~~ and ~~unpaid~~was ~~dividends and the outstanding shares of our 6~~0.~~125~~75% ~~Series~~as ~~C Cumulative Redeemable Preferred Stock will be extinguished. The merger transaction is expected to close during the second half~~ of ~~calendar~~December ~~2021~~31, ~~subject~~2021 ~~to customary closing conditions, including approval by common stockholders of both Equity Commonwealth~~ and ~~MREIC~~2020. OnAt ~~July~~December 2331, 2021, ~~we filed with the SEC,~~ and ~~shortly thereafter began distributing to our stockholders~~2020, ~~a definitive joint proxy statement/prospectus of MREIC and EQC~~there ~~pursuant~~were tono ~~which~~amounts ~~both~~drawn ~~MREIC~~down ~~and~~under ~~EQC are seeking approval of~~ the ~~merger~~margin ~~from their respective stockholders at special stockholder meetings that have been called for August 24, 2021~~loan.

OnIn ~~February~~the 6,absence ~~2020,~~of wewaivers ~~entered~~or ~~into~~consents afrom ~~Common~~holders ~~Stock~~of ~~ATM~~our ~~Program with BMO Capital Markets Corp.~~indebtedness, B.which ~~Riley FBR~~we, ~~Inc.,~~in ~~D.A.~~consultation ~~Davidson~~with ~~& Co.~~ILPT, ~~Janney~~are ~~Montgomery~~currently ~~Scott LLC~~seeking, ~~J.P. Morgan Securities LLC and RBC Capital Markets, LLC (together~~ the ~~“Distribution Agents”)~~ ~~under~~consummation ~~which we may offer and sell shares~~ of our ~~common~~merger ~~stock,~~with ~~$0.01~~ILPT ~~par~~and ~~value~~resulting ~~per~~“change ~~share, having an aggregate sales price~~ of upcontrol” tois ~~$150.0 million~~expected ~~from time~~ to ~~time~~result ~~through the Distribution Agents. Sales of the shares of Common Stock under the Agreement, if any, will be~~ in ~~“at~~ ~~the~~a ~~market~~default ~~offerings”~~or assimilar ~~defined in Rule 415~~ event under ~~the~~substantially ~~Securities~~all ~~Act,~~of ~~including,~~our ~~without~~outstanding ~~limitation~~indebtedness, ~~sales~~permitting ~~made directly on or through~~ the ~~NYSE,~~holders orof onsuch ~~any~~indebtedness ~~other existing trading market for the Common Stock, or~~ to oraccelerate ~~through~~such ~~a market maker or any other method~~indebtedness ~~permitted~~and bydemand ~~law,~~immediate ~~including,~~repayment ~~without~~at ~~limitation~~par, ~~negotiated~~together ~~transactions~~with ~~and block trades. We established~~ the ~~Common~~applicable ~~Stock~~‘make-whole’ ~~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~~premium, weif ~~have elected to not raise~~ any, ~~equity~~following ~~though~~the ~~our Common Stock Equity Program~~merger.

39As of December 31, 2021, we owned 123 properties, of which 59 carried mortgage loans with outstanding principal balances totaling $815.9 million. The 64 unencumbered properties could be refinanced to raise additional funds, although covenants in our New Facility limit the amount of unencumbered properties that can be mortgaged. As of December 31, 2021, Loans Payable represented $225.0 million drawn down on our Revolver and $75.0 million outstanding under our Term Loan.

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OnAs ~~June~~of 29December 31, ~~2017~~2021, we ~~entered~~had ~~into~~total aassets ~~Preferred~~of ~~Stock~~$2.2 ~~At-The-Market~~billion ~~Sales~~and ~~Agreement~~liabilities ~~Program~~of ~~with~~$1.1 Bbillion. ~~Riley~~Our ~~FBR~~net debt (net of unamortized debt issuance costs and net of cash and cash equivalents) to total market capitalization as of December 31, ~~Inc.~~2021 was approximately 29% and our net debt, orless B.marketable ~~Riley~~securities (~~formerly FBR~~net ~~Capital~~of ~~Markets~~unamortized &debt ~~Co.)~~issuance costs, ~~that~~net ~~provided~~of ~~for~~cash ~~the~~and ~~offer~~cash equivalents and ~~sale~~net of ~~shares~~marketable securities) to total market capitalization as of ~~our~~December ~~6.125~~31, 2021 was approximately 25%. ~~Series~~Our Cdebt ~~Preferred~~consists ~~Stock,~~of ~~having~~73% anamortizing ~~aggregate~~fixed rate debt with ~~sales~~a ~~price~~weighted average interest rate of up3.85% toand ~~$100~~a weighted average loan maturity of 10.07 ~~million~~years. We believe that we have the ability to meet our obligations and to generate funds for new investments.

OnAs ~~August~~previously 2announced, ~~2018~~on November 5, 2021, we ~~replaced~~entered ~~this~~into ~~program~~a definitive merger agreement with aILPT, ~~new~~under ~~Preferred~~which, ~~Stock~~on Atthe terms and subject to the conditions set forth in the merger agreement, ILPT will acquire us in an all-~~The-Market~~cash ~~Sales~~transaction, ~~Agreement~~with ~~Program~~our ~~that~~common ~~provides~~shareholders ~~for~~receiving $21.00 in cash per share upon the ~~offer~~consummation of the transaction. ILPT’s acquisition of us is subject to obtaining the requisite ~~and~~approval ~~sale~~of ~~from~~our ~~time~~common shareholders, the special meeting of shareholders for which is scheduled to ~~time~~take place on February 17, 2022, and the satisfaction of ~~$125~~other customary closing conditions.0 ~~million~~Upon closing of the merger with ILPT, holders of our outstanding 6.125% Series C Preferred Stock will receive $25.00 in cash per share plus accumulated and unpaid dividends to, ~~representing~~but annot ~~additional~~including, ~~$96~~the date the merger is completed.5 ~~million~~As permitted by the Merger Agreement, ~~with~~we ~~$28~~plan to continue to pay our regular quarterly common stock dividend and our 6.5125% ~~million~~Series ~~being~~C ~~carried~~Preferred ~~over~~Stock ~~from~~dividend for each full quarterly dividend period completed prior to the closing of the transaction, in amounts not exceeding $0.18 per share for our common stock and equal to $0.3828125 per share for our 6.125% Series C Preferred Stock. AtThis transaction with ILPT represents the culmination of the publicly announced comprehensive strategic alternatives review processes conducted by our Board of Directors during fiscal 2021. Our Board re-~~The~~initiated its strategic alternatives review process in September 2021 after a previous agreement for a stock-~~Market~~for-stock ~~Sales~~merger ~~Agreement~~that ~~Program~~we entered into onwith ~~June~~another 29party, ~~2017~~following a strategic alternatives review process in the first half of calendar year 2021, did not receive the requisite approval of our shareholders.

OnAs of December 431, ~~2019~~2021, 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 $12522.0 million shares of our 6.125% Series C Preferred Stock, ~~representing~~were ~~an additional $101~~outstanding.~~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.~~

OnDuring ~~November 25, 2020, we replaced~~ the ~~Preferred~~three ~~Stock~~months ~~At-The-Market~~ended ~~Sales Agreement Program entered into on~~ December 431, ~~2019~~2021, ~~with~~we ~~another new~~paid ~~Preferred Stock At-The-Market Sales Agreement Program (Preferred Stock ATM Program) that provides for the offer and sale from time to time of up to~~ $~~150~~17.07 million ofin ~~our~~total ~~6.125%~~cash ~~Series C Preferred Stock~~dividends, ~~representing~~or ~~an additional~~ $~~149~~0.318 ~~million,~~per ~~with~~share ~~$747,000~~to ~~being carried~~common ~~over from the Preferred Stock At-The-Market Sales Agreement Program entered into on December 4, 2019~~shareholders.

~~Sales~~On ofJanuary ~~shares of our 6.125% Series C Preferred Stock under the Preferred Stock ATM Program are in “at the market offerings” as defined in Rule 415 under the Securities Act~~14, ~~including~~2021, ~~without~~our ~~limitation,~~Board ~~sales~~of ~~made~~Directors ~~directly~~approved ona ~~or through the NYSE, or on any other existing trading market for the 6~~5.~~125~~9% ~~Series~~increase Cin ~~Preferred~~our ~~Stock,~~quarterly orcommon tostock ~~or through a market maker~~dividend, orraising ~~any~~it ~~other~~to ~~method permitted by law, including, without limitation, negotiated transactions and block trades~~$0.18 Weper ~~began selling shares through these programs on July 3, 2017.~~share ~~Since~~from ~~inception through June 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~~ $240.9117 per share, ~~and~~representing ~~generated~~an ~~net~~annualized ~~proceeds,~~dividend ~~after~~rate ~~offering expenses,~~ of $~~332~~0.472 ~~million,~~per ~~of which 3~~share.1 ~~million~~This ~~shares were~~increase ~~sold~~was ~~during~~ the ~~nine~~third ~~months~~dividend ~~ended~~increase ~~June~~in 30six years, ~~2021~~representing at a ~~weighted~~total ~~average~~increase ~~price~~ of ~~$24~~20%.88 ~~per~~We ~~share,~~have ~~generating~~maintained ~~net~~or ~~proceeds~~increased ~~after~~our ~~offering expenses~~common ofstock ~~$76.0~~cash ~~million.~~dividend Asfor of31 ~~June~~consecutive ~~30, 2021, there is $108~~years.3 We ~~million~~are ~~remaining~~one ~~that~~of ~~may be sold under~~ the ~~Preferred~~few ~~Stock~~REITs ~~ATM~~that ~~Program. No~~maintained ~~shares~~our ~~have~~dividend ~~been~~throughout ~~sold pursuant to~~ the ~~Preferred~~Global ~~Stock~~Financial ~~ATM Program since December 2020~~Crisis.

AsDuring ofthe ~~June~~three 30months ended December 31, 2021, 22we paid $8.04 million ~~shares~~in ofPreferred Dividends, or $0.3828125 per share, on our outstanding 6.125% Series C Preferred Stock for the period September 1, 2021 through November 30, 2021. As of December 31, 2021, we had accrued Preferred Dividends of $2.8 million covering the period December 1, 2021 to December 31, 2021. Dividends on the 6.125% Series C Preferred Stock are ~~were~~cumulative ~~outstanding~~and payable quarterly at an annual rate of $1.53125 per share.

We ~~raised~~have ~~$1.4~~used ~~million~~a ~~(including~~variety ~~dividend reinvestments~~ of ~~$1.0~~sources ~~million)~~to ~~from~~fund ~~the~~our ~~issuance~~cash ofneeds ~~87,000~~in ~~shares~~addition ofto ~~common~~cash ~~stock~~generated ~~under~~from ~~our~~operations. ~~DRIP during~~In the ~~nine~~past, ~~months~~we ~~ended~~considered ~~June~~selling marketable ~~30,~~securities ~~2021.~~from Ofour ~~this~~investment ~~amount~~portfolio, ~~UMH~~borrowing ~~made~~on ~~total~~our ~~purchases~~unsecured line of 13credit facility,~~000~~ ~~common~~term ~~shares~~loan ~~under~~or ~~our~~securities ~~DRIP~~margin loans, ~~for~~finance aor ~~total cost~~refinance ~~of $205~~debt,~~000,~~ or araising ~~weighted~~capital ~~average~~through ~~cost~~registered direct placements and public offerings of ~~$15.68~~common ~~per~~and ~~share~~preferred stock.

~~During~~We ~~the~~have ~~nine~~a ~~months~~concentration ~~ended~~of ~~June~~properties ~~30,~~leased ~~2021~~to FedEx Corporation (FDX) and FDX subsidiaries, weconsisting ~~paid~~of ~~$52~~66 separate stand-alone leases covering 11.19 million insquare ~~total~~feet ~~cash~~as ~~dividends~~of December 31, or2021 $0and 63 separate stand-alone leases covering 11.532 ~~per~~million ~~share~~square feet as of December 31, 2020. FDX is experiencing record demand due to ~~common~~the ~~shareholders~~continued strong growth in ecommerce. Additionally, in periods of ~~which~~unprecedented $1turbulence, the services of FedEx are essential in keeping supply chains moving and in delivering critically needed supplies throughout the world.0 ~~million~~As ~~was~~of ~~reinvested~~December 31, 2021, the 66 separate stand-alone leases we have with FDX and FDX subsidiaries are located in 27 different states and have a weighted average lease maturity of 8.1 years. The percentage of FDX and its subsidiaries leased square footage to the total ~~DRIP~~of our rental space was 47% (4% to FDX and 43% to FDX subsidiaries) as of December 31, 2021 and 46% (5% to FDX and 41% to FDX subsidiaries) as of December 31, 2020.

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 is 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.36

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~~During~~As ~~the~~of ~~nine~~December ~~months ended June 30~~31, 2021, wethe ~~paid~~only ~~$24.6~~tenants, ~~million~~other inthan ~~Preferred~~FDX ~~Dividends,~~and orits ~~$1.1484375 per share~~subsidiaries, onthat ~~our~~leased ~~outstanding 6.125~~5% ~~Series~~ Cor ~~Preferred~~more ~~Stock~~of ~~for~~our ~~the~~total ~~period~~square ~~September~~footage 1,were subsidiaries ~~2020~~of ~~through~~Amazon.com, ~~May~~Inc 31(Amazon), ~~2021.~~which Asconsists of ~~June~~five ~~30,~~separate ~~2021,~~stand-alone weleases ~~had~~for ~~accrued~~properties ~~Preferred~~located ~~Dividends~~in four different ofstates, $2containing 1.85 million ~~covering~~total ~~the~~square ~~period June 1~~feet, ~~2021~~comprising to6% ~~June~~of ~~30,~~our ~~2021.~~total ~~Dividends~~leasable onsquare ~~the 6~~feet.~~125%~~ ~~Series~~None Cof ~~Preferred~~our ~~Stock~~properties are ~~cumulative and~~subject ~~payable~~to ~~quarterly~~a atmaster anlease ~~annual~~or ~~rate~~any ofcross-collateralization $1agreements.~~53125 per share.~~

OnAnnualized ~~July~~Rental 1,and ~~2021,~~Reimbursement ~~our~~Revenue ~~Board~~from ofFDX ~~Directors~~and ~~declared~~its asubsidiaries ~~cash~~is ~~dividend~~estimated ~~on our 6.125% Series C Cumulative Redeemable Preferred Stock. The preferred stock dividend will cover the period from June 1, 2021~~ to ~~August~~be ~~31,~~approximately ~~2021~~57% ~~unless~~(4% ~~the pending merger with Equity Commonwealth closes prior~~ to ~~August~~FDX ~~31,~~and ~~2021.~~53% ~~If the merger is completed prior~~ to ~~August~~FDX ~~31,~~subsidiaries) of ~~2021,~~total ~~then~~Rental ~~the~~and ~~preferred~~Reimbursement ~~stock~~Revenue ~~dividend~~for ~~period~~fiscal ~~will end on~~2022, ~~but~~and ~~not include,~~was ~~the~~57% ~~closing~~(5% ~~date~~to ofFDX ~~the merger~~ and ~~the~~52% ~~dividend will be paid immediately prior~~ to ~~the~~FDX ~~effective~~subsidiaries) ~~time~~ of ~~the~~total ~~merger.~~Rental Ifand ~~the merger~~Reimbursement isRevenue ~~not~~for ~~completed~~fiscal ~~prior to August 31,~~ 2021~~, the preferred dividend will be paid on August 31, 2021~~. The ~~quarterly~~only ~~preferred stock dividend payment of $0.3828125 per share will be prorated if the merger is completed prior to August 31~~tenants, ~~2021.~~other ~~Regardless~~than ofFDX ~~whether~~and ~~the~~its ~~merger closes prior to August 31~~subsidiaries, ~~2021,~~that ~~the~~we ~~preferred~~estimate ~~stock dividend~~ will becomprise ~~payable~~5% toor ~~shareholders~~more of ~~record~~our astotal Rental ofand ~~the~~Reimbursement ~~close~~Revenue offor ~~business~~fiscal ~~on August~~2022 ~~16,~~are ~~2021.~~subsidiaries ~~Also, under the terms~~ of ~~the definitive merger agreement~~Amazon, ~~upon~~which ~~closing~~is ofestimated ~~the~~to ~~merger,~~be ~~each~~6% ~~holder~~ of our ~~6.125%~~Annualized ~~Series~~Rental and CReimbursement ~~Preferred~~Revenue ~~Stock,~~for ~~will~~fiscal be2022 ~~entitled to receive an amount in cash equal to $25.00 per share plus accumulated~~ and ~~unpaid~~was ~~dividends~~6% ~~and the~~for ~~outstanding shares~~ of our ~~6.125%~~Annualized ~~Series~~Rental Cand ~~Preferred~~Reimbursement ~~Stock~~Revenue ~~will~~for befiscal ~~extinguished~~2021.

We have used a variety of sources to fund our cash needs in addition to cash generated from operations. 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, public offerings of common and preferred stock and through our Common Stock ATM Program.

As of June 30, 2021, the only tenants, other than FDX and its subsidiaries, that leased 5% or more of our total square footage were subsidiaries of Amazon.com, Inc (Amazon), which consists of 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.

Annualized Rental and Reimbursement Revenue from FDX and its subsidiaries is estimated to be approximately 55% (5% to FDX and 50% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2021, and was 58% (5% to FDX and 53% to FDX subsidiaries) of total Rental and Reimbursement Revenue for fiscal 2020. The only tenants, other than FDX and its subsidiaries, that we estimate will comprise 5% or more of our total Rental and Reimbursement Revenue for fiscal 2021 are subsidiaries of Amazon, which is estimated to be 7% of our Annualized Rental and Reimbursement Revenue for fiscal 2021 and was 6% for of our Annualized Rental and Reimbursement Revenue for fiscal 2020. For the nine months ended June 30, 2021, no other tenant accounted for 5% or more of our total Rental and Reimbursement Revenue.

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During ~~the~~fiscal ~~nine months ended June 30,~~ 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 ~~which resulted~~ in aan ~~$340,000~~initial increase in ~~annualized~~annual rent effective November 5, 2020 ~~increasing~~of ~~the~~approximately ~~annualized~~$340,000 ~~rent~~ from approximately $2.214 million, or $6.83 per square foot, to approximately $2.648 million, or $7.91 Weper ~~recently~~square ~~began~~foot. ~~construction~~Furthermore, annual rent increased by 2.1% on aJune 1, ~~second~~2021 ~~phase~~and ofwas ~~this~~to ~~parking~~continue ~~expansion~~to ~~project~~increase at2.1% ~~this~~every ~~location~~five years, ~~which~~ ~~will~~resulting ~~increase~~in ~~the~~an ~~rental~~annualized ~~rate~~rent ~~further~~of ~~and~~$2.56 ~~extend~~million, or $8.15 per square foot, from November 5, 2020 through May 2031, the ~~lease~~remaining term of the lease. InDuring ~~addition,~~the ~~effective~~three ~~June~~months 4ended December 31, 2021, we completed ~~a parking lot~~ ~~expansion~~the ~~for~~second ~~UPS~~phase atof ~~our~~this ~~property~~parking ~~located~~expansion inproject ~~Halfmoon~~at ~~(Albany),~~this NYlocation for a total cost of ~~approximately~~ $~~835~~2.3 million,~~000,~~ resulting in an initial increase in annual rent effective onNovember ~~the~~19, ~~date~~2021 of ~~completion of~~ approximately $52185,000 from approximately $~~510~~2.53 million,~~000,~~ or $68.8008 per square foot, to ~~approximately~~ approximately $~~562~~2.72 million,~~000,~~ or $78.5067 per square foot. ~~Furthermore~~In addition, ~~annual~~the ~~rent~~expansion ~~will~~resulted ~~continue~~in toa ~~increase~~new ~~each~~14.5 year bylease ~~2.0%~~which ~~resulting~~extended inthe anprior lease ~~annualized~~expiration ~~rent~~date from ~~June~~May 42031 to May 2036. Furthermore, ~~2021~~annual ~~through~~rent ~~the~~will ~~remaining~~increase ~~term~~by of1.9% ~~the~~on ~~lease~~June 1, 2026 resulting in an annualized rent of approximately $~~622~~2.76 million,~~000,~~ or $8.2978 per square foot from November 19, 2021 through the remaining term of the lease.

~~In addition to the property~~During ~~purchased subsequent to~~ the ~~quarter~~three ~~end~~months inended ~~July~~December 31, 2021, we ~~have~~completed ~~entered~~a ~~into~~parking ~~agreements~~expansion toproject ~~purchase~~for ~~five~~FedEx ~~new~~Ground ~~build-to-suit~~Package System, ~~industrial buildings~~Inc. ~~that~~at ~~are~~our ~~currently~~property located ~~being developed~~ in ~~Alabama (2)~~Wheeling, ~~Georgia,~~IL ~~Tennessee~~for ~~and~~a ~~Texas.~~total ~~These~~cost ~~five~~of ~~future acquisitions total~~ $1.60 million ~~square feet~~, ~~with net-leased terms ranging from 10 to 15 years,~~ resulting in aan ~~weighted~~initial ~~average~~increase ~~lease term of 13.4 years and are expected to generate $10.5 million~~ in annual rent. ~~The~~effective ~~aggregate~~October ~~purchase~~28, ~~price for these five properties is $183.6 million. Four~~ 2021 of ~~these~~approximately ~~five properties~~$105,000 ~~consisting~~from of approximately $1.127 million ~~square feet~~, or ~~68%, are leased for 15 years to FedEx Ground Package System, Inc~~$10.~~, with~~34 ~~the~~per ~~remaining property, consisting of approximately 530,000~~ square ~~feet or 32%~~foot, ~~leased for 10 years~~ to ~~Mercedes~~approximately ~~Benz US International, Inc~~$1.38 ~~All properties are leased to companies~~million, or ~~subsidiaries~~$11.19 ~~of companies, that are considered Investment Grade by S&P Global Ratings~~per ~~(www.standardandpoors.com)~~square ~~and by Moody’s (www~~foot.~~moodys.com).~~ ~~Subject~~In ~~to satisfactory due diligence and other customary closing conditions and requirements~~addition, wethe ~~anticipate~~expansion ~~closing~~resulted ~~two~~in ofa ~~these~~new ~~transactions~~9.8 ~~during~~year ~~fiscal~~lease ~~2021,~~which ~~two~~extended in the ~~first~~prior ~~half~~lease ofexpiration ~~fiscal~~date ~~2022 and~~from ~~one~~May in2027 to ~~the~~August ~~second half of fiscal 2022~~2031.

WeDuring ~~have~~the ~~several~~three ~~FedEx~~months ~~Ground~~ended ~~parking~~December ~~expansion~~31, ~~projects~~2021, ~~in progress with more under discussion. Currently there are eight parking expansion projects underway which~~ we ~~expect~~completed ~~to cost approximately $37.3 million. In addition, the first phase of~~ a parking expansion project ~~was completed~~for ~~during~~FedEx ~~the~~Ground ~~prior~~Package ~~quarter~~System, Inc. at our property located in ~~Olathe~~Sauget (~~Kansas~~St. ~~City~~Louis, MO), KSIL for a total ~~project~~ cost of $3.48 million., ~~This first~~resulting ~~phase of the expansion resulted~~ in aan ~~$340,000~~initial increase in ~~annualized~~annual rent effective November 5 10, ~~2020~~2021 ~~increasing~~of ~~the~~approximately ~~annualized rent~~$346,000 from approximately $21.204 million, toor $25.621 ~~million.~~per Wesquare ~~recently~~foot, ~~began~~to ~~construction~~approximately on$1.38 amillion, ~~second~~or ~~phase on this parking expansion project at this location~~$6.95 Weper ~~expect~~square ~~this~~foot. ~~second~~In ~~phase~~addition, tothe beexpansion ~~completed~~resulted in ~~November~~a ~~2021~~new ~~and cost approximately $2~~13.38 ~~million~~year lease which ~~will~~extended ~~increase~~ the ~~annual~~prior ~~rental rate by approximately $185,000 and extend the~~ lease ~~term~~expiration ~~approximately~~date ~~14.6 years~~ from ~~the~~May 2029 ~~date~~to ofAugust ~~completion~~2035. ~~These~~Furthermore, ~~parking~~annual ~~expansion projects~~rent will ~~enable~~increase usby to3.7% ~~capture~~on ~~additional~~June ~~rent~~1, ~~while~~2029 ~~lengthening~~resulting ~~the~~in ~~terms~~an ofannualized ~~these~~rent ~~leases.~~from WeNovember ~~are~~10, 2021 ~~also~~through ~~in discussions to expand~~ the ~~parking~~remaining atterm ~~nine~~of ~~additional locations bringing~~ the ~~total~~lease ~~recently~~of ~~completed~~approximately ~~and~~$1.40 ~~potential~~million, ~~parking~~or ~~lot~~$7.07 ~~expansion~~per ~~projects~~square ~~to 18 currently~~foot.

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During the three months ended December 31, 2021, we completed a parking expansion project for FedEx Ground Package System, Inc. at our property located in Orion, MI for a total cost of $6.5 million, resulting in an initial increase in annual rent effective November 24, 2021 of approximately $651,000 from approximately $1.91 million, or $7.77 per square foot, to approximately $2.56 million, or $10.42 per square foot. In addition, the expansion resulted in a new 9.9 year lease which extended the prior lease expiration date from June 2023 to October 2031.

We intend to acquire additional net-leased industrial properties on long-term leases, primarily to investment grade tenants or their subsidiaries, and, when needed, expand our current properties. To the extent that funds or appropriate properties are not available, fewer acquisitions will be made.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

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Funds From Operations and Adjusted Funds From Operations

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, and 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,~~ 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 have a non-controlling interest in~~. We define recurring capital expenditures as all capital expenditures ~~that~~ that are recurring in nature, excluding capital expenditures related to expansions at our current locations or capital expenditures that ~~are~~ 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.

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The following is a reconciliation of our U.S. GAAP Net Income ~~(Loss)~~ Attributable to Common Shareholders to our FFO and AFFO for the three ~~and~~ ~~nine~~ months ended ~~June~~December 3031, 2021 and 2020 (in thousands):

	Three Months Ended						~~Nine Months Ended~~
	6/30/2021			6/30/2020			6/30/2021			6/30/2020
		12/31/2021			12/31/2020
Net Income (Loss) Attributable to Common Shareholders	$	17,292		$	26,851		$	68,950		$	(44,700	)
Net Income Attributable to Common Shareholders	$	11,417		$	25,746
Less/Plus: Unrealized Holding (Gains) Losses Arising During the Periods		(16,471	)		(19,610	)		(55,377	)		67,100
Plus: Depreciation Expense (excluding Corporate Office Capitalized Costs)		13,671			12,020
Plus: Depreciation Expense (excluding Corporate Office Capitalized Costs)		12,960			11,672			37,959			34,436
Plus: Amortization of Intangible Assets		603			532
Plus: Amortization of Intangible Assets		599			524			1,731			1,539
Plus: Amortization of Capitalized Lease Costs		308			303
Plus: Amortization of Capitalized Lease Costs		374			284			971			830
Less: Unrealized Holding Gains Arising During the Periods		(16,508	)		(19,721	)
Less: Realized Gain on Sale of Real Estate Investment (1)		(3,252	)		-0-			(3,252	)		-0-
FFO Attributable to Common Shareholders (1)		9,491			18,880
FFO Attributable to Common Shareholders (2)		11,502			19,721			50,982			59,205
Plus: Depreciation of Corporate Office Capitalized Costs		57			57
Plus: Depreciation of Corporate Office Capitalized Costs		57			57			172			176
Plus: Stock Compensation Expense		94			57
Plus: Stock Compensation Expense		77			98			210			368
Plus: Amortization of Financing Costs		428			331
Plus: Amortization of Financing Costs		350			326			1,026			1,082
Plus: Non-recurring Strategic Alternatives & Proxy Costs		12,274			-0-
Plus: Non-recurring Strategic Alternatives & Proxy Costs		8,657			-0-			10,896			-0-
Less: Lease Termination Income		-0-			(377	)
Plus: Non-recurring Severance Expense		-0-			-0-			-0-			786
Less: Recurring Capital Expenditures		(84	)		(160	)
Less: Realized Gain on Sale of Securities Transactions		-0-			-0-			(2,248	)		-0-
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment		(617	)		(618	)
Less: Lease Termination Income		-0-			-0-			(377	)		-0-
AFFO Attributable to Common Shareholders	$	21,643		$	18,170
Less: Recurring Capital Expenditures		(229	)		(508	)		(791	)		(1,443	)
Less: Effect of Non-cash U.S. GAAP Straight-line Rent Adjustment		(713	)		(231	)		(2,363	)		(1,469	)
AFFO Attributable to Common Shareholders	$	19,701		$	19,463		$	57,507		$	58,705

	(1)	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 three and nine months ended June 30, 2021 includes Non-recurring Strategic Alternatives & Proxy Costs of $8.7 million and $10.9 million, respectively. FFO Attributable to Common Shareholders for the three and nine months ended June 30, 2021 excluding these Non-recurring Strategic Alternatives & Proxy Costs is $20.2 million and $61.9 million, respectively.

(1)

FFO Attributable to Common Shareholders for the three months ended December 31, 2021 includes Non-recurring Strategic Alternatives & Proxy Costs of $12.3 million. FFO Attributable to Common Shareholders for the three months ended December 31, 2021 excluding these Non-recurring Strategic Alternatives & Proxy Costs is $21.8 million.

The following are the Cash Flows provided (used) by Operating, Investing and Financing Activities for the ~~nine~~three months ended ~~June~~December 3031, ~~2021~~ 2021 and 2020 (in thousands):

	Nine Months Ended
	Three Months Ended
	6/30/2021			6/30/2020
		12/31/2021			12/31/2020
Operating Activities	$	768,~~768~~393		$	7429,~~964~~692
Investing Activities		(~~145~~38,~~246~~112	)		(~~163~~166,~~049~~774	)
Financing Activities		~~135~~(1,~~857~~186	)		80142,~~010~~845

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to information required regarding quantitative and qualitative disclosures about market risk from the end of the preceding fiscal year to ~~June~~December 3031, 2021 (the date of this Quarterly Report on Form 10-Q).

ITEM 4. Controls and Procedures.

Our President and Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting officer) with the assistance of other members of our management, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our President and Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of such period.

Changes in Internal Control over Financial Reporting

There has not been any change in our internal controls over financial reporting during the quarter ended ~~June~~December 3031, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II:

OTHER INFORMATION

Item 1.	Legal Proceedings.
	Litigation Relating to our Merger with Equity Commonwealth Our merger with Equity Commonwealth is the subject of four lawsuits commenced by purported shareholders, all of which allege generally that we and the members of our Board of Directors violated provisions of the federal securities laws by preparing and disseminating a registration statement relating to the merger that misstates or omits certain allegedly material information. The lawsuits seek, among other things, injunctive relief enjoining the consummation of the merger, or, if the merger is consummated, rescission or rescissory damages, and an award of the plaintiff’s costs, including attorneys’ and experts’ fees. We believe that all of the claims asserted in these lawsuits are without merit and intend to defend against them vigorously. However, litigation is inherently uncertain and there can be no assurance regarding the likelihood that the defense of the actions will be successful. If any of these lawsuits is successful, the lawsuit(s) could prevent or delay completion of the merger and result in costs to us and Equity Commonwealth. Additional lawsuits relating to the merger may also be filed in the future.
Item 1A.	Risk Factors. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Item 1A – “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 (the “10-K”) and the Company’s Quarterly Reports on Form 10-Q for the fiscal quarter ended December 31, 2020 and March 31, 2021 (the “10-Qs”) which could materially affect the Company’s business, financial condition or future results. The risks described in the 10-K and the 10-Qs are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds. - None
Item 3.	Defaults Upon Senior Securities. – None
Item 4.	Mine Safety Disclosures. – None
Item 5.	Other Information. - None
Item 6.	Exhibits
31.1	Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).
31.2	Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Michael P. Landy, President and Chief Executive Officer, and Kevin S. Miller, Chief Financial Officer (Furnished herewith).
101	The following materials from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

Item 1.

Legal Proceedings.

Litigation Relating to our Merger Agreement with Industrial Logistics Properties Trust (“ILPT”)

Former Litigation with Blackwells Capital and our former general counsel

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 each annual and special meeting of shareholders until December 31, 2029 in favor of all of the Board’s director nominees and in support of all Board-recommended proposals. Blackwells also agreed to comply with certain additional standstill, non-disparagement and affirmative solicitation commitments and terms through December 31, 2029. The Cooperation Agreement also provides for us to provide partial expense reimbursement to Blackwells of $3.85 million for certain of its documented, actual out-of-pocket third party professional fees and expenses, which reimbursement expense was reflected in our income statement for the quarter ended September 30, 2021.

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Item 1A.	Risk Factors. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Item 1A – “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (the “10-K”) which could materially affect the Company’s business, financial condition or future results. The risks described in the 10-K and the 10-Qs are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds. - None

Item 3.	Defaults Upon Senior Securities. – None

Item 4.	Mine Safety Disclosures. – None

Item 5.	Other Information. - None

Item 6.	Exhibits

2.1	Agreement and Plan of Merger, dated as of November 5, 2021, by and among Monmouth Real Estate Investment Corporation, Industrial Logistics Properties Trust, and Maple Delaware Merger Sub LLC (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K of Monmouth Real Estate Investment Corporation, filed with the SEC on November 8, 2021)* * Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Monmouth hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, however, that Monmouth may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedules so furnished.

31.1	Certification of Michael P. Landy, President and Chief Executive Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).

31.2	Certification of Kevin S. Miller, Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (Filed herewith).

32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Michael P. Landy, President and Chief Executive Officer, and Kevin S. Miller, Chief Financial Officer (Furnished herewith).

101	The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements 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
Date:	~~August~~February 24, ~~2021~~2022	By:	/s/ Michael P. Landy
		Michael P. Landy, President and Chief Executive Officer,	~~Michael P. Landy, President and Chief Executive Officer,~~
		its principal executive officer	~~its principal executive officer~~
Date:	~~August~~February 24, ~~2021~~2022	By:	/s/ Kevin S. Miller
		Kevin S. Miller, Chief Financial Officer, its principal	~~Kevin S. Miller, Chief Financial Officer, its principal~~
		financial officer and principal accounting officer	~~financial officer and principal accounting officer~~

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