Summary

• I see more clarity that Monmouth will be in a position to meaningfully grow its AFFO per share going forward.
• When I look at Monmouth’s dividend history, it appears the company is acting more like a utility than a REIT.
• I need a dividend booster, not just a share price rooster.

Late last year I voiced my interest in buying shares in Monmouth Real Estate (NYSE:MNR); however, my sentiment was guarded (latest article here):

I must maintain discipline and focus on dividend safety.

Monmouth's latest earnings results were recently announced and I'm warming up to the New Jersey-based REIT. Here are a few highlights:

• Core funds from operations for Q1-15 were $8.5 million or $0.15 per diluted share. This compares to core FFO for the same period one year ago of $6.7 million or $0.15 per diluted share. Excluding securities gains realized during the quarter, core FFO was $8.1 million or $0.14 per diluted share as compared to $6.6 million or $0.15 per diluted share one year ago.
• Adjusted funds from operations (or AFFO) which excludes securities gains or losses and excludes lease termination income, were $0.14 per diluted share for the quarter compared to $0.15 per diluted share in the prior-year period. On a sequential basis, AFFO per share increased 17% over the prior quarter.

One of my big push-backs for Monmouth has been dividend coverage and as a result of the company's substantial recent acquisition activity (as well as our large acquisition pipeline), I see more clarity that the company will be in a position to meaningfully grow its AFFO per share going forward.

• Monmouth's rental and reimbursement revenues for the quarter were $17.7 million compared to $15.7 million or an increase of 13% from the previous year. Net operating income (or NOI) - defined as recurring rental and reimbursement revenues less property taxes and operating expenses - was $14.7 million for the quarter reflecting a 14% increase from the comparable period a year ago. Net income was $5.4 million for the first quarter compared to $4.3 million in the previous year's first quarter representing a 26% increase.
• Occupancy for the first quarter remained relatively unchanged at 96.3% as compared to 96.4% in the prior-year period. Monmouth's average lease maturity (at quarter end) was 7.1 years as compared to 6.8 years representing an increase of 4%.

Dividend Safety

As of the end of the quarter, Monmouth's capital structure consisted of approximately $365 million in debt, of which $325 million was property-level fixed-rate mortgage debt and $40 million were loans payable. Around 94% of debt is fixed-rate with the weighted-average interest rate of 5.2% (as compared to 5.3% in the prior-year period).

Read More at: Seeking Alpha.