Monmouth CEO Says Pace of Acquisitions by REIT Will Continue

Michael Landy, president and CEO of Monmouth Real Estate Investment Corp. (NYSE: MNR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

Monmouth currently has an acquisition pipeline of 2.3 million square feet in place, representing $250 million in class-A industrial space. By the end of the 2015 fiscal year on Sept. 30, Monmouth will have increased its gross leasable area by 30 percent. Landy said the company is also anticipating double-digit growth in 2016.

Landy noted that the firm only invests in single-tenant industrial facilities. Monmouth targets investment-grade tenants for long-term leases.

“We’re very picky at Monmouth,” Landy said.

Turning to the potential for interest rate hikes, Landy acknowledged that Monmouth has benefited from the extended period of low rates. The low rate environment has enabled the firm to cut its highest costs, interest expenses. Looking ahead, Landy emphasized that Monmouth used the opportunity to lock in long-term financing.

“The benefits of this extended period of low interest rates will be felt for many years to come, long after the inevitable tightening begins,” he said. “One day, we’ll look back on this period of negative short-term interest rates and say, ‘Did that actually happen?’”

However, the market is sending a message that it wants to see higher-yielding REITs going forward, according to Landy.

Another key variable for the industrial real estate is the growth of rapid-delivery services. The continued migration in retail toward e-commerce has driven up demand for industrial space and is creating synergies in the marketplace. For example, Monmouth recently acquired a property in Indianapolis that is being leased to cosmetics retailer ULTA as an e-commerce fulfillment center. Orders from the ULTA site will be shipped out for delivery through one of Monmouth’s other assets in the area, a facility at the Indianapolis International Airport leased to FedEx.