SUMMARY

This summary of the material information contained in this joint proxy statement/prospectus may not include all the information that is important to you. To understand fully the proposed merger, and for a more detailed description of the terms and conditions of the merger and other matters being considered at your meeting, you should read this entire joint proxy statement/prospectus and the documents to which we have referred you. See “Where You Can Find More Information,” beginning on page 190 of this joint proxy statement/prospectus. We have included references parenthetically in this summary to direct you to a more detailed description of each topic presented in this summary.

The Companies

Monmouth Real Estate Investment Corporation, or Monmouth REIT, is a Maryland corporation that operates as a real estate investment trust, which we refer to as a REIT, under Sections 856-860 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, specializing in net-leased industrial properties. Monmouth REIT’s equity portfolio consists of forty-two industrial properties and one shopping center located in New Jersey, New York, Connecticut, Maryland, Michigan, Mississippi, Missouri, Massachusetts, Iowa, Illinois, Nebraska, North Carolina, South Carolina, Kansas, Pennsylvania, Florida, Virginia, Ohio, Wisconsin, Arizona, Georgia, and Colorado. In addition, Monmouth REIT owns a portfolio of REIT securities.

Monmouth Capital Corporation, or Monmouth Capital, is a New Jersey corporation organized in 1961 that operates as a REIT, deriving its income primarily through real estate rental operations and from dividend and interest income. Monmouth Capital’s equity portfolio consists of thirteen industrial properties in Florida, Georgia, Illinois, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Texas and Virginia. Monmouth Capital also owns a portfolio of REIT securities.

Route 9 Acquisition, Inc., or Route 9, is a New Jersey corporation, recently organized as a wholly-owned subsidiary of Monmouth REIT solely for the purpose of effecting the merger. Currently, Route 9 has no material assets and has not engaged in any activities except in connection with the execution of the merger agreement.

The address and telephone number of the principal executive offices of Monmouth Capital, Monmouth REIT and Route 9 are Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey 07728, 732-577-9996.

The Merger (page 56)

In the merger, Route 9 will merge with and into Monmouth Capital on the terms set forth in the merger agreement and Monmouth Capital will survive the merger transaction as a wholly-owned subsidiary of Monmouth REIT. As part of the merger transaction, each outstanding share of Monmouth Capital common stock, par value $1.00 per share, will be converted into and exchanged for the right to receive 0.655 shares of Monmouth REIT common stock, par value $0.01 per share, in accordance with the merger agreement. Following the merger, Monmouth Capital’s outstanding convertible debentures will remain outstanding and will become convertible into shares of Monmouth REIT common stock at a conversion price adjusted to reflect the exchange ratio. The new conversion prices will be $9.16 per share for Monmouth Capital’s 8% Convertible Subordinated Debentures due 2013 and $11.45 per share for Monmouth Capital’s 8% Convertible Subordinated Debentures due 2015. Each outstanding option to purchase shares of Monmouth Capital common stock, whether or not vested at the effective time of the merger, will become exercisable in accordance with its terms for a number of shares of Monmouth REIT common stock, at an exercise price adjusted to reflect the exchange ratio, and will remain subject to the same terms and conditions of vesting as in effect immediately before the effective time of the merger. Upon completion of the merger, Monmouth Capital common stock, which is listed on the NASDAQ Global Market under the symbol “MONM,” will be delisted.

 

Merger Consideration (page 96)

Holders of Monmouth Capital common stock (other than Monmouth REIT, Route 9 and any other subsidiary of Monmouth REIT) will be entitled to receive 0.655 shares of Monmouth REIT common stock for each share of Monmouth Capital common stock that they own immediately before the effective time of the merger, in accordance with the merger agreement. As a result, Monmouth REIT will issue approximately 3,757,650 shares of its common stock in the merger, based on the number of shares of Monmouth Capital common stock outstanding as of the record date for the Monmouth Capital special meeting of stockholders. We refer to the stock consideration to be paid to Monmouth Capital common stockholders by Monmouth REIT as the merger consideration.

The total value of the merger consideration that a Monmouth Capital common stockholder will receive in the merger is not fixed and will depend on the value of 0.655 shares of Monmouth REIT common stock at the effective time of the merger. This value may be obtained by multiplying the trading price of Monmouth REIT common stock at the effective time of the merger by 0.655.

As illustrated in the table below, the value of 0.655 shares of Monmouth REIT common stock may be less than or greater than $5.71, which was the value of 0.655 shares of Monmouth REIT common stock as of March 26, 2007, the day we announced the merger, based on the closing price of Monmouth REIT common stock as of March 26, 2007. In particular, if the closing price of Monmouth REIT common stock upon completion of the merger is greater than $8.72, then the value of 0.655 shares of Monmouth REIT common stock will be greater than $5.71. If the closing price of Monmouth REIT common stock upon completion of the merger is less than $8.72, then the value of 0.655 shares of Monmouth REIT common stock will be less than $5.71.

 

Closing Price of Monmouth REIT Common Stock		Value of per-share merger consideration
$  7.70		$5.04
7.80		5.11
7.90		5.17
8.00		5.24
8.10		5.31
8.20		5.37
8.30		5.44
8.40		5.50
8.50		5.57
8.60		5.63
8.70		5.70
8.72		5.71
8.80		5.76
8.90		5.83
9.00		5.90
9.10		5.96
9.20		6.03
9.30		6.09
9.40		6.16
9.50		6.22
9.60		6.29
9.70		6.35
9.80		6.42
9.90		6.48
10.00		6.55

 

No fractional shares of Monmouth REIT common stock will be issued in the merger. Each Monmouth Capital common stockholder immediately before the effective time of the merger who would otherwise have been entitled to receive a fraction of a share of Monmouth REIT common stock in the merger (after taking into account all shares of Monmouth Capital common stock surrendered by the stockholder in the merger) will receive, in lieu of a fraction of a share of Monmouth REIT common stock, cash (rounded up to the nearest whole cent and without interest) in an amount equal to the fraction of a share of Monmouth REIT common stock multiplied by the average closing price of Monmouth REIT common stock on the NASDAQ Global Select Market during the ten trading-day period ending two trading days before the closing date of the merger.

Reasons for the Merger and Recommendations to Stockholders (page 64 for Monmouth REIT and page 75 for Monmouth Capital)

Monmouth REIT’s board of directors, for the reasons discussed under the caption “The Merger—Recommendation of Monmouth REIT’s Board of Directors and its Reasons for the Merger,” has determined that the merger transaction is in the best interest of Monmouth REIT and recommends that Monmouth REIT common stockholders vote FOR the proposal to approve the merger transaction.

Monmouth Capital’s board of directors, for the reasons discussed under the caption “The Merger—Recommendation of Monmouth Capital’s Board of Directors and its Reasons for the Merger,” has determined that the merger agreement and the merger on the terms set forth in the merger agreement are fair to, and in the best interest of, Monmouth Capital common stockholders and recommends that Monmouth Capital common stockholders vote FOR the proposal to approve the merger agreement and the merger on the terms set forth in merger agreement.

We encourage you to read the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus, because it governs the merger and sets forth the terms of the merger of Route 9 with and into Monmouth Capital.

Opinions of Financial Advisors (page 66 for Monmouth REIT and page 77 for Monmouth Capital)

The Monmouth REIT Special Committee . Cohen & Steers Capital Advisors, LLC, which we refer to as Cohen & Steers, delivered its opinion to the special transaction committee of the board of directors of Monmouth REIT, which we refer to as the Monmouth REIT Special Committee, that, as of the date of Cohen & Steers’ written fairness opinion and based upon and subject to the factors and assumptions set forth therein, the exchange ratio of 0.655 shares of Monmouth REIT common stock to be issued in exchange for each share of Monmouth Capital common stock in accordance with the merger agreement is fair from a financial point of view to the holders of Monmouth REIT common stock.

The full text of the written opinion of Cohen & Steers, dated March 26, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with its opinion, is attached as Annex C to this joint proxy statement/prospectus. Cohen & Steers provided its opinion for the information and assistance of the Monmouth REIT Special Committee in connection with its consideration of the merger. The Cohen & Steers opinion is not a recommendation as to how any holder of Monmouth REIT common stock should vote with respect to the proposal to approve the merger transaction.

The Monmouth Capital Special Committee . Ferris, Baker Watts, Incorporated, which we refer to as FBW, delivered its opinion to the special transaction committee of the board of directors of Monmouth Capital, which we refer to as the Monmouth Capital Special Committee, that, as of the date of FBW’s written fairness opinion and based upon and subject to the factors and assumptions set forth therein, the exchange ratio of 0.655 shares of Monmouth REIT common stock to be issued in exchange for each share of Monmouth Capital common stock in

 

accordance with the merger agreement is fair from a financial point of view to the Monmouth Capital stockholders other than Monmouth REIT and those Monmouth Capital stockholders that are significant holders of Monmouth REIT common stock.

The full text of the written opinion of FBW, dated March 26, 2007, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with its opinion, is attached as Annex D to this joint proxy statement/prospectus. FBW provided its opinion for the information and assistance of the Monmouth Capital Special Committee in connection with its consideration of the merger. The FBW opinion is not a recommendation as to how any holder of Monmouth Capital common stock should vote with respect to the merger.

Monmouth REIT’s Board of Directors after the Merger (page 97)

Upon completion of the merger, the number of directors of Monmouth REIT will be increased to thirteen, and Anna T. Chew, Joshua Kahr, Michael P. Landy and Eugene D. Rothenberg, currently members of Monmouth Capital’s board of directors, will be appointed to Monmouth REIT’s board of directors. The directors of Monmouth REIT will also serve as the directors of Monmouth Capital after the merger.

Ownership of Monmouth REIT after the Merger (page 96)

Based on the number of shares of Monmouth REIT and Monmouth Capital common stock outstanding on the record date for the Monmouth Capital special meeting of stockholders, after completion of the merger, Monmouth REIT expects to issue approximately 3,757,650 shares of Monmouth REIT common stock which will represent approximately 19% of the fully-diluted shares of Monmouth REIT common stock.

The Monmouth REIT Annual Meeting of Stockholders (page 43)

The Monmouth REIT annual meeting of stockholders will take place on Thursday, July 26, 2007, at 2:00 p.m., local time, at the offices of Monmouth REIT, located at Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey. At the Monmouth REIT annual meeting of stockholders, Monmouth REIT common stockholders will be asked to:

 

•

Elect three directors, each to hold office until the Monmouth REIT annual meeting of stockholders in 2010 and until his or her successor is duly elected and qualifies;

 

•

Consider and vote on a proposal to approve the merger transaction, including the issuance of shares of Monmouth REIT common stock in the merger to stockholders of Monmouth Capital, on the terms set forth in the merger agreement;

 

•

Consider and vote on a proposal to approve Monmouth REIT’s 2007 Stock Option Plan; and

 

•

Consider and vote on a proposal to approve the appointment of Reznick Group, P.C. as Monmouth REIT’s independent registered public accounting firm for the fiscal year ending September 30, 2007.

Monmouth REIT common stockholders may vote at the Monmouth REIT annual meeting of stockholders if they owned shares of Monmouth REIT common stock of record at the close of business on June 1, 2007, the record date for the annual meeting. With respect to the election of directors, Monmouth REIT common stockholders may vote for as many individuals as there are directors to be elected for each share of Monmouth REIT common stock registered in their names as of the record date and, with respect to all other matters, Monmouth REIT common stockholders may cast one vote for each share of Monmouth REIT common stock registered in their names as of the record date. As of the record date for the annual meeting, there were 20,212,990 shares of Monmouth REIT common stock outstanding and entitled to vote at the annual meeting and holders of Monmouth REIT common stock were entitled to cast a total of 20,212,990 votes.

 

The proposal to approve the merger transaction, the proposal to approve Monmouth REIT’s 2007 Stock Option Plan and the proposal to approve the appointment of Reznick Group, P.C. as Monmouth REIT’s independent registered public accounting firm for the fiscal year ending September 30, 2007 must each be approved by a majority of the votes cast on the proposal by Monmouth REIT common stockholders. A plurality of the votes cast at the Monmouth REIT annual meeting of stockholders in the election of directors is required to elect a director.

The Monmouth Capital Special Meeting of Stockholders (page 53)

The Monmouth Capital special meeting of stockholders will be held on Thursday, July 26, 2007, at 10:00 a.m., local time, at the offices of Monmouth Capital, located at Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey. At the Monmouth Capital special meeting of stockholders, Monmouth Capital common stockholders will be asked to approve the merger agreement and the merger on the terms set forth in the merger agreement.

Monmouth Capital common stockholders may vote at the Monmouth Capital special meeting of stockholders if they owned shares of Monmouth Capital common stock of record at the close of business on June 1, 2007, the record date for the special meeting. As of the record date for the special meeting, there were 5,736,849 shares of Monmouth Capital common stock outstanding and entitled to vote at the special meeting, and holders of Monmouth Capital common stock were entitled to cast a total of 5,736,849 votes. The proposal to approve the merger agreement and the merger on the terms set forth in the merger agreement must be approved by the affirmative vote of a majority of the shares of Monmouth Capital common stock represented in person or by proxy at the Monmouth Capital special meeting of stockholders.

Dissenters’ Rights (page 93)

Under applicable Maryland and New Jersey law, neither Monmouth REIT nor Monmouth Capital common stockholders are entitled to dissenters’ or appraisal rights in connection with the merger, the issuance of shares of Monmouth REIT common stock in accordance with the merger agreement or the consummation of any of the other transactions contemplated by the merger agreement.

Comparison of Rights of Stockholders (page 179)

As a result of the merger, the holders of Monmouth Capital common stock will become holders of Monmouth REIT common stock. Following the merger, Monmouth Capital common stockholders will have different rights as stockholders of Monmouth REIT than as stockholders of Monmouth Capital due to differences between the laws of the states of incorporation, charter or certificate of incorporation and bylaws of Monmouth REIT and Monmouth Capital.

The material differences between the rights of Monmouth REIT common stockholders and Monmouth Capital common stockholders are described under the caption “Comparison of Rights of Stockholders.”

Comparative Per Share Data and Comparative Market Prices (page 24)

The following table sets forth the closing sale prices of Monmouth REIT and Monmouth Capital common stock as reported on the NASDAQ Global Select Market and NASDAQ Global Market, respectively, on March 26, 2007, the last trading day before the announcement of the merger agreement, and on June 1, 2007, the last trading day before the printing of this joint proxy statement/prospectus for which it was practicable to obtain this information. This table also shows the equivalent per share price of Monmouth Capital common stock.

 

Date		Closing Price of Monmouth REIT Common Stock			Closing Price of Monmouth Capital Common Stock			Value of per-share merger consideration
March 26, 2007		$	8.72		$	5.66		$	5.71
June 1, 2007		$	8.71		$	5.58		$	5.71

 

The market price of Monmouth REIT common stock will change before the merger, while the exchange ratio is fixed. You should obtain current stock price quotations for Monmouth REIT and Monmouth Capital common stock. You can get these quotations from a newspaper, on the Internet or by calling your broker.

Stock Ownership of Directors and Executive Officers (page 114 for Monmouth REIT and page 167 for Monmouth Capital)

Monmouth REIT . As of the record date for the Monmouth REIT annual meeting of stockholders, there were 20,212,990 shares of Monmouth REIT common stock outstanding and entitled to vote at the annual meeting, and the directors and executive officers of Monmouth REIT and their affiliates beneficially owned and were entitled to vote 1,552,018 shares of Monmouth REIT common stock, collectively representing approximately 8% of the shares of Monmouth REIT common stock outstanding as of the record date.

Monmouth Capital . As of the record date for the Monmouth Capital special meeting of stockholders, there were 5,736,849 shares of Monmouth Capital common stock outstanding and entitled to vote at the special meeting, and the directors and executive officers of Monmouth Capital and their affiliates beneficially owned and were entitled to vote 378,116 shares of Monmouth Capital common stock, collectively representing approximately 7% of the shares of Monmouth Capital common stock outstanding as of the record date.

Interests of Monmouth REIT Directors and Executive Officers in the Merger (page 85)

In considering the recommendation of Monmouth REIT’s board of directors with respect to the merger transaction, Monmouth REIT common stockholders should be aware that certain directors and executive officers of Monmouth REIT have interests in the merger that may be different from, or in addition to, the interests of Monmouth REIT common stockholders generally. These interests include rights under employment agreements with Monmouth Capital, ownership of Monmouth Capital securities, positions on the post-merger board of directors of Monmouth REIT and rights to continued indemnification. In addition, many of the directors and executive officers of Monmouth REIT are also directors or executive officers of Monmouth Capital. The Monmouth REIT Special Committee and Monmouth REIT’s board of directors were aware of these interests and considered them, among other matters, when approving the merger agreement and the merger.

Interests of Monmouth Capital Directors and Executive Officers in the Merger (page 89)

In considering the recommendation of Monmouth Capital’s board of directors with respect to the merger agreement and the merger, Monmouth Capital common stockholders should be aware that certain executive officers and directors of Monmouth Capital have interests in the merger that may be different from, or in addition to, the interests of Monmouth Capital common stockholders generally. These interests include rights of Monmouth Capital’s executive officers under employment agreements with Monmouth Capital, ownership of Monmouth REIT common stock and rights to continued indemnification by Monmouth REIT after the merger. In addition, many of the members of Monmouth Capital’s board of directors are also directors of Monmouth REIT. Monmouth Capital’s board of directors was aware of these interests and considered them, among other matters, when approving the merger agreement and the merger.

Conditions to Completion of the Merger (page 101)

As more fully described in this joint proxy statement/prospectus and the merger agreement, the completion of the merger depends on the satisfaction or waiver of a number of conditions, including:

 

•

the approval of both Monmouth REIT and Monmouth Capital common stockholders;

 

•

the absence of any injunction or other order prohibiting the consummation of the merger by a court, governmental entity or provision of law;

 

•

the listing on the NASDAQ Global Select Market of the shares of Monmouth REIT common stock to be issued in the merger; and

 

•

the registration statement of which this joint proxy statement/prospectus forms a part having become effective and not being subject to any stop order or proceeding seeking a stop order.

Monmouth REIT’s and Route 9’s obligations to effect the merger are separately subject to satisfaction or waiver of certain other conditions, including the following:

 

•

the representations and warranties of Monmouth Capital being true and correct, subject to the materiality standards contained in the merger agreement;

 

•

Monmouth Capital’s performance of and compliance with, in all material respects, all agreements and covenants required by the merger agreement;

 

•

there not having occurred an event that has, or is reasonably likely to have, a material adverse effect on Monmouth Capital since March 26, 2007;

 

•

the parties to the merger agreement having obtained all permits and consents legally required to consummate the merger, subject to the materiality standards contained in the merger agreement; and

 

•

Monmouth Capital’s delivery of an opinion of tax counsel with respect to Monmouth Capital’s status as a REIT for United States federal income tax purposes.

Monmouth Capital’s obligations to effect the merger are separately subject to satisfaction or waiver of certain other conditions, including the following:

 

•

the representations and warranties of Monmouth REIT and Route 9 being true and correct, subject to the materiality standards contained in the merger agreement;

 

•

Monmouth REIT’s performance of and compliance with, in all material respects, all agreements and covenants required by the merger agreement;

 

•

there not having occurred an event that has, or is reasonably likely to have, a material adverse effect on Monmouth REIT since March 26, 2007;

 

•

the parties to the merger agreement having obtained all permits and consents legally required to consummate the merger, subject to the materiality standards contained in the merger agreement;

 

•

Monmouth REIT’s delivery of an opinion of tax counsel to the effect that the merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code; and

 

•

Monmouth REIT’s delivery of an opinion of tax counsel with respect to Monmouth REIT’s status as a REIT for United States federal income tax purposes.

Required Regulatory Approvals (page 93)

Neither Monmouth REIT nor Monmouth Capital is aware of any material regulatory approvals that are required in order to consummate the merger.

Termination of the Merger Agreement (page 102)

The boards of directors of Monmouth REIT and Monmouth Capital can agree at any time to terminate the merger agreement, even if Monmouth REIT and Monmouth Capital common stockholders have approved the merger. Either Monmouth REIT or Monmouth Capital can terminate the merger agreement if:

 

•

any governmental entity has issued a final non-appealable order, decree, judgment, injunction or taken any other action, which permanently restrains, enjoins or otherwise prohibits or makes illegal the consummation of the merger;

 

•

the merger has not occurred on or before November 15, 2007, if the failure to complete the merger by that date did not result from the failure to fulfill an obligation under the merger agreement by the party seeking termination;

 

•

Monmouth REIT common stockholders do not approve the merger transaction; or

 

•

Monmouth Capital common stockholders do not approve the merger agreement and the merger on the terms set forth in the merger agreement.

Monmouth REIT may terminate the merger agreement if:

 

•

Monmouth Capital is in breach of any of its representations, warranties, covenants or other agreements contained in the merger agreement and the breach would give rise to a failure of a condition to the consummation of the merger or Monmouth Capital suffers a material adverse effect;

 

•

Monmouth Capital enters into a definitive agreement to effect an alternative acquisition proposal;

 

•

Monmouth Capital’s board of directors recommends that Monmouth Capital common stockholders accept or approve any alternative acquisition proposal; or

 

•

Monmouth Capital’s board of directors withdraws or modifies its recommendation that Monmouth Capital common stockholders vote to approve the merger agreement and the merger on the terms set forth in the merger agreement.

In addition, Monmouth Capital may terminate the merger agreement if:

 

•

Monmouth REIT is in breach of any of its representations, warranties, covenants or other agreements contained in the merger agreement and the breach would give rise to a failure of a condition to the consummation of the merger or Monmouth REIT suffers a material adverse effect; or

 

•

Monmouth Capital enters into a definitive agreement to effect certain alternative acquisition proposals, if it has complied with certain obligations relating to nonsolicitation of alternative acquisition proposals and has paid the termination fee described below.

Termination Fees and Expenses (page 103)

Monmouth Capital agreed to pay to Monmouth REIT a termination fee of $1 million, less the amount of any of Monmouth REIT’s termination costs and expenses that have already been paid by Monmouth Capital (up to a maximum of $500,000), if the merger agreement is terminated under any of the circumstances described under the caption “The Merger Agreement—Termination Fees and Expenses.”

No Solicitation of Alternative Acquisition Proposals by Monmouth Capital (page 99)

Subject to certain exceptions, the merger agreement precludes Monmouth Capital or any of its subsidiaries, whether directly or indirectly through its officers, directors, employees, agents or representatives, from soliciting, encouraging, initiating or facilitating any inquiries that could reasonably be expected to lead to, participating in any discussions or negotiations regarding or entering into any agreement with respect to, any third party’s proposal with respect to the acquisition of assets representing 20% or more of the consolidated assets of Monmouth Capital or of an equity interest representing a 20% or greater economic interest in Monmouth Capital, its subsidiaries, or its assets.

Material United States Federal Income Tax Consequences (page 93)

The merger is intended to qualify as a reorganization under the Internal Revenue Code so that, assuming the merger does qualify, Monmouth Capital common stockholders will not recognize any gain or loss upon the

 

conversion and exchange of their shares of Monmouth Capital common stock for shares of Monmouth REIT common stock in the merger, although they will recognize gain (or loss) for United States federal income tax purposes as a result of the merger to the extent of any cash received in lieu of a fractional share of Monmouth REIT common stock. We anticipate that the merger will have no material United States federal income tax consequences to Monmouth REIT stockholders who do not own any shares of Monmouth Capital common stock.

The tax consequences to you of the merger will depend on your own situation. You should consult your own tax advisor for a full understanding of the tax consequences to you of the merger. For more information regarding the tax consequences of the merger to Monmouth Capital common stockholders, please see “The Merger—Material United States Federal Income Tax Consequences of the Merger.”

Accounting Treatment (page 92)

Monmouth REIT will account for the merger as a purchase by Monmouth REIT of Monmouth Capital for financial reporting purposes, as required by Statement of Financial Accounting Standards No. 141. Under that method of accounting, the aggregate merger consideration paid, merger costs incurred and the fair value of Monmouth Capital options will be allocated to the fair value of the assets acquired and liabilities assumed in the merger.

Risks (page 25)

In evaluating the merger, the merger agreement or the issuance of shares of Monmouth REIT common stock in the merger, you should carefully read this joint proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors,” beginning on page 25 of this joint proxy statement/prospectus.

 

FINANCIAL SUMMARY

Selected Historical Financial Data of Monmouth REIT

The following table shows selected historical financial data for Monmouth REIT. The data as of and for each of the five years ended September 30, 2006, was derived from Monmouth REIT’s audited consolidated financial statements. The income statement data for the six months ended March 31, 2007 and 2006, and the balance sheet data at March 31, 2007, was derived from Monmouth REIT’s unaudited financial statements.

Detailed historical financial information is included in the audited consolidated balance sheets of Monmouth REIT as of September 30, 2006 and 2005, and the related consolidated statements of income, shareholders’ equity and comprehensive income and cash flows for each of the years in the three-year period ended September 30, 2006, included in Monmouth REIT’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 14, 2006, as well as Monmouth REIT’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, filed with the SEC on May 9, 2007. You should read the following selected financial data together with Monmouth REIT’s historical consolidated financial statements, including the related notes, and the other information contained or incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

		Six Months ended March 31,						For the Year ended September 30,
		2007 (unaudited)			2006 (unaudited)			2006				2005				2004			2003			2002
OPERATING DATA:
Rental and Occupancy Charges		$	13,956,265		$	13,039,651		$	26,533,882			$	24,302,300			$	21,048,278		$	19,412,732		$	15,898,542
Gains on Securities Transactions, Net			34,596			321,641			50,983				1,541,952				1,714,395			1,018,862			909,704
Interest and Dividend Income			581,087			566,172			1,028,151				1,525,325				1,801,107			1,688,448			1,027,220
Total Expenses			7,436,314			6,459,188			13,077,627				11,788,655				10,215,318			9,423,083			7,443,225
(Loss) on Sales of Assets—
Investment Property			-0-			-0-			(28,385	)			-0-				-0-			-0-			(175,376	)
Income from Equity Investment			-0-			-0-			-0-				82,500				110,000			110,000			110,000
Gain on Dissolution of Equity Investment			-0-			-0-			-0-				1,269,179	1			-0-			-0-			-0-
Interest Expense			4,163,486			4,070,150			8,298,077				8,001,956				6,979,007			6,906,078			6,059,415
Income from Continuing Operations			2,978,381			3,398,126			6,237,312				8,930,645				7,479,455			5,900,881			4,442,826
Net Income			2,978,381			3,324,329			6,165,588				9,046,822				7,672,635			6,120,343			4,478,145
Income from Continuing Operations Per Share Basic and Diluted			0.15			0.17			0.32				0.50				0.46			0.43			0.40
Net Income Per Common Share— Basic			0.11			0.17			0.32				0.50				0.47			0.44			0.40
Diluted			0.11			0.17			0.31				0.50				0.47			0.44			0.40
		At March 31,						At September 30,
		2007 (unaudited)			2006 (unaudited)			2006				2005				2004			2003			2002
BALANCE SHEET DATA:
Total Assets		$	258,731,610		$	229,791,374		$	241,906,933			$	217,841,402			$	195,487,662		$	183,173,874		$	149,011,493
Real Estate Investments, Net			224,071,593			208,384,347			220,210,796				191,744,473				166,879,808			152,770,335			129,107,256
Securities Available for Sale			14,239,422			11,612,833			10,395,767				13,789,400				23,084,270			25,421,551			15,223,942
Mortgage Notes Payable			118,412,384			118,140,534			122,194,039				111,968,518				97,530,963			90,909,299			78,220,163
Shareholders’ Equity			136,224,635			106,459,732			107,566,977				102,560,241				92,907,840			78,313,289			59,005,016

 

		Six Months ended March 31,								For the Year ended September 30,
		2007 (unaudited)				2006 (unaudited)				2006				2005				2004				2003				2002
CASH FLOW DATA:
Net Cash Provided (Used) By:
Operating Activities		$	6,616,229			$	5,865,388			$	11,991,556			$	11,429,276			$	10,385,410			$	9,725,898			$	6,792,043
Investing Activities			(11,536,431	)			(18,167,739	)			(32,691,106	)			(19,643,014	)			(15,215,218	)			(35,417,062	)			(30,564,641	)
Financing Activities			13,116,795				8,191,148				16,806,026				13,211,677				4,684,267				26,068,148				24,318,591
OTHER INFORMATION:
Average Number of Common Shares Outstanding—Basic			20,208,618				19,185,255				19,555,278				17,967,360				16,206,433				13,844,056				11,177,294
Cash Dividends Per Common Share		$	0.30			$	0.30			$	0.60			$	0.58			$	0.58			$	0.58			$	0.58

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Notes:

 

1.

The results for the year ended September 30, 2005, included a one-time gain on the dissolution of the investment in Hollister ‘97, LLC. On June 27, 2005, Hollister ‘97, LLC sold Hollister Corporate Park for a selling price of approximately $13,800,000. Simultaneous with the sale, Monmouth REIT withdrew from Hollister ‘97, LLC. Upon withdrawal, Monmouth REIT received $2,169,578, resulting in a gain of $1,269,179.

 

Selected Historical Financial Data of Monmouth Capital

The following table shows selected historical financial data for Monmouth Capital. The data as of and for each of the five years ended December 31, 2006, was derived from Monmouth Capital’s audited consolidated financial statements. The income statement data for the three months ended March 31, 2007 and 2006, and the balance sheet data for the three months ended March 31, 2007 and 2006 was derived from Monmouth Capital’s unaudited financial statements.

Detailed historical financial information is included in the consolidated balance sheets as of December 31, 2006 and 2005, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2006, and you should read the following selected financial data together with Monmouth Capital’s historical consolidated financial statements, including the related notes, and the other information contained in this joint proxy statement/prospectus. See “Consolidated Financial Statements of Monmouth Capital Corporation.”

 

		Three Months ended March 31,							For the Year ended December 31,
		2007 (unaudited)				2006 (unaudited)			2006				2005				2004				2003				2002
OPERATING DATA:
Rental Income and Reimbursements		$	1,695,177			$	1,425,049		$	6,111,082			$	4,881,491			$	2,835,614			$	1,734,583			$	1,016,513
Interest and Dividend Income			158,413				181,775			722,288				1,135,290				1,247,988				1,091,924				1,247,379
Sales of Manufactured Homes			-0-				-0-			51,425				79,305				165,324				269,690				394,500
Gain on Securities Transactions, Net			624,058				156,594			87,956				644,674				815,844				710,491				181,002
Total Expenses			1,798,662				1,503,542			6,425,340				5,386,767				3,936,849				2,425,468				2,239,932
Minority Interest			54,147				60,130			195,918				186,779				134,730				98,829				45,507
Net Income			624,829				199,746			358,776				1,167,261				1,237,361				1,283,432				554,638
Average Number of Shares Outstanding
Basic			5,704,939				4,754,898			5,177,777				4,142,355				3,362,018				2,824,809				1,924,860
Diluted			5,727,773				4,780,863			5,202,376				4,175,929				3,404,950				3,747,584				1,941,477
Net Income per Share—Basic		$	0.11			$	0.04		$	0.07			$	0.28			$	0.37			$	0.45			$	0.29
Net Income per Share—Diluted		$	0.11			$	0.04		$	0.07			$	0.28			$	0.36			$	0.34			$	0.29
		At March 31,							At December 31,
		2007 (unaudited)				2006 (unaudited)			2006				2005				2004				2003				2002
BALANCE SHEET DATA:
Total Assets		$	79,703,810			$	70,371,637		$	75,742,364			$	69,254,054			$	54,149,086			$	41,569,008			$	27,101,532
Real Estate Investments, Net			67,225,465				54,652,131			61,171,411				54,609,067				39,054,571				23,088,247				11,849,213
Securities Available for Sale			4,397,591				7,650,981			8,205,110				8,107,492				12,130,692				15,443,909				12,844,937
Loans Receivable, Net			562,223				787,382			617,476				868,543				1,145,922				1,515,625				1,888,094
Mortgages Payable			33,555,931				30,715,161			29,852,441				30,977,186				21,663,355				15,889,239				8,616,405
Convertible Subordinated Debentures			15,490,000				15,740,000			15,490,000				15,740,000				5,370,000				-0-				-0-
Shareholders’ Equity			22,438,901				20,157,045			21,908,317				18,439,983				15,446,093				12,371,005				9,110,010
		Three Months ended March 31,							For the Year Ended December 31,
		2007 (unaudited)				2006 (unaudited)			2006				2005				2004				2003				2002
CASH FLOW DATA:
Net Cash Provided by
Operating Activities		$	1,015,578			$	992,767		$	2,003,980			$	1,768,790			$	1,428,602			$	898,188			$	1,401,577
Net Cash Used by
Investing Activities			(2,846,795	)			557,278			(7,110,353	)			(14,537,039	)			(13,085,511	)			(13,190,104	)			(5,018,312	)
Net Cash Provided by
Financing Activities			3,275,567				199,464			5,025,712				13,974,554				11,876,504				12,431,908				3,183,391
OTHER DATA:
Cash Dividends per Share			0.25				0.25			0.50				0.50				0.50				0.40				0.35