Logo of jester cap with thought bubble with words 'Fool Transcripts' below it

Image source: The Motley Fool.

Monmouth Real Estate Investment Corporation (NYSE:MNR)
Q4 2018 Earnings Conference Call
November 29, 2018, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. And welcome to Monmouth Real Estate Investment Corporation's fourth quarter and fiscal year-end 2018 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the * key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press * then 1 on your touchtone phone. To withdraw your question, please press * then 2. Please note this event is being recorded. It is now my pleasure to introduce your host, Ms. Susan Jordan, Vice President, Investor Relations. Thank you, Ms. Jordan. You may begin.

Susan Jordan -- Vice President, Investor Relations

Thank you very much, Operator. In addition to the 10-K that we filed with the SEC yesterday, we have filed an unaudited annual and fourth quarter supplemental information presentation. This supplemental information presentation along with our 10-K are available on the Company's website at mreic.reit. I would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's annual 2018 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements.

I would now like to introduce management with us today, Eugene Landy, Chairman; Michael Landy, President and Chief Executive Officer; Kevin Miller, Chief Financial Officer; and Richard Molke, Vice President of Asset Management. It is now my pleasure to turn the call over to Monmouth's President and Chief Executive Officer, Michael Landy.

Michael Landy -- President, Chief Executive Officer

Thanks, Susan. Good morning, everyone. And thank you for joining us. We are pleased to report our results for the fiscal year ended September 30th. Fiscal 2018 was an excellent year for Monmouth. During the year, we acquired seven brand-new Class A built-to-suit industrial properties containing 2.7 million total square feet for $282.3 million. These seven acquisitions generate annualized rental revenue of $17.4 million and have a weighted average lease maturity of 11.4 years. We continue to experience strong demand for our properties with an occupancy rate above 99% achieved for the third consecutive year. This year, we generated AFFO per-share growth of 14.5% with our most recent quarter representing a 4.8% increase over the prior-year period. During 2018, we also completed two expansion projects for approximately $3.5 million. These properties are located in Indiana and South Carolina and are both leased to FedEx Ground.

These expansions resulted in $367 thousand in increased annual rents and 10-year lease extensions from their respective dates of completion. We also sold four properties during the year, generating a realized gain of $7.5 million on a GAAP basis and a $1.2 million gain over our original un-depreciated cost-basis. During the fourth quarter, we acquired two properties for $108.3 million, comprising brand-new Class A built-to-suit distribution centers with approximately 639 thousand total square feet. The first acquisition for $47.2 million consisted of a 265 thousand square foot distribution center situated on 49 acres in Charleston, South Carolina and leased to FedEx Ground for 15 years. With this acquisition, we now have four properties located in Charleston which is the home to one of the fastest growing ports in North America.

We also acquired for $61.1 million a brand-new 374 thousand square foot distribution center situated on 93 acres in the Atlanta market and leased to FedEx Ground for 15 years. This large 93-acre site has substantial future expansion capacity and is located right off of Interstate 85. Subsequent to fiscal year-end, we acquired another property for $85.2 million, consisting of a newly built 347 thousand square foot distribution center situated on 62 acres in Trenton, New Jersey. This property is leased to FedEx Ground for 15 years with approximately 14 years remaining. With this acquisition, our total portfolio has a gross leasable area of 21.5 million square feet, a weighted average building age of 8.6 years, a land-to-building ratio of 5.2 to 1, and a weighted average lease term of 8.2 years. Approximately 80% of our rental revenue is generated from investment-grade tenants with the remaining 20% generated from strong, unrated companies.

With regard to our current acquisition pipeline, we've entered into agreements to purchase two properties for $68.7 million comprising new Class A built-to-suit industrial buildings with 398 thousand square feet and residing on 69 acres. Both of these properties are leased to FedEx Ground and have a weighted average lease term of 13.4 years. Subject to satisfactory due diligence, we anticipate closing each of these two transactions upon completion and occupancy which is expected to be during the first quarter of 2019 and during the first half of fiscal 2020, respectively. During fiscal 2018, we raised approximately $90 million in equity capital through our dividend reinvestment plan. Of this amount, a total of $12.9 million in dividends were reinvested this year, representing a 24% participation rate. We also raised $40.1 million in net proceeds through our preferred stock ATM program with a sale of $1.6 million shares for a six-and-one-eighth percent Series C preferred stock.

Subsequent to fiscal year-end, in October, we completed our first common stock offering since 2014 with a sale of 9.2 million shares, generating net proceeds of approximately $132.3 million. With regard to the overall US industrial market, our property sector continues to perform exceptionally well. Net absorption for the third quarter was 76.5 million square feet, representing the third highest quarter on record. This brings year-to-date net absorption to 203.6 million square feet, representing an 11.3% increase over the prior-year period and marking the 34th consecutive quarter of positive debt absorption. This has resulted in record-high occupancy rates and rental rates. Net absorption is expected to eclipse 230 million square feet for the fifth consecutive year. The overall economy is showing continued strength with Q3 real GDP growing at 3.5%, railcar traffic increasing by 4.9%, and intermodal traffic increasing by 5.8%, all pointing toward continued strong demand for the US industrial space market.

Tonnage moving through the expanded Panama Canal is up over 30%. And Monmouth has built up a large presence in several of the US regions that are benefiting most from this major shift in the global supply chain. This holiday season is expected to once again deliver record-breaking results for online sales. And e-commerce will continue to be a big demand driver for industrial space in the year ahead. We are working closely with some of our tenants in order to continue to capture the growth in consumer spending that is migrating online. And now, let me turn it over to Rich Molke, our vice president of asset management, so he can provide you with more detail on the property level as well as our progress on the leasing front.

Richard Molke -- Vice President of Asset Management

Thanks, Mike. With respect to our total property portfolio, end of year occupancy increased 30 basis points to 99.6% as compared to 99.3% at fiscal year-end 2017. As mentioned, our occupancy rate has averaged above 99% for the past three years now. Our weighted average lease maturity increased from 7.9 years a year ago to 8.1 years as of fiscal year-end. Our weighted average rent-per-square-foot increased to $6.01 as of fiscal year-end as compared to $5.93 at the end of fiscal 2017. From a leasing standpoint, in fiscal 2018, 16 leases totaling approximately 1.5 million square feet or 8% of our gross leasable area were scheduled to expire. As previously reported, 11 of the 16 leases totaling 1.1 million square feet or 69% of the expiring square footage have been renewed. Excluding one short-term renewal, we renewed 10 leases representing approximately 972 thousand square feet or 63% of the expiring square footage.

These ten renewals have a weighted average lease term of 6.8 years and result in an increase in the weighted average lease rate of 4.1% on a GAAP basis and 2.8% on a cash basis. Of the five remaining leases originally set to expire during fiscal 2018, three of the properties were sold, one property was retenanted, and one property is currently vacant. In fiscal 2019, approximately 7% of our gross leasable area consisting of 12 leases totaling 1.5 million square feet is scheduled to expire. While it is still early in our fiscal new year, to date, we have renewed five of these 12 leases, representing 803 thousand square feet or 54% of the 1.5 million square feet up for renewal. These renewed leases have a substantial weighted average lease term of 8.4 years. These five renewed leases have an average GAAP lease rate of $4.55 per square foot and a cash lease rate of $4.46 per square foot which represents a decrease of 5.4% on a GAAP basis and a decrease of 10.8% on a cash basis.

These five renewals represent a small dataset. And this negative leasing spread is largely the result of one property leased to United Technologies that renewed for five years. Excluding that one property results in an increase of 6.3% on a GAAP basis and an increase of 1.3% on a cash basis. We look forward to reporting progress on the remaining seven leases in the next few quarters. And now, Kevin will provide you with greater detail on our financial results.

Kevin Miller -- Chief Financial Officer

Thank you, Rich. I will start off by discussing some of our key financial indicators for the fourth quarter and then move into some of our key financial indicators for the full fiscal year. Funds from operations or FFO and core FFO for the three months ended September 30th, 2018 were $18.1 million or $0.22 per diluted share as compared to $15.4 million or $0.21 per diluted share for the same period one year ago, representing an increase in FFO and core FFO per share of 4.8%. Adjusted funds from operations or AFFO, which excludes securities gains or losses, were $17.7 million or $0.22 per diluted share for the recent quarter as compared to $15.5 million or $0.21 per diluted share a year ago, representing a 4.8% increase in AFFO per share. Rental reimbursement revenues for the quarter were $36.6 million compared to $31.2 million or an increase of 17.5% from the prior year. Same property NOI for the three months ended September 30th, 2018 increased slightly by 0.8% on a US GAAP basis and increased 0.3% on a cash basis.

Net operating income increased $4.1 million to $30.2 million for the quarter, reflecting a 15.8% increase from the comparable period a year ago. This increase was due to the additional income related to the 10 properties purchased during fiscal 2017 and the seven properties purchased during fiscal 2018. As Michael mentioned earlier, we acquired two brand-new properties containing approximately 639 thousand square feet for a total of $108.3 million during the recent quarter. Net income excluding depreciation was $21.8 million for the fourth quarter compared to $18.4 million in the prior-year period, representing an increase of 18.3%. As mentioned earlier, subsequent to our fiscal year-end, we acquired a brand-new 347 thousand square foot facility for $85.2 million situated on 62 acres in Trenton, New Jersey. This facility is leased for 15 years to FedEx Ground and was financed with a 15-year fully amortizing mortgage loan in the amount of $55 million with a fixed interest rate of 4.13%.

We expect this recently closed acquisition to positively impact our results going forward. I would now like to cover the financial results for the full fiscal year. FFO for the full fiscal year 2018 was $69.8 million or $0.89 per diluted share as compared to $54.4 million or $0.75 per diluted share for the same period a year ago representing an increase in FFO per share of 18.7%. Core FFO for the full fiscal year 2018 was $69.8 million versus $57.1 million in 2017. On a per share basis, core FFO was $0.89 per diluted share in fiscal 2018 compared to $0.79 per diluted share in 2017, representing a 12.7% increase. AFFO, which excludes securities gains or losses, was $0.87 per diluted share for fiscal 2018 as compared to $0.76 per diluted share a year ago representing a year-over-year increase of 14.5%. Over the past five years, we have grown our AFFO per diluted share at an average annual rate of 14%.

Revenue reimbursement revenues for the year were $139.2 million compared to $116.4 million or an increase of 19.6% from the prior year. Net operating income increased $18.5 million to $114.8 million for the year, reflecting a 19.3% increase from the comparable period a year ago. Net income excluding depreciation was $92.2 million for the full year compared to $69.9 million in the prior year period, representing an increase of 31.9%. Again, this improvement was driven largely by the substantial acquisition activity that has occurred over the past year. Same property NOI for the 12 months ended September 30th, 2018 decreased slightly by 0.2% on a US GAAP basis and remains flat on a cash basis. As of the end of the fiscal year, our capital structure consisted of approximately $898 million in debt, of which $711 million was property level fixed rate mortgage debt and $187 million were loans payable including $167 million in draws under our line.

79% of our mortgages and loans payable are fixed rate with the weighted average interest rate of 4.1% as compared to 4.2% in the prior-year period. We also had a total of $287 million in perpetual preferred equity at year-end. Combined with an equity market capitalization of approximately $1.4 billion, our total market capitalization was approximately $2.5 billion at year-end representing a 17% increase from our year-ago. From a credit standpoint, we continue to be conservatively capitalized with our net debt to total market capitalization at 35% and our net debt plus preferred equity to total market capitalization at 46% at year-end. For the fourth quarter ended September 30th, 2018, our fixed charge coverage was 2.4 times. And our net debt to adjusted EBITDA was 7.1 times. From a liquidity standpoint, we ended the year with $9.3 million in cash and cash equivalents. We also had $40 million available under our credit facility as well as an additional $100 million potentially available from the accordion feature.

Subsequent to fiscal year-end, we paid down $50 million on our credit facility. This year, we fully repaid a total of five loans associated with five properties with unamortized balances totaling $12.5 million which unencumbered approximately $46 million worth of properties. The continued substantial growth of our unencumbered asset pool enhances our financial flexibility and further strengthens our already strong credit profile. At fiscal year-end, we held $154.9 million in marketable REIT securities representing 8% of our un-depreciated assets. This compares to a balance of $123.7 million held at the end of the prior year. At year-end, our REIT securities investments reflected $24.7 million in unrealized losses as compared to $6.6 million in gains a year ago. During the year, we earned dividend and interest income from our securities portfolio of $13.1 million as compared to $6.9 million in fiscal 2017. And now, let me turn it back to Michael before we open up the call for questions.

Michael Landy -- President, Chief Executive Officer

Thanks, Kevin. Just a few comments on trade before we open it up to questions, as this continues to be prominent topic. For some perspective, 50 years ago, the cost of ocean shipping was approximately 15% of the value of goods shipped. Today, it is less than 1%. As a result, imports plus exports in the US have grown exponentially and now represent over a $4 trillion market.

Additionally, as the result of fracking technology, the US is now the world's largest producer of natural gas and one of the largest producers of oil. This technological breakthrough will result in increasing amounts of domestic manufacturing in the years ahead. Supply chains will shift and self-correct over time. But in today's fast-paced digital economy with billions of people interconnected through the internet, it is hard to imagine a protracted slowdown in globalization and trade. Monmouth's assets are all located in the continental United States, home to the largest and most dynamic economy in the world. We have the world's reserved currency, the most reliable rule of law, and the best higher education institutions. This is where all of our focus has been throughout our 50-year history. And it is where our focus will remain. We'll now be happy to take your questions.

Questions and Answers:

Operator

We will now begin the question and answer session. To ask a question, you may press * then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press * then 2. At this time, we will pause momentarily to assemble our roster. And our first question comes from Jeremy Metz of BMO Capital.

Jeremy Metz -- BMO Capital -- Analyst

Hey, guys. Good morning. In terms of the acquisitions pipeline, if you have the two deals that you mentioned for -- call it $70 million under contract right now. So, just given some of the lead time that some of these deals take, how should we think about the pipeline beyond that? Just trying to get a sense for how active some of your discussions are today and how we should ballpark potential acquisition activity for fiscal '19. Mike, you obviously mentioned some of the trade stuff going on. We've heard FedEx is maybe gonna slow its expansion a bit. So, how does that play into the deal pipeline?

Michael Landy -- President, Chief Executive Officer

Sure, Jeremy. So, the pipeline of roughly $70 million has 40% scheduled to close in fiscal '19, 60% in fiscal '20. The 2019 closing is looking like it will be before the end of the calendar year. So, that closing is imminent. The discussions are pretty robust and exciting. But they do entail 2020 acquisitions and even as far out as 2021. We're just closing in on 2019. And these are built-to-suit discussions. So, they won't be income-producing until 2020. And like I said, in some cases, 2021. So, it's a good runway of growth. But it's a long runway of growth.

Jeremy Metz -- BMO Capital -- Analyst

Got it. And are you seeing today any changes in yields or cap rates that you're looking at in the market or even underwriting in some of these deals?

Michael Landy -- President, Chief Executive Officer

Well, I guess the first thing that comes to mind thinking about that question is the big merger in our sector that took place at a sub-4% cap rate. So, cap rates are at record lows. And price per square foot's at record high levels. But because these deals go way out and because the widespread consensus is that interest rates are going up and the yield curve is steepening, our cap rates are nowhere near the recent transactions. And you see on the stuff we closed in fiscal '18, the cap rates are above on the spot cap rates because these things were transacted before the ground was even broken.

And you get a premium for doing so. Or it could be a discount depending on how cap rates go. But throughout this cycle, it has been a discount in pricing, a premium in cap rate, and it's worked out very well. If we were short-term investors, we could transact and realize substantial gains on the acquisitions we've done. And since 2013, we've more than doubled our asset base. So, when we talk about percentages of gross assets, all we're doing is adding depreciation back to our balance sheet assets. But if we marked them to market, you'd see even a higher level of asset value.

Jeremy Metz -- BMO Capital -- Analyst

Yeah. No. Appreciate that. And just one last one, maybe for Rich or Mike. Maybe you can comment on it. Just talk about the utilization across your portfolio and within your assets. We've heard varies from some of the industrial peers that tenants are really sweating assets. Just trying to think through how this could mean for potential expansions in the portfolio. In your opening remarks, you mentioned about the growth in e-commerce and working with tenants to help capture this shift. So, does this translate into some expansion potential?

Michael Landy -- President, Chief Executive Officer

Yeah. Well, we like that the new assets we've been acquiring have abundant land for future expansion. The fourth quarter acquisition in the Atlanta market is on 93 acres. So, it's 12 to one land to building ratio. So, therefore, the tenant will not be outgrowing that facility. And we could expand properties. We did two expansions in fiscal '18. We have some more expansions under discussion. I think part of the rhetoric around "sweating assets" has been with regard to the automation. The automation is getting faster and more high-tech as we speak. And our tenants are putting in state of the art, cutting-edge technology. And so, when they talk about sweating assets, they mean that it's highly automated and could process over 15,000 packages per hour.

And now that they've spent billions of dollars in the automation, they're able to instead of build new facilities, get more productivity out of existing facilities. And new facilities tend to have excess capacity. We're in the peak season right now. And peak means FedEx distribution center where throughout most of the year, we'll have 50 people in the employee parking lot, we'll go up to 550 people. And it'll be going 24/7 just processing instead of 8 million packages a day for FedEx, they're processing over 20 million packages a day during peak season. So, the automation helps them get more productivity out of the assets. They're building in excess capacity, looking at past growth and extrapolating that into the future and planning for continued growth in e-commerce. Rich, you wanna add at all to that?

Richard Molke -- Vice President of Asset Management

No. That's about it.

Jeremy Metz -- BMO Capital -- Analyst

Good. Thanks for your time, Mike.

Operator

The next question comes from Barry Oxford of DA Davidson.

Barry Oxford -- DA Davidson -- Analyst

Great. Thanks. Mike, just to build on Jeremy's question, when we're looking at the "building out" of the e-commerce infrastructure, are we seeing any slowdown because these buildings are more automated and can process a lot faster and a lot more? Or no, we're not seeing a slowing in demand despite the higher utilization, for lack of a better word?

Michael Landy -- President, Chief Executive Officer

Well, If I look back and saw the billions of dollars in capital investment that FedEx is making expanding their network, I would say the peak was two years ago. But they're still spending a fortune and needing to ramp up the network. And UPS was certainly late to the game. And they just announced going more high-tech and spending billions of dollars expanding their network. The postal service is losing a fortune. And it needs to be totally revamped. And Amazon is also late to the game, wanting to get into logistics, realizing how highly unprofitable the last mile is, trying to figure out a way to make it profitable. And they're for getting into logistics business and getting into the brick and mortar retail business. So, I don't really see slowdown as being the right way to describe it unless you're talking just relative to when it was growing $3 billion a year, and now it's probably growing $1.5 billion a year for FedEx expanding their network.

Barry Oxford -- DA Davidson -- Analyst

Right. Great. Now, moving to the more mundane, when I'm looking at the mark to mark in your portfolio, Mike, why aren't I seeing maybe stronger numbers coming out from your portfolio?

Michael Landy -- President, Chief Executive Officer

Well, just backing up, total shareholder return for the US REIT index, the RMS -- you know as well as anybody the REIT index has underperformed. In 2015, total return was 2.5%. 2016, 8.9%. 2017, 5.1%. Year-to-date, 2018, roughly flat, up 1.8%. Our portfolio has not performed indicative with the RMS. We've outperformed in many of those years. And we've substantially underperformed this year. So, just looking at Monmouth Real Estate alone, its securities pricing, I think you'll see over a 75% gain over the last three years. So, why have we underperformed? We tend to be early. Yeah, I could explain that. We're early in our thesis that brick and mortar retail is an essential part of the last mile. Before e-commerce, brick and mortar was the last mile.

The consumer had to make that leg of the journey. Bringing goods right to your doorstep, "free," is not sustainable. And so, we have a front row seat to the e-commerce ecosystem. And we really see brick and mortar retail becoming relevant again. You see Amazon owning Whole Foods, Amazon Go. They're investing in brick and mortar retail. So, admittedly, we were early in our position in brick and mortar retail. But I think, as Jim Grant says, successful investing is about having everyone agree with you later. And so, we're early. And I remember during the housing bubble when home ownership was 70%, and we had big exposure to multifamily REITs and big losses. It was heavily criticized. But ultimately, it was very profitable.

Barry Oxford -- DA Davidson -- Analyst

Great. Thanks, guys.

Operator

The next question will come from Rob Stevenson of Janney.

Rob Stevenson -- Janney -- Analyst

Hi. Good morning, guys. Kevin, one for you. Property taxes. The first half of the fiscal year was 7.6. The last half of the year was 11. Was there anything weird in there that wound up happening? Or is $22-ish million on a annual run rate about where -- given the increase in the size of the portfolio, about where property taxes are likely to be headed for you guys?

Kevin Miller -- Chief Financial Officer

Well, yeah. Property taxes tend to go up as we have the acquisitions. And that's one of the reasons for the increase. And there was some increases in the assessed values and just the general nature of just property taxes going up. But in general, I would say almost all of those property taxes -- it's really not a net effect factor because they're all billed back to our tenants. So, we don't focus so much on that because they're basically a reimbursable expense.

Rob Stevenson -- Janney -- Analyst

Okay. Just wanted to make sure that there wasn't anything that was non-reimbursable that was hitting that -- that those blinds were going up and down simultaneously. The other question I have for you guys is sitting here today, roughly -- call it almost two months after the equity offering, what are you guys doing with the capital at this point? Because you guys normally don't -- when you buy stuff, you're normally putting debt on there as you go. Can you talk about what the proceeds from the equity offering have gone to thus far and what the plan is for deployment of that?

Michael Landy -- President, Chief Executive Officer

Sure. I'll answer it broadly. And then if Kevin wants to drill down, fine. About 35% of our acquisitions are equity-based. And so, as we announced when we did the capital offering, our pipeline at the time was about $175 million. And we closed our biggest deal shortly after the capital raised the $85 million deal. And we have queued up another acquisition scheduled to close this fiscal year, about $23 million deal. So, that was the main source of the equity. Yeah. We increased our share count about 12%. And so, there will be a lag in earnings growth when you increase your share count by 12%. You have to grow into those earnings. But we wouldn't' raise the capital if we didn't have a good use of proceeds.

Rob Stevenson -- Janney -- Analyst

Well, I guess the question is did you guys pay down any of the debt, older debt or not-refinanced stuff, as a result, took it out with equity? And sitting here today, how much cash is left on the balance sheet as we head into December?

Kevin Miller -- Chief Financial Officer

Yeah. So, like Mike mentioned, we had the big $85 million acquisition. Of that, about $30 million of equity was used to fund that. And then about $80 million was used to temporarily pay down debt, the short-term debt, floating rate debt. So, the fixed rate debt hasn't been paid down. That's self-amortizing. And it's a very long-term. It's right now 4.7%, 11.7-year maturity. So, we used about $80 million to pay down about $50 million on the line and about $30 million on some other short-term debt. So, that'll improve our leverage ratios in the first quarter. And then as we close on the additional deals in the pipeline, we'll build the pipeline, we'll be probably drawing down again.

Rob Stevenson -- Janney -- Analyst

Okay. And then just last one for me. Any significant changes in the securities portfolio since the 930 balance sheet listing?

Michael Landy -- President, Chief Executive Officer

Some purchases. No new holdings. Maybe $15 million in purchases but all to existing names.

Rob Stevenson -- Janney -- Analyst

Okay. Thanks, guys. Appreciate it.

Operator

The next question comes from Craig Kucera of B. Riley FBR. Please go ahead.

Craig Kucera -- B. Riley FBR -- Analyst

Hey. Good morning, guys. I wanna circle back to the United Technologies building where you had the big reg rolled out. Can you just give us a little color on what went on in that transaction that allowed just such a -- I think you guys were previously at 540. Just a sense of what the new reg was and why that change was made.

Michael Landy -- President, Chief Executive Officer

Yeah. I'll turn that over to Rich for drilling down on the details. It's a good market. It's in Dallas. We were competing with a spec building. And as you know, United Technologies is under a restructuring. And we're glad to keep them in the building. I think overall, the one point I'd like to point out with our fiscal '19 renewals thus far that jumps out is the 8.4% weighted average lease maturity. That's substantial duration in our lease renewals. And so, we've always been willing to, for long-term renewals, not be that aggressive on pushing rents. And I'd rather collect a rent from United Technologies than a start-up, a speculative tenant. And so, that was the broad thinking there. But go ahead, Rich, if you wanna give him -- and flesh out the details.

Richard Molke -- Vice President of Asset Management

Well, I'll just add to that that we still have 50% of the expiring GLA to go. And we're confident we can achieve positive GAAP spreads by the end of the year based on current conversations we've had with our tenants that are rolling in fiscal 2019.

Craig Kucera -- B. Riley -- Analyst

Okay. Mike, you made the commentary that UPS has been late to the game, and they're starting to maybe turn things a little bit and become a little more modernized. Do you anticipate potentially looking at working with them in the future? I know they're not a part of the portfolio. But is it potential we might see some UPS? Or are you a lot more comfortable sticking with FedEx?

Michael Landy -- President, Chief Executive Officer

Yeah. I just don't see it. We're very much enamored with the caliber of FedEx and the relationship with FedEx. And they run circles around UPS in my opinion. And then the postal service is coming at a distant third. And so, we're very picky. And we've really struck gold with FedEx. It's just a great relationship. And I think we'd be foolish to turn our eye elsewhere.

Craig Kucera -- B. Riley -- Analyst

Okay. I just wanna talk about G&A. I think it was up about 12% year-over-year. And I think cash was up maybe 16%. Just given the size of your company now and your portfolio, do you anticipate having to add more people as you continue to grow and close these acquisitions? Or are you where you need to be to fully go out at this point?

Michael Landy -- President, Chief Executive Officer

Yeah. We talk a lot about how far the company's come and how to get the company to the next level. And no question, the next level entails increased headcount, increased office space. So, we've over doubled the size of the company since 2013 and added very few people. I think we doubled our legal staff from one person to two people. But no, I think we have a need to increase headcount, increase office space, and plan for the next ten years.

Kevin Miller -- Chief Financial Officer

Yeah. I just wanted to add something to that. Although G&A did increase in gross amount, but if you compare it to our rental revenue and reimbursement revenue, it actually decreased by about 8% from -- it was 6.3% of rental revenue last year. But now it's 5.8%. And also, as a percentage of gross assets, it decreased about 4% from 48 basis points last year to 46 basis points. So, although G&A is going up, it's not going up nearly as quickly as the growth in the company.

Richard Molke -- Vice President of Asset Management

Yeah. So, you guys follow all the other REITs. And our annual G&A for fiscal '18 was $8.8 million. That's not quarterly. That's over the four quarters, G&A was under $9 million. And yet, the ratio is a percentage of revenue under 6% and percentage of assets under 50 BPS. So, it's been remarkable how productive our staff has been. But G&A should be over $10 million.

Craig Kucera -- B. Riley -- Analyst

Okay. And one more for me. Just talking about the securities portfolio, you grew it quite a bit this year. I think maybe more than 50%. And it looks like you invested about $62 million this quarter. Sounds like you're at that $60 million run rate based on your commentary, Mike. Should we think that you're gonna continue to maybe invest upwards of $60 million-plus this year? Or how are you thinking about the portfolio?

Michael Landy -- President, Chief Executive Officer

Well, first, my numbers show we invested in the fourth quarter $3.7 million. So, I don't know where you're getting $60 million. But anyhow, it depends on the disconnect. As we said earlier, there's been transactions in our space on the private side. Well, two public REITs merging. But that was at rounding up of four cap. So, there's clearly a disconnect in values on Wall Street versus Main Street. And so, to what extent we invest in liquid real estate depends on the discount versus the private market valuations and vice versa.

Craig Kucera -- B. Riley -- Analyst

All right. Thank you.

Operator

And this concludes our question and answer session. I would like to turn the conference back over to Michael Landy for any closing remarks.

Michael Landy -- President, Chief Executive Officer

Well, thanks, Laura. I'd like to thank everyone for participating in our call. As always, Kevin, Gene, and I are available for any follow-up questions. Take this opportunity to wish everyone a healthy, happy, prosperous New Year. And look forward to reporting back after our first quarter. Thank you.

Operator

The conference is now concluded. Thank you for attending today's presentation. The teleconference replay will be available in approximately one hour. To access this replay, please dial US toll-free (877) 344-7529 or international toll 1-412-317-0088. The conference ID number is 10123229. Thank you. And please disconnect your lines.
Duration: 42 minutes

Call participants:

Susan Jordan -- Vice President, Investor Relations

Michael Landy -- President, Chief Executive Officer

Richard Molke -- Vice President of Asset Management

Kevin Miller -- Chief Financial Officer

Jeremy Metz -- BMO Capital -- Analyst

Barry Oxford -- DA Davidson -- Analyst

Rob Stevenson -- Janney -- Analyst

Craig Kucera -- B. Riley FBR -- Analyst

More MNR analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

10 stocks we like better than Monmouth Real Estate Investment
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Monmouth Real Estate Investment wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Motley Fool Transcription has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.