MONMOUTH REAL ESTATE INVESTMENT CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ___________________ to ____________________

Commission File Number 0-4258

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 No.)
3499 Route 9 North, Suite 3-C, Freehold, NJ 07728
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (732) 577-9997

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock Class A $.01 par value

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 12 preceding 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 X No

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment of this Form 10-K X .

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). X Yes __ No

The aggregate market value of voting stock held by non-affiliates
of the Registrant was $119,886,664 (based on 13,875,769 shares of
common stock at the closing price of $8.64 per share) as of
December 15, 2003, presuming that directors and executive officers are
affiliates.

There were 15,392,904 shares of common stock outstanding as of
December 15, 2003.

Documents Incorporated by Reference: Exhibits incorporated by
reference are listed in Part IV, Item 14 (a) (3).

PART I
ITEM 1 - BUSINESS

Monmouth Real Estate Investment Corporation (the Company) is a
corporation operating as a qualified real estate investment trust
(REIT) under Sections 856-860 of the Internal Revenue (the Code), and
intends to maintain its qualification as a REIT in the future. As a
qualified REIT, with limited exceptions, the Company will not be taxed
under Federal and certain state income tax laws at the corporate level
on taxable income that it distributes to its shareholders. For special
tax provisions applicable to REITs, refer to Sections 856-860 of the
Code.

The Company was incorporated in 1968 as a Delaware Corporation.
On May 15, 2003, the Company changed its state of incorporation from
Delaware to Maryland (the Reincorporation). The Reincorporation was
approved by the Company's shareholders at the Company's annual meeting
on May 6, 2003.

The Reincorporation was accomplished by the merger (the Merger)
of the Company with and into its wholly-owned subsidiary, MREIC
Maryland, Inc., a Maryland Corporation, (Monmouth Maryland), which
was the surviving corporation in the Merger. In connection with
the Merger, Monmouth Maryland changed its name to Monmouth Real Estate
Investment Corporation.

As a result of the Merger each outstanding share of the
Company's Class A Common stock, $.01 par value per share (the
Delaware Common Stock), was converted into one share of common stock,
$.01 par value, of Monmouth Maryland (the Maryland Common Stock).
In addition, each outstanding option to purchase Delaware Common
Stock was converted into the right to purchase Maryland Common Stock
upon the same terms and conditions as immediately prior to the
Merger. The Company's 1997 Stock Option Plan, as amended, was assumed
and will be continued by Monmouth Maryland. The conversion of the
Delaware Common Stock into Maryland Common Stock occurred
without an exchange of certificates. Accordingly,
certificates formerly representing shares of Delaware Common Stock
are now deemed to represent the same number of shares of Maryland
Common Stock.

Prior to the Merger, Monmouth Maryland had no assets or
liabilities, other than nominal assets or liabilities. As a result of
the Merger, Monmouth Maryland acquired all of the assets and all of
the liabilities and obligations of the Company. The Merger was
accounted for as if it were a "pooling of interests" rather than a
purchase for financial reporting and related purposes, with the result
that the historical accounts of the Company and Monmouth Maryland have
been combined for all periods presented. Monmouth Maryland has
the same business, properties, directors, management, status as a
real estate investment trust under the Internal Revenue Code of 1986,
as amended, and principal executive offices as Monmouth
Delaware.

Currently, the Company derives its income primarily from real
estate rental operations. Rental and occupancy revenue was
$17,888,495, $14,519,670, and $10,524,575 for the years ended
September 30, 2003, 2002 and 2001, respectively. Total assets were
$183,173,874 and $149,011,493 as of September 30, 2003 and 2002,
respectively. The Company has approximately 3,546,000 square feet of
property, of which approximately 1,034,000 square feet, or 29%, is
leased to Federal Express Corporation and subsidiaries and
approximately 274,000 square feet, or 8%, is leased to Keebler
Company, a subsidiary of the Kellogg Company. During 2003, 2002 and
2001 rental and occupancy charges from properties leased to these
companies approximated 48%, 52% and 55%, respectively, of total rental
and occupancy charges.

Page 2

ITEM 1 - BUSINESS, (CONT'D.)

At September 30, 2003, the Company had investments in thirty-
three properties. (See Item 2 for detailed description of the
properties.) These properties are located in New Jersey, New York,
Pennsylvania, North Carolina, Mississippi, Massachusetts, Kansas,
Iowa, Missouri, Illinois, Michigan, Nebraska, Florida, Virginia, Ohio,
Connecticut, Wisconsin, Maryland and Arizona. All properties are
managed by a management company. All properties are leased on a net
basis except Monaca, Pennsylvania.

The Company competes with other investors in real estate for
attractive investment opportunities. These investors include other
"equity" real estate investment trusts, limited partnerships,
syndications and private investors, among others. Competition in the
market areas in which the Company operates is significant and affects
acquisitions and/or development of properties, occupancy levels,
rental rates, and operating expenses of certain properties.
Management has built relationships with merchant builders which
provides the Company with investment opportunities which fit the
Company's investment policy.

The Company has a flexible investment policy concentrating its
investments in the area of net-leased industrial properties. The
Company's strategy is to obtain a favorable yield spread between the
yield from the net-leased industrial properties and mortgage interest
costs. The Company continues to purchase net-leased industrial
properties, since management believes that there is a potential for
long-term capital appreciation through investing in well-located
industrial properties. There is the risk that, on expiration of
current leases, the properties can become vacant or re-leased at lower
rents. The results obtained by the Company by re-leasing the
properties will depend on the market for industrial properties at that
time.

In fiscal 2003, the Company purchased three net-leased industrial
properties for a total cost of approximately $26,200,000. In fiscal
2004, the Company anticipates acquisitions of approximately
$30,000,000. The funds for these acquisitions may come from the
Company's available line of credit, other bank borrowings, proceeds
from the Dividend Reinvestment and Stock Purchase Plan and private
placements. To the extent that funds or appropriate properties are not
available, fewer acquisitions will be made. Because of the contingent
nature of contracts to purchase real property, the Company announces
acquisitions only upon closing.

The Company seeks to invest in well-located, modern buildings
leased to credit worthy tenants on long-term leases. In management's
opinion, newly built facilities leased to Federal Express Corporation
(FDX) or FDX subsidiaries meet this criteria. The Company has a
concentration of properties leased to FDX and FDX subsidiaries. This
is a risk factor that shareholders should consider. FDX is a publicly-
owned corporation and information on its financial business operations
is readily available to the Company's shareholders.

The Company is subject to various environmental regulatory
requirements related to the ownership of real estate. Investments in
real property have the potential for environmental liability on the
part of the owner of such property. The Company is not aware of any
environmental liabilities to the Company relating to the Company's
investment properties which would have a material adverse effect on
the Company's business, assets, or results of operations.

Page 3

ITEM 1 - BUSINESS, (CONT'D.)

The Company operates as part of a group of three public companies
(all REITs) which includes United Mobile Homes, Inc., Monmouth Capital
Corporation, and Monmouth Real Estate Investment Corporation (the
affiliated companies). Some general and administrative expenses are
allocated between the three affiliated companies based on use or
services provided. The Company currently has eleven employees.
Allocations of salaries and benefits are made between the affiliated
companies based on the amount of the employees' time dedicated to each
affiliated company.

The Company does not have an advisory contract; however, all of
the properties are managed by Cronheim Management Services, a division
of David Cronheim Company. In 1998, the Company entered into a new
management contract with Cronheim Management Services. Under this
contract, Cronheim Management Services receives 3% of gross rental
income on certain properties for management fees. Cronheim Management
Services provides sub-agents as regional managers for the Company's
properties and compensates them out of this management fee. Cronheim
Management Services received $258,626, $245,597 and $220,521, in
2003, 2002 and 2001, respectively, for the management of the
properties. David Cronheim Company received $14,377, $20,194 and
$26,708 in lease brokerage commissions in 2003, 2002 and 2001,
respectively.

The Company continues to invest in both debt and equity
securities of other REITs. The Company from time to time may purchase
these securities on margin when the interest and dividend yields
exceed the cost of the funds. The securities portfolio, to the extent
not pledged to secure borrowing, provides the Company with liquidity
and additional income. Such securities are subject to risk arising
from adverse changes in market rates and prices, primarily interest
rate risk relating to debt securities and equity price risk relating
to equity securities.

Additional information about the Company can be found on the
Company's website which is located at www.mreic.com. The Company's
filings with the Securities and Exchange Commission are made available
through a link on the Company's website or by calling Investor
Relations.

Risk Factors

Real Estate Industry Risks

The Company faces risks associated with local real estate
conditions in areas where the Company owns properties. The Company may
be affected adversely by general economic conditions and local real
estate conditions. For example, an oversupply of industrial properties
in a local area or a decline in the attractiveness of our properties
to tenants would have a negative effect on the Company.

Other factors that may affect general economic conditions or
local real estate conditions include:

- population and demographic trends;

- zoning, use and other regulatory restrictions;

- income tax laws;

Page 4

ITEM 1 - BUSINESS, (CONT'D.)

- changes in interest rates and availability and costs of
financing;

- competition from other available real estate;

- our ability to provide adequate maintenance and insurance; and

- increased operating costs, including insurance premiums and real
estate taxes.

The Company may be unable to compete with its larger
competitors and other alternatives available to tenants or potential
tenants of our properties. The real estate business is highly
competitive. The Company competes for properties with other real
estate investors, including other real estate investment trusts,
limited partnerships, syndications and private investors, many of whom
have greater financial resources, revenues, and geographical diversity
than the Company has. Furthermore, the Company competes for tenants
with other property owners. All of the Company's industrial properties
are subject to significant local competition. The Company also
competes with a wide variety of institutions and other investors for
capital funds necessary to support our investment activities and asset
growth.

The Company is subject to significant regulation that
inhibits our activities and increases our costs. Local zoning and use
laws, environmental statutes and other governmental requirements may
restrict expansion, rehabilitation and reconstruction activities.
These regulations may prevent the Company from taking advantage of
economic opportunities. Legislation such as the Americans with
Disabilities Act may require management to modify our properties.
Future legislation may impose additional requirements. The Company
cannot predict what requirements may be enacted or what changes may be
implemented to existing legislation.

Risks Associated with Our Properties

The Company may be unable to renew leases or relet space as
leases expire. While management seeks to invest in well-located,
modern buildings leased to credit-worthy tenants on long term leases,
a number of the Company's properties are subject to short-term leases.
When a lease expires, a tenant may elect not to renew it. Management
may not be able to relet the property on similar terms, if we are able
to relet the property at all. Management has established an annual
budget for renovation and reletting expenses that management believes
is reasonable in light of each property's operating history and local
market characteristics. This budget, however, may not be sufficient to
cover these expenses.

The Company has been and may continue to be affected
negatively by tenant financial difficulties and leasing delays. A
general decline in the economy may result in a decline in the demand
for industrial space. As a result, the Company's tenants may delay
lease commencement, fail to make rental payments when due, or declare
bankruptcy. Any such event could result in the termination of that
tenant's lease and losses to the Company. The Company receives a
substantial portion of our income as rents under long-term leases. If
tenants are unable to comply with the terms of their leases because of
rising costs or falling sales, management, in our sole discretion, may
deem it advisable to modify lease terms to allow tenants to pay a
lower rental or a smaller share of operating costs, taxes and
insurance.

Page 5

ITEM 1 - BUSINESS, (CONT'D.)

The Company may be unable to sell properties when appropriate
because real estate investments are illiquid. Real estate investments
generally cannot be sold quickly and, therefore, will tend to limit
management's ability to vary our property portfolio promptly in
response to changes in economic or other conditions. The inability to
respond promptly to changes in the performance of the Company's
property portfolio could adversely affect the Company's financial
condition and ability to service debt and make distributions to our
stockholders.

Environmental liabilities could affect the Company's
profitability. The Company faces possible environmental liabilities.
Current and former real estate owners and operators may be required by
law to investigate and clean up hazardous substances released at the
properties they own or operate. They may also be liable to the
government or to third parties for property damage, investigation
costs and cleanup costs. Contamination may affect adversely the
owner's ability to sell or lease real estate or to borrow using the
real estate as collateral.

Environmental laws today can impose liability on a previous
owner or operator of a property that owned or operated the property at
a time when hazardous or toxic substances were disposed on, or
released from, the property. A conveyance of the property, therefore,
does not relieve the owner or operator from liability.

Management is not aware of any environmental liabilities
relating to our investment properties which would have a material
adverse effect on our business, assets, or results of operations.
However, we cannot assure you that environmental liability claims will
not arise in the future.

If our insurance coverage is inadequate or management cannot
obtain acceptable insurance coverage, the Company operations could be
materially adversely affected. Management generally maintains
insurance policies related to the Company's business, including
casualty, general liability and other policies covering business
operations, employees and assets. The Company may be required to bear
all losses that are not adequately covered by insurance. Although
management believes that our insurance programs are adequate, no
assurance can be given that we will not incur losses in excess of the
Company's insurance coverage, or that the Company will be able to
obtain insurance in the future at acceptable levels and reasonable
cost.

Financing Risks

The Company faces risks generally associated with our debt.
The Company finances a portion of our investments in properties and
marketable securities through debt. This debt creates risks,
including:

- rising interest rates on our floating rate debt;

- failure to repay or refinance existing debt as it matures, which
may result in forced disposition of disposition of assets on
disadvantageous terms;

Page 6

ITEM 1 - BUSINESS, (CONT'D.)

- refinancing terms less favorable than the terms of existing
debt; and

- failure to meet required payments of principal and/or interest.

The Company faces risks associated with the use of debt to
fund acquisitions, including refinancing risk. The Company is subject
to the risks normally associated with debt financing, including the
risk that our cash flow will be insufficient to meet required payments
of principal and interest. Management anticipates that a portion of
the principal of our debt will not be repaid prior to maturity.
Therefore, the Company will likely need to refinance at least a
portion of our outstanding debt as it matures. There is a risk that we
may not be able to refinance existing debt or that the terms of any
refinancing will not be as favorable as the terms of the existing
debt. If principal payments due at maturity cannot be refinanced,
extended or repaid with proceeds from other sources, such as new
equity capital or sales of properties, the Company's cash flow will
not be sufficient to repay all maturing debt in years when significant
"balloon" payments come due. As a result, we may be forced to dispose
of properties on disadvantageous terms.

Management may amend our business policies without the
stockholders' approval. Our board of directors determines our growth,
investment, financing, capitalization, borrowing, REIT status,
operations and distributions policies. Although the board of directors
has no present intention to amend or reverse any of these policies,
they may be amended or revised without notice to stockholders.
Accordingly, stockholders may not have control over changes in our
policies. Management cannot assure you that changes in our policies
will serve fully the interests of all stockholders.

Other Risks

The market value of our Common Stock could decrease based on
the Company's performance and market perception and conditions. The
market value of the Company's Common Stock may be based primarily upon
the market's perception of the Company's growth potential and current
and future cash dividends, and may be secondarily based upon the real
estate market value of the Company's underlying assets. The market
price of the Company's Common Stock is influenced by the dividend on
the Company's Common Stock relative to market interest rates. Rising
interest rates may lead potential buyers of the Company's Common Stock
to expect a higher dividend rate, which would adversely affect the
market price of our Common Stock. In addition, rising interest rates
would result in increased expense, thereby adversely affecting cash
flow and the Company's ability to service our indebtedness and pay
dividends.

There are restrictions on the transfer of the Company's
Common Stock. To maintain the Company's qualification as a REIT under
the Internal Revenue Code of 1986 (the Code), no more than 50% in
value of the Company's outstanding capital stock may be owned,
actually or by attribution, by five or fewer individuals, as defined
in the Code to also include certain entities, during the last half of
a taxable year. Accordingly, the Company's charter and bylaws contain
provisions restricting the transfer of the Company's Common Stock.

Page 7

ITEM 1 - BUSINESS, (CONT'D.)

The Company's earnings are dependent, in part, upon the
performance of our investment portfolio. As permitted by the Code,
management invests in and owns securities of other real estate
investment trusts. To the extent that the value of those investments
declines or those investments do not provide a return, the Company's
earnings could be adversely affected.

The Company is subject to restrictions that may impede
management's ability to effect a change in control. Certain provisions
contained in the Company's charter and bylaws, and certain provisions
of Maryland law may have the effect of discouraging a third party from
making an acquisition proposal for us and thereby inhibit a change in
control.

The Company may fail to qualify as a REIT. If the Company
fails to qualify as a REIT, the Company will not be allowed to deduct
distributions to stockholders in computing our taxable income and will
be subject to Federal income tax, including any applicable alternative
minimum tax, at regular corporate rates. In addition, the Company
might be barred from qualification as a REIT for the four years
following disqualification. The additional tax incurred at regular
corporate rates would reduce significantly the cash flow available for
distribution to stockholders and for debt service.

Furthermore, the Company would no longer be required to make
any distributions to the Company's stockholders as a condition to REIT
qualification. Any distributions to stockholders that otherwise would
have been subject to tax as capital gain dividends would be taxable as
ordinary income to the extent of the Company's current and accumulated
earnings and profits. Corporate distributees, however, may be eligible
for the dividends received deduction on the distributions, subject to
limitations under the Code.

To qualify as a REIT, and to continue to qualify as a REIT,
the Company must comply with certain highly technical and complex
requirements. The Company cannot be certain it has complied, and will
always be able to comply, with these requirements. In addition, facts
and circumstances that may be beyond the Company's control may affect
the Company's ability to continue to qualify as a REIT. The Company
cannot assure you that new legislation, regulations, administrative
interpretations or court decisions will not change the tax laws
significantly with respect to the Company's qualification as a REIT or
with respect to the Federal income tax consequences of qualification.
The Company believes that it has qualified as a REIT since its
inception and intends to continue to qualify as a REIT. However, the
Company cannot assure you that the Company is qualified or will remain
qualified.

The Company may be unable to comply with the strict income
distribution requirements applicable to REITs. To obtain the favorable
tax treatment associated with qualifying as a REIT, among other
requirements, the Company is required each year to distribute to its
stockholders at least 90% of its REIT taxable income. The Company will
be subject to corporate income tax on any undistributed REIT taxable
income. In addition, we will incur a 4% nondeductible excise tax on
the amount by which our distributions in any calendar year are less
than the sum of (i) 85% of our ordinary income for the year, (ii) 95%
of our capital gain net income for the year, and (iii) any
undistributed taxable income from prior years. The Company could be
required to borrow funds on a short-term basis to meet the
distribution requirements that are necessary to achieve the tax
benefits associated with qualifying as a REIT (and to avoid corporate
income tax and the 4% excise tax), even if conditions were not
favorable for borrowing.

Page 8

ITEM 1 - BUSINESS, (CONT'D.)

Notwithstanding the Company's status as a REIT, the Company
is subject to various Federal, state and local taxes on our income and
property. For example, the Company will be taxed at regular corporate
rates on any undistributed taxable income, including undistributed net
capital gains, provided, however, that properly designated
undistributed capital gains will effectively avoid taxation at the
stockholder level. The Company may also have to pay some state income
or franchise taxes because not all states treat REITs in the same
manner as they are treated for Federal income tax purposes.

ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES

The Company operates as a real estate investment trust. Its
portfolio is primarily in real estate holdings, some of which have
been long-term holdings carried on the financial statements of the
Company at depreciated cost. It is believed that their current market
values exceed both the original cost and the depreciated cost.

The following table sets forth certain information concerning the
Company's real estate investments as of September 30, 2003:

Page 9

Fiscal Year
State City Acquisition Type
_____ ____ ___________ ____

AZ Tolleson 2003 Industrial
CT Newington 2001 Industrial
FL Ft. Myers 2003 Industrial
FL Jacksonville 1999 Industrial
IL Schaumburg 1997 Industrial
IL Burr Ridge 1997 Industrial
IL Granite City 2001 Industrial
IL Elgin 2002 Industrial
IO Urbandale 1994 Industrial
KS Wichita 1994 Industrial
KS Edwardsville 2003 Industrial
MA Franklin 1994 Industrial
MD Beltsville 2001 Industrial
MI Romulus 1998 Industrial
MO O' Fallon 1994 Industrial
MO Liberty 1998 Industrial
MO St. Joseph 2001 Industrial
MS Jackson 1993 Industrial
MS Richland 1994 Industrial
NC Fayetteville 1997 Industrial
NC Greensboro 1993 Industrial
NC Monroe 2001 Industrial
NC Winston-Salem 2002 Industrial
NE Omaha 1999 Industrial
NJ Ramsey 1969 Industrial
NJ South Brunswick 1993 Industrial
NJ Somerset (1) 1970 Shopping Center
NY Orangeburg 1993 Industrial
OH Union Township 2000 Industrial
PA Monaca 1977 Industrial
VA Charlottesville 1999 Industrial
VA Richmond 2001 Industrial
WI Cudahy 2001 Industrial

(1) The Company has a 2/3 interest
in the property.
Estimated annual rent
reflects the Company's
proportionate share of the
total rent on this property.
(2) Subleased to USC Solutions.
(3) Subleased to Leer Corporation.

Page 10A

Mortgage
Square Balance
State City Footage 9/30/03
_____ _____ _____ _____

AZ Tolleson 288,211 $ 10,615,499
CT Newington 54,812 2,235,607
FL Ft. Myers 90,020 3,131,807
FL Jacksonville 95,883 3,440,326
IL Schaumburg 73,500 2,545,793
IL Burr Ridge 12,477 883,861
IL Granite City 184,800 8,770,809
IL Elgin 89,052 4,735,617
IO Urbandale 36,150 182,989
KS Wichita 44,136 -0-
KS Edwardsville 179,280 4,713,277
MA Franklin 84,376 414,965
MD Beltsville 109,705 5,427,127
MI Romulus 72,000 2,151,940
MO O' Fallon 102,135 1,095,093
MO Liberty 98,200 3,637,322
MO St. Joseph 388,671 7,980,478
MS Jackson 26,340 373,626
MS Richland 36,000 207,819
NC Fayetteville 148,000 2,801,133
NC Greensboro 40,560 -0-
NC Monroe 160,000 3,753,546
NC Winston-Salem 106,507 4,607,334
NE Omaha 88,140 3,236,441
NJ Ramsey 44,719 -0-
NJ South Brunswick 144,520 -0-
NJ Somerset (1) 42,800 -0-
NY Orangeburg 50,400 364,498
OH Union Township 85,508 2,577,450
PA Monaca 292,000 -0-
VA Charlottesville 49,900 2,233,032
VA Richmond 112,799 4,928,959
WI Cudahy 114,123 3,862,951
________ ________
3,545,724 $90,909,299
========= =========
1) The Company has a 2/3 interest
in the property.
Estimated annual rent
reflects the Company's
proportionate share of the
total rent on this property.
(2) Subleased to USC Solutions.
(3) Subleased to Leer Corporation.

Page 10B

State City Tenant Expiration

_____ _____ _____ ________

AZ Tolleson Western Container Corp 4/30/2012
CT Newington Keebler Company 2/28/2011
FL Ft. Myers Fedex Ground Package System, Inc. 10/31/2011
FL Jacksonville Federal Express Corporation 5/31/2008
IL Schaumburg Federal Express Corporation 3/31/2007
IL Burr Ridge Sherwin-Wiliams Company 10/31/2009
IL Granite City Anheuser-Busch, Inc. 5/31/2011
IL Elgin Reynolds Metals Company 1/31/2012
IO Urbandale Glazers Distributors of Iowa, Inc.6/30/2008
KS Wichita Keebler Company (4) 5/31/2005
KS Edwardsville Carlisle Tire & Wheel Company 5/31/2012
MA Franklin Keebler Company 1/31/2007
MD Beltsville Fedex Ground Package System, Inc. 12/31/2010
MI Romulus Federal Express Corporation 5/31/2008
MO O' Fallon PPG Industries 6/30/2006
MO Liberty Johnson Controls, Inc. (3) 12/31/2007
MO St. Joseph Mead Corporation 11/30/2015
MS Jackson Oxford Auto Alabama month to month
MS Richland Federal Express Corporation 3/31/2004
NC Fayetteville Belk Enterprises, Inc. (2) 6/30/2006
NC Greensboro Keebler Company 2/28/2006
NC Monroe Hughs Supply, Inc. 10/31/2011
NC Winston-Salem Fedex Ground Package System, Inc. 12/31/2011
NE Omaha Federal Express Corporation 10/31/2008
NJ Ramsey Bogen Photo, Inc. 9/30/2006
NJ South Brunswick McMaster Carr Supply 9/30/2005
NJ Somerset (1) various various
NY Orangeburg Keebler Company 12/31/2004
OH Union Township RPS Ground 8/31/2013
PA Monaca various various
VA Charlottesville Federal Express Corporation 8/31/2008
VA Richmond Federal Express Corporation 10/21/2009
WI Cudahy Fedex Ground Package System, Inc. 3/31/2011

(1) The Company has a 2/3 interest
in the property.
Estimated annual rent
reflects the Company's
proportionate share of the
total rent on this property.
(2) Subleased to USC Solutions.
(3) Subleased to Leer Corporation.

Page 10C

Estimated
State City Annual Rent
_____ _____ __________

AZ Tolleson $ 1,243,000
CT Newington 340,000
FL Ft. Myers 400,000
FL Jacksonville 526,000
IL Schaumburg 463,000
IL Burr Ridge 151,000
IL Granite City 1,147,000
IL Elgin 614,000
IO Urbandale 121,000
KS Wichita 193,000
KS Edwardsville 671,000
MA Franklin 516,000
MD Beltsville 892,000
MI Romulus 396,000
MO O' Fallon 372,000
MO Liberty 699,000
MO St. Joseph 1,239,000
MS Jackson 145,000
MS Richland 140,000
NC Fayetteville 470,000
NC Greensboro 215,000
NC Monroe 589,000
NC Winston-Salem 637,000
NE Omaha 516,000
NJ Ramsey 285,000
NJ South Brunswick 673,000
NJ Somerset (1) 351,000
NY Orangeburg 390,000
OH Union Township 493,000
PA Monaca 421,000
VA Charlottesville 363,000
VA Richmond 707,000
WI Cudahy 572,000

_________
$ 16,950,000
==========
1) The Company has a 2/3 interest
in the property.
Estimated annual rent
reflects the Company's
proportionate share of the
total rent on this property.
(2) Subleased to USC Solutions.
(3) Subleased to Leer Corporation.

Page 10D

ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES, (CONT'D.)

The Company is a partner in a limited liability company,
Hollister `97, LLC, representing a 25% ownership interest. The
sole business of this LLC is the ownership and operation of the
Hollister Corporate Park in Teterboro, New Jersey. Under the
agreement, the Company is to receive a cumulative preferred 11%
annual return on its investment.

ITEM 3 - LEGAL PROCEEDINGS

None.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fiscal fourth quarter
of 2003.

Page 11

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The shares of common stock of Monmouth Real Estate
Investment Corporation are traded on the National Association
of Securities Dealers Automated Quotation (NASDAQ symbol
MNRTA). The per share range of high and low market prices and
distributions paid to shareholders during each quarter of the
last two years were as follows:

2003 2002
Market Price Market Price
____________ ____________
Fiscal Fiscal
Qtr. High Low Distrib. Qtr. High Low Distrib.
_____ ____ ___ ________ ______ ____ ___ ________

First 7.17 6.70 $.145 First 7.18 6.00 $.145
Second 7.90 6.70 .145 Second 7.00 6.41 .145
Third 8.80 7.36 .145 Third 8.01 6.68 .145
Fourth 8.77 7.31 .145 Fourth 7.29 6.55 .145

$ .58 $ .58
======= ======

The over-the-counter market quotations reflect the inter-
dealer prices, without retail mark-up, mark-down or commission,
and may not necessarily represent actual transactions.

On September 30, 2003, the closing price was $8.11.

As of September 30, 2003, there were approximately 1,154
shareholders of record who held shares of common stock of the
Company.

It is the Company's intention to continue distributing
quarterly dividends. On October 1, 2003 the Company declared a
dividend of $.145 per share to be paid on December 15, 2003 to
shareholders of record on November 17, 2003.

Page 12

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS (CONT'D.)

Equity Compensation Plan Information

The following table summarizes information, as of
September 30, 2003, relating to equity compensation plans of
the Company (including individual compensation arrangements)
pursuant to which equity securities of the Company are
authorized for issuance.

Number of
Securities
Remaining
Available
Number of for Future
Securities Weighted- Issuance
to be average Under Equity
Issued Upon Exercise Compensation
Exercise of Price of Plans
Outstanding Outstanding (excluding
Options, Options, Securities
Plan Warrants Warrants reflected in
Category and Rights and Rights column (a))
(a) (b) (c)
_________ _________ _________ _________
Equity
Compensation
Plans
Approved by
Security
Holders 500,500 $6.83 735,000

Equity
Compensation
Plans not
Approved by
Security
Holders N/A N/A N/A

Total 500,500 $6.83 735,000

Page 13

ITEM 6 - SELECTED FINANCIAL DATA

The following table sets forth selected financial and
other information for the Company as of and for each of the
years in the five year period ended September 30, 2003. This
table should be read in conjunction with all of the financial
statements and notes thereto included elsewhere herein.

September 30,

OPERATING DATA: 2003 2003 2001 2000 1999
____ ____ ____ ____ ____

Total Income $20,705,805 $ 6,566,594 $12,908,204 $10,397,973 $ 8,751,219
Rental Income 17,888,495 14,519,670 10,524,575 8,559,004 7,982,334
Gains on Sales
Of Securities 1,018,862 909,704 632,492 110,960 -0-
Total Expenses 14,585,462 11,913,073 8,785,150 6,897,207 6,214,993
Gains (Losses) on
Sales of Assets -
Investment
Property -0- (175,376) -0- 88,631 1,260,534
Net Income 6,120,343 4,478,145 4,123,054 3,589,397 3,796,760
Net Income Per
Share -
Basic and
Diluted .44 .40 .43 .44 .57

BALANCE SHEET DATA:

Total Assets $183,173,874 $149,011,493 $119,433,470 $86,003,905 $79,424,958
Gross Investment
in Real Estate 170,200,325 142,977,100 113,990,784 74,996,066 70,871,655
Mortgage Notes
Payable 90,909,299 78,220,163 60,424,754 36,104,743 35,237,759
Shareholders'
Equity 78,313,289 59,005,016 49,929,539 41,013,926 36,276,677

CASH FLOW DATA:

Operating
Activities $9,725,898 $6,792,043 $4,785,236 $4,583,749 $4,493,792
Investing
Activities (35,417,062) (30,564,641) (32,301,411) (8,283,278) (24,068,573)
Financing
Activities 26,068,148 24,318,591 27,149,664 2,971,162 20,669,262

OTHER INFORMATION:

Average Number of
Shares
Outstanding 13,844,056 11,177,294 9,504,806 8,078,877 6,627,344
Funds from
Operations* $9,680,489 $7,594,618 $6,289,381 $5,203,753 $4,220,279
Cash Dividends
Per Share .58 .58 .58 .58 .5675

* Funds from operations (FFO), is defined as net income,
excluding gains (or losses) from sales of depreciable assets,
plus depreciation. FFO should be considered as a supplemental
measure of operating performance used by real estate investment
trusts (REITs). The Company believes that FFO is helpful to
investors as one of several measures of the performance of a
REIT. FFO excludes historical cost depreciation as an
expense and may facilitate the comparison of REITs which
have different cost bases. The items excluded from FFO are
significant components in understanding the Company's financial
performance.

Page 14

ITEM 6 - SELECTED FINANCIAL DATA, (CONT'D.)

FFO (1) does not represent cash flow from operations as defined
by generally accepted accounting principles; (2) should not
be considered as an alternative to net income as a measure
of operating performance or to cash flows from operating,
investing and financing activities; and (3) is not an
alternative to cash flow as a measure of liquidity. FFO, as
calculated by the Company, may not be comparable to similarly
entitled measures reported by other REITs.

The Company's FFO is calculated as follows:

2003 2002 2001 2000 1999
____ ____ ____ ____ _____

Net Income $6,120,343 $4,478,145 $4,123,054 $3,589,397 $3,796,760
Gain/Loss on
Sales of
Depreciable
Assets - 175,376 - (88,631) (1,260,534)
Adjustment
for
Unconsolidated
Partnerships - - - - 84,601
Depreciation 3,560,146 2,941,097 2,166,327 1,702,987 1,599,452

_________ _________ _________ _________ _________
FFO $9,680,489 $7,594,618 $6,289,381 $5,203,753 $4,220,279
========== ========== ========== ========== ==========

Page 15

ITEM 6 - SELECTED FINANCIAL DATA, (CONT'D.)

SUMMARY OF OPERATIONS BY PROPERTY
FOR THE YEARS ENDED SEPTEMBER 30,

2003 2002 2001 2000 1999
Net Rental Income
(Loss):
Somerset, New Jersey $ 293,177 $ 166,747 $270,716 $ 247,795 $ 257,143
Ramsey, New Jersey 232,785 222,078 114,702 157,488 165,994
Monaca, Pennsylvania 127,727 102,897 145,484 187,031 190,435
Monsey, New York -0- -0- -0- -0- 115,534
Orangeburg, New York 181,752 161,000 155,249 220,767 203,916
South Brunswick, New
Jersey 489,916 505,744 448,308 412,634 404,304
Greensboro, North
Carolina 224,251 220,285 207,361 192,358 182,442
Jackson, Mississippi 91,898 88,510 78,996 72,937 70,372
Franklin,
Massachusetts 356,356 330,752 307,996 278,733 259,637
Wichita, Kansas 142,352 67,243 53,132 31,117 23,714
Urbandale, Iowa 47,250 38,001 28,631 88,628 110,817
Richland,
Mississippi 87,263 80,056 69,508 58,738 51,872
O'Fallon, Missouri 199,537 177,225 130,480 101,646 85,811
Virginia Beach,
Virginia* -0- (320,181) (56,485) 110,359 107,227
Fayetteville, North
Carolina 126,549 119,903 107,017 89,158 93,972
Schaumburg, Illinois 120,885 130,583 105,769 80,094 64,422
Burr Ridge, Illinois 41,206 39,595 33,355 41,756 9,448
Romulus, Michigan 130,652 118,385 104,130 93,874 90,261
Liberty, Missouri 264,945 243,747 222,353 206,755 120,806
Omaha, Nebraska 159,407 145,288 126,956 113,526 121,793
Charlottesville,
Virginia 120,371 116,247 105,075 94,450 77,251
Jacksonville,
Florida 163,079 140,924 132,789 114,921 (18,300)
Union Township, Ohio 94,872 75,140 62,314 41,177 -0-
Richmond, Virginia 224,077 320,576 198,862 -0- -0-
St. Joseph, Missouri 222,808 190,325 155,660 -0- -0-
Newington,
Connecticut 73,400 66,321 26,670 -0- -0-
Cudahy, Wisconsin 109,891 88,637 35,275 -0- -0-
Beltsville, Maryland 316,619 299,699 115,176 -0- -0-
Granite City,
Illinois 184,984 299,672 -0- -0- -0-
Monroe, North
Carolina 164,180 185,450 -0- -0- -0-
Winston-Salem, North
Carolina 149,097 123,007 -0- -0- -0-
Elgin, Illinois 133,700 55,468 -0- -0- -0-
Tolleson, Arizona 376,824 -0- -0- -0- -0-
Ft. Myers, Florida 136,885 -0- -0- -0- -0-
Edwardsville, Kansas 99,440 -0- -0- -0- -0-
_______ _______ _______ _______ _______
Net Rental
Income 5,888,135 4,599,324 3,485,479 3,035,942 2,788,871
Net Investment and
Other Income 2,204,780 1,583,425 1,613,977 1,253,695 465,602
TOTAL 8,092,915 6,182,749 5,099,456 4,289,637 3,254,473
General &
Administrative
Expenses (1,972,572) (1,529,228) (976,402) (788,871) (718,247)
_______ _______ _______ _______ _______
Income Before
(Loss) Gain on
Sale of Assets-
Investment
Property 6,120,343 4,653,521 4,123,054 3,500,766 2,536,226
(Loss) Gain on Sale
of Assets -
Investment
Property -0- (175,376) -0- 88,631 1,260,534
__________ __________ _________ _________ _________
NET INCOME $ 6,120,343 $4,478,145 $4,123,054 $ 3,589,397 $ 3,796,760
========== ========== ========= ========= =========

*Sold in May, 2002.
Page 16

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies

The discussion and analysis of the Company's financial
condition and results of operations are based upon the
Company's consolidated financial statements, which have been
prepared in accordance with generally accepted accounting
principles. The preparation of these financial statements
requires management 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 the Company's financial statements.
Actual results may differ from these estimates under different
assumptions or conditions.

Critical accounting policies are defined as those that
involve significant judgment and potentially could result in
materially different results under different assumptions and
conditions. Management believes the following critical
accounting policies are affected by our more significant
judgments and estimates used in the preparation of the
Company's financial statements. For a detailed description of
these and other accounting policies, see Note 1 in the notes to
the Company's financial statements included in this Form 10-K.

Real Estate Investments

The Company applies Financial Accounting Standards Board
Statement No.144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", (Statement 144) to measure impairment in
real estate investments. Rental properties are individually
evaluated for impairment when conditions exist which may
indicate that it is probable that the sum of expected future
cash flows (on an undiscounted basis without interest) from a
rental property is less than its historical net cost basis.
These expected future cash flows consider factors such as
future operating income, trends and prospects as well as the
effects of leasing demand, competition and other factors. Upon
determination that a permanent impairment has occurred, rental
properties are reduced to their fair value. For properties to
be disposed of, an impairment loss is recognized when the fair
value of the property, less the estimated cost to sell, is less
than the carrying amount of the property measured at the time
there is a commitment to sell the property and/or it is
actively being marketed for sale. A property to be disposed of
is reported at the lower of its carrying amount or its
estimated fair value, less its cost to sell. Subsequent to the
date that a property is held for disposition, depreciation
expense is not recorded.

Securities Available for Sale

Investments in non-real estate assets consist primarily of
marketable equity securities. Management reviews our
marketable securities for impairment on an annual basis, or
when events or circumstances occur. If a decline in fair value
is determined to be other than temporary, an impairment charge
is recognized in earnings and the cost basis of the individual
security shall be written down to fair value as the new cost
basis.

Page 17

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, (CONT'D.)

Revenue Recognition

Estimates are used to establish amounts receivable from
tenants for such things as annualized rents, real estate taxes
and other cost recoveries. In addition, an estimate is made
with respect to whether a provision for allowance for doubtful
accounts receivable is necessary. The allowance for doubtful
accounts reflects management's estimate of the amounts of the
recorded accounts receivable at the balance sheet date that
will not be realized from cash receipts in subsequent periods.
If cash receipts in subsequent periods vary from our estimates,
or if the Company's tenants' financial condition deteriorates
as a result of operating difficulties, additional changes to
the allowance may be required.

Results of Operations

The Company's activities primarily generate rental
income. Net income for the fiscal year ended September 30,
2003 was $6,120,343 as compared to $4,478,145 in 2002 and
$4,123,054 in 2001. Net rental income, defined as rental and
occupancy charges reduced by direct operating expenses,
management fees, interest and depreciation, for the fiscal
year ended September 30, 2003 was $5,888,135 as compared to
$4,599,324 in 2002 and $3,485,479 in 2001.

Net rental income increased $1,288,811 in 2003 as compared
to 2002. The increase is due mainly to the addition of the net
rental income related to the acquisitions of properties made in
2003 at Tolleson, Arizona, Ft. Myers, Florida and Edwardsville,
Kansas and the selling of the property at Virginia Beach,
Virginia in 2002 which had produced a net rental loss in 2002.
The Company also paid off the mortgage on the Wichita, Kansas
property during 2003 resulting in an interest savings in 2003
as compared to 2002. These increases were partially offset
by a decrease in the net rental income at the Granite City,
Illinois property due to a full year of depreciation in 2003 as
compared with partial year depreciation in 2002.

Net rental income increased $1,113,845 in 2002 as compared
to 2001. The increase is due mainly to the addition of the net
rental income related to the acquisitions of properties made in
2002 at Granite City, Illinois, Monroe, North Carolina,Winston-
Salem, North Carolina and Elgin, Illinois and a full year of
net rental income of the acquisitions of properties made in
2001. These increases were partially offset by decreases in
net rental income at the Somerset, New Jersey property as a
result of the main tenant going out of business and an increase
in the net rental loss at the Virginia Beach, Virginia
property. The Somerset, New Jersey space has been released
under similar terms. The Virginia Beach property was sold in
2002.

The Company also generated net investment income from its
investments in securities available for sale and Hollister '97
LLC. These securities have an average dividend yield of
approximately 8.6%. Net investment and other income, which
includes interest and dividend income, realized gains on
securities available for sale, net reduced by margin loan
interest expense increased $621,355 in 2003 as compared to 2002
due primarily to an increase in dividend and interest income
and an increase in the gain on sale of securities available for
sale. Net investment and other income decreased $30,552 during
2002 as compared to 2001 primarily to sales of securities
available for sale resulting in a decrease in dividend income.
Gain on sales of securities available for sales transactions,
net amounted to $1,018,862, $909,704 and $632,492 for 2003,
2002, and 2001, respectively.
Page 18

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, (CONT'D.)

Interest expense increased $846,663 in 2003 as compared to
2002 and $1,468,658 in 2002 compared to 2001. The increases
are primarily due to the acquisitions of three industrial
properties in 2003 and four industrial properties in 2002.

Real estate taxes increased $605,558 in 2003 as compared
to 2002 and $125,813 in 2002 as compared to 2001 due to the
property acquisitions. The tenants related to the acquisitions
in 2003 and 2002 are subject to net leases which require the
tenants to absorb the real estate taxes as well as insurance
and the majority of the repairs and maintenance. As such, the
Company is reimbursed by the tenants for these real estate
taxes.

Operating expenses increased $135,537 in 2003 as compared
to 2002 and $178,727 in 2002 as compared to 2001. The
increases in 2003 and 2002 are due mainly to insurance costs
related to the new acquisitions and increased repairs and
maintenance.

Office and general expenses increased $441,996 in 2003 as
compared to 2002 and increased $645,839 in 2002 as compared to
2001. The increases relate mainly to increases in personnel
costs due to additional employees and increases in franchise
taxes. The Company has been active in acquisitions and is
expanding its operations. Total assets increased from
approximately $86,000,000 as of September 30, 2000 to
approximately $183,000,000 as of September 30, 2003.

During 2002, the Company sold the warehouse facility in
Virginia Beach, VA for a net loss of $175,376.

Off-Balance Sheet Arrangements

The Company has not executed any off-balance sheet arrangements

Liquidity and Capital Resources

The Company operates as a real estate investment trust
deriving its income primarily from real estate rental
operations. At September 30, 2003, the Company's shareholders'
equity increased to $78,313,289 as compared to $59,005,016 at
September 30, 2002 principally due to proceeds from the
dividend reinvestment and stock purchase plan, and the proceeds
from a private placement. See further discussion below.

The Company's ability to generate cash adequate to meet
its needs is dependent primarily on income from its real estate
investments, the sale of real estate investments and
securities, refinancing of mortgage debt, leveraging of real
estate investments, availability of bank borrowings, proceeds
from the Dividend Reinvestment and Stock Purchase Plan,
proceeds from private placements, and access to the capital
markets. Purchases of new properties, payments of expenses
related to real estate operations, capital improvements
programs, debt service, management and professional fees, and
dividend requirements place demands on the Company's liquidity.

Page 19

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, (CONT'D.)

The Company intends to operate its existing properties
from the cash flows generated by the properties. However, the
Company's expenses are affected by various factors, including
inflation. Increases in operating expenses raise the breakeven
point for a property and, to the extent that they cannot be
passed on through higher rents, reduce the amount of available
cash flow which can adversely affect the market value of the
property.

The Company's focus is on real estate investments. During
the past ten years, the Company purchased thirty-one net-leased
warehouse facilities at an aggregate cost of approximately
$166,200,000. The Company financed these purchases primarily
through mortgages on its acquisitions. The Company also has a
secured $10,000,000 line of credit of which approximately
$6,600,000 was available at September 30, 2003. Interest is at
the bank's floating prime (4.0% at September 30, 2003) and is
due monthly. The line increases to $15,000,000 in May, 2004
and expires in April, 2006.

During 2003, the Company made three acquisitions totaling
approximately $26 million. The Company expects to make
additional real estate investments from time to time. In 2004,
the Company plans to acquire approximately $30,000,000 of net-
leased industrial properties. The funds for these acquisitions
may come from the Company's available line of credit, other
bank borrowings and proceeds from the Dividend Reinvestment and
Stock Purchase Plan or private placements. To the extent that
funds or appropriate properties are not available, fewer
acquisitions will be made. Funds generated are expected to be
sufficient to meet debt service requirements and capital
expenditures of the Company.

The Company also invests in debt and equity securities of
other REITs as a proxy for real estate when suitable
acquisitions are not available, for liquidity, and for
additional income. The Company from time to time may purchase
these securities on margin when there is an adequate yield
spread. The margin loans at September 30, 2003 totaled
approximately $8,500,000. During fiscal 2003, the Company's
securities portfolio increased by approximately $10,200,000
primarily due to purchases of approximately $16,300,000 and a
change in the unrealized gain of approximately $985,000
partially offset by sales of approximately $8,092,000. During
October, 2003, the Company sold approximately $3,959,000 in
securities and recorded a gain of approximately $1,091,000.
The sales were made to recognize a portion of the substantial
unrealized gains in the security portfolio of existing at
September 30, 2003. The securities portfolio at September 30,
2003 has experienced an increase in value from cost of
approximately 13%.

Cash flows provided from operating activities were
$9,725,898, $6,792,043 and $4,785,236 for fiscal year 2003,
2002 and 2001, respectively. The increases in cash provided
from operating activities resulted primarily from the
operations of the property acquisitions of approximately
$26,000,000 in 2003 and $32,000,000 in 2002.

Cash flows used in investing activities were $35,417,062,
$30,564,641, and $32,301,411 for fiscal year 2003, 2002 and
2001, respectively. Cash flows used in investing activities
increased in 2003 as compared to 2002 due mainly to the
increase in securities purchases and decreased in 2002 as
compared to 2001 due mainly to decreased acquisitions in 2002
as compared to 2001.

Page 20

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, (CONT'D.)

Cash flows provided from financing activities were
$26,068,148, $24,318,591, and $27,149,664 for fiscal year 2003,
2002 and 2001, respectively. Cash flows provided from financing
activities increased in 2003 as compared to 2002 due mainly to
increases in cash from the issuance of common stock. The
Company sold common stock in a private placement in 2003 for
approximately $8,300,000 in addition to common stock sold
through the Dividend Reinvestment and Stock Purchase Plan. See
further explanation below. Cash flow provided from financing
activities decreased in 2002 as compared to 2001 primarily due
to less acquisitions made in 2002 compared to 2001 which
resulted in less mortgage proceeds in 2002 as compared to 2001.

At September 30, 2003, the Company had total liabilities
of $104,860,585 and total assets of $183,173,874. The Company
believes that it has the ability to meet its obligations and to
generate funds for new investments.

During 2003, the Company paid $7,987,624 as a dividend of
$0.58 per share. Management anticipates maintaining the annual
dividend rate of $0.58 per share although no assurances can be
given since various economic factors can reduce the amount of
cash flow available to the Company for dividends. Of the
$7,987,624 in dividends paid, $3,327,957 was reinvested in the
Dividend Reinvestment and Stock Purchase Plan.

The Company has a Dividend Reinvestment and Stock Purchase
Plan, (the Plan), in which participants purchase stock from the
Company at a discount of approximately 95% of market price.
During 2003, a total of $11,887,869 in additional capital was
raised. The success of the Plan has resulted in a substantial
improvement in the Company's liquidity and capital resources in
2003. It is anticipated, although no assurances can be given,
that a comparable level of participation will continue in the
Plan in fiscal 2004. Therefore, the Company anticipates that
the Plan will result in further increased liquidity and capital
resources in fiscal 2004.

On February 27, 2003, the Company sold 1,257,253 shares in
a private placement with Palisade Concentrated Equity
Partnership, L.P. for cash of $8,324,901 or $6.6215 a share.
The proceeds of the private placement were used to pay down the
Company's outstanding credit facility and will be used for
working capital. The Company paid approximately $107,000 in
offering costs which were offset from the proceeds received.

During the year ended September 30, 2003, two directors
exercised their stock options and purchased 9,500 shares for a
total of $52,875. During the year ended September 30, 2002,
nine officers, directors and key employees exercised their
stock options and purchased 255,000 shares for a total of
$1,617,488. Of this amount, 225,000 shares, for a total of
$1,617,488, were exercised through the issuance of notes
receivable from officers. These notes receivable are at an
interest rate of 5%, mature on April 30, 2012 and are
collateralized by the underlying common shares. As of
September 30, 2003, the balance of these notes receivable was
$1,325,001.

Page 21

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, (CONT'D.)

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin No. 51", which
addresses consolidation by business enterprises of variable
interest entities. The Interpretation clarifies the application
of Accounting Research Bulletin No. 51, Consolidated
Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling
financial interest or do not have sufficient equity at
risk for the entity to finance its activities without
additional subordinated financial support from other parties.
FIN 46 applies immediately to variable interest entities
created after January 31, 2003, and to variable interest
entities in which an enterprise obtains an interest after
that date. On October 9, 2003, the effective date was
deferred until the end of the first interim or annual period
ending after December 15, 2003, for certain interests held by a
public entity in certain variable interest entities or
potential variable interest entities created before February 1,
2003. Management believes that this Interpretation will
not have a material impact on the Company's financial
statements.

In April 2003, the FASB issued Statement No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities (SFAS No. 149). SFAS No. 149 amends and
clarifies accounting for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities under Statement 133.
SFAS No. 149 is effective for contracts entered into or
modified after June 30, 2003, with some exceptions, and for
hedging relationships designated after June 30, 2003. The
guidance should be applied prospectively. Management
believes that this Statement will not have a material impact on
the Company's financial statements.

In May 2003, the FASB issued Statement No. 150,
"Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" (SFAS
No. 150). SFAS No. 150 establishes standards for how an
issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that
is within its scope as a liability (or an asset in some
circumstances). Many of those instruments were previously
classified as equity. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. It is to
be implemented by reporting the cumulative effect of a change
in an accounting principle for financial instruments created
before the issuance date of the Statement and still
existing at the beginning of the interim period of adoption.
Restatement is not permitted. On October 29, 2003, the FASB
voted to indefinitely defer certain provisions of this
statement relating to non-controlling (minority) interests
in finite-like entities. Management believes that this
Statement will not have a material impact on the Company's
financial statements.

Page 22

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, (CONT'D.)

Safe Harbor Statement

This Form 10-K contains various "forward-looking
statements" within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, and the Company
intends that such forward-looking statements be subject to the
safe harbors created thereby. The words "may", "will",
"expect", "believe", "anticipate", "should", "estimate", and
similar expressions identify forward-looking statements. The
forward-looking statements reflect the Company's current views
with respect to future events and finance performance, but are
based upon current assumptions regarding the Company's
operations, future results and prospects, and are subject to
many uncertainties and factors relating to the Company's
operations and business environment which may cause the actual
results of the Company to be materially different from any
future results expressed or implied by such forward-looking
statements.

Such factors include, but are not limited to, the
following: (i) changes in the general economic climate; (ii)
increased competition in the geographic areas in which the
Company operates; (iii) changes in government laws and
regulations; and (iv) the ability of the Company to continue to
identify, negotiate and acquire properties on terms favorable
to the Company. The Company undertakes no obligation to
publicly update or revise any forward-looking statements
whether as a result of new information, future events, or
otherwise.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

The Company is exposed to interest rate changes primarily
as a result of its line of credit and long-term debt used to
maintain liquidity and fund capital expenditures and
acquisitions of the Company's real estate investment portfolio.
The Company's interest rate risk management objectives are to
limit the impact of interest rate changes on earnings and cash
flows and to lower its overall borrowing costs. To achieve its
objectives, the Company borrows primarily at fixed rates.

The following table sets forth information as of September
30, 2003, concerning the Company's debt obligations, including
principal cash flow by scheduled maturity, weighted average
interest rates and estimated fair value:

Long -Term
Debt: Average
Fixed Rate Carrying Value Interest Rate Fair Value
__________ __________ __________

2004 $207,819 7.50%
2005 962,452 7.00%
2006 2,801,133 -
2007 -0- 7.80%
2008 1,468,719 8.50%
Thereafter 85,469,176 7.15%
___________
Total $90,909,299 7.19% $95,315,781
===========

Page 23

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS (CONT'D.)

The Company also has $3,361,198 in variable rate debt
maturing in April, 2006. This debt is a line of credit. The
interest is at the bank's floating prime rate and is due
monthly. The interest rate was 4.0% at September 30, 2003.
Additionally, the Company has $8,512,853 in variable rate debt
due on demand. This debt is primarily margin loans secured by
marketable securities. The interest rates on these loans range
from 2.75% to 3.75% at September 30, 2003. The carrying value
of the Company's variable rate debt approximates fair value at
September 30, 2003.

The Company also invests in both debt and equity
securities of other REITs and is primarily exposed to equity
price risk from adverse changes in market rates and conditions.
All securities are classified as available for sale and are
carried at fair value. The Company has no significant interest
rate risk relating to debt securities as they are short-term in
nature.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data listed in
Part VI, Item 14 are incorporated herein by reference and filed
as part of this report.

The following is the Unaudited Selected Quarterly
Financial Data:

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED

FISCAL 2003 12/31/02 03/31/03 06/30/03 09/30/03

Total Income $4,588,030 $4,701,257 $5,798,227 $5,618,291
Total Expenses 3,149,602 3,559,128 3,767,316 4,109,416
Net Income 1,438,428 1,142,129 2,030,911 1,508,875
Net Income per
Share .12 .08 .14 .10

FISCAL 2002 12/31/01 3/31/02 6/30/02 9/30/02

Total Income $3,768,291 $4,082,895 $4,541,434 $4,173,974
Total Expenses 2,565,946 3,009,853 2,978,770 3,358,504
Net Income 1,202,345 1,073,042 1,387,289 815,469(1)
Net Income Per
Share .12 .10 .12 .06

(1) Decrease due primarily to an increase in professional
fees and insurance costs.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None

Page 24

ITEM 9A - CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial
Officer, with the assistance of other members of the Company's
management, have evaluated the effectiveness of the Company's
disclosure controls and procedures as of the end of the period
covered by this Annual Report on Form 10-K. Based on such
evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the Company's disclosure
controls and procedures are effective.

The Company's Chief Executive Officer and Chief Financial
Officer have also concluded that there have not been any
changes in the Company's internal control over financial
reporting that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over
financial reporting.

Page 25

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following are the Directors and Executive Officers of the
Company as of September 30, 2003:

Present Position with the Company;
Business Experience During Past Director
Name Age Five Years; Other Directorships Since
____ ___ _______________________________ ________
Ernest V. 85 Secretary/Treasurer (1968 to 1968
Bencivenga present) and Director. Financial
Consultant (1976 to present);
Treasurer and Director (1961 to
present) and Secretary (1967 to
present) of Monmouth Capital
Corporation, an affiliate of the
Company; Treasurer and Director
(1969 to present) and
Secretary/Treasurer (1984 to
present) of United Mobile Homes,
Inc., an affiliated company.

Anna T. Chew 45 Chief Financial Officer (1991 to 1993
present) and Director. Certified
Public Accountant. Vice President
(1995 to present) and Director
(1994 to present) of United Mobile
Homes, Inc., an affiliated
company. Chief Financial Officer
(1991 to present of Monmouth
Capital Corporation, an affiliated
company.

Daniel D. 48 Director. Attorney at Law (1982 to 1989
Cronheim present); Executive Vice
President (1989 to present) and
General Counsel (1983 to present)
of David Cronheim Company.

Matthew I. 44 Director. Attorney at law (1985 2000
Hirsch to present); Adjunct Professor of
Law (1993 to present) Widener
University School of Law.

Charles P. 66 Director. Investor; Director 1974
Kaempffer (1970 to present) of Monmouth
Capital Corporation, an affiliated
company; Director (1969 to
present) of United Mobile Homes,
Inc., an affiliated company.
Vice Chairman and Director (1996
to present) of Community Bank of
New Jersey.

Eugene W. Landy 70 President (1968 to present) and 1968
Director. Attorney at Law;
President and Director (1961 to
present) of Monmouth Capital
Corporation, an affiliated
company; Chairman of the Board
(1995 to present), President (1969
to present) of United Mobile
Homes, Inc., an affiliated
company.
Page 26

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT,
(CONT'D.)

Present Position with the Company;
Business Experience During Past Director
Name Age Five Years; Other Directorships Since
____ ___ _______________________________ _______
Samuel A. Landy 43 Director. Attorney at Law (1985 1989
to present); President (1995 to
present), Vice President (1991 to
1995) and Director (1992 to
present) of United Mobile Homes,
Inc., an affiliated company;
Director (1994 to present) of
Monmouth Capital Corporation, an
affiliated company.

Cynthia J. 34 Executive Vice President and 2002
Morgenstern Director. Vice President (1996 to
2001) Summit Bank, Commercial Real
Estate Division.

John R. Sampson 49 Director. Senior Portfolio Manager 2001
at Fox Asset Management, Inc.
(1998 to present); Principal at
Pharos Management and Principia
Partners LLC (1995 to 1998)
specializing in fixed income
consulting and research for the
securities industry.

Peter J. 56 Director. Investor; Director of 2001
Weidhorn real estate
management/acquisitions at Kushner
Companies (2000-2003); Chairman of
the Board, President/CEO WNY
Group, Inc. a real estate
investment trust that owned and
operated 8,000 apartments prior to
its sale to the Kushner Companies
(1998-2000); Director BNP
Residential Properties, Inc. (2001
to present); Director The
Community Development Trust, Inc.
(2003 to present); Trustee of the
CentraState Healthcare Foundation,
Inc. and Vice Chairman and Trustee
of the Union for Reform Judaism.

Stephen B. 49 Director. Principal of U.S. Real 2003
Wolgin Estate Advisors, Inc. (2000 to
present), a real estate advisory
services group based in New York;
Principal of the Wolgin Group
(2000-2003); prior affiliations
with J.P. Morgan, Odyssey
Associates, The Prudential Realty
Group, Standard & Poor's
Corporation, and Grubb and Ellis.

Page 27

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT,
(CONT'D.)

Audit Committee

The Company's Board of Directors has determined that at
least one member of the Audit Committee is a financial expert.

Delinquent Filers

There have been no delinquent filers pursuant to Item 405
of regulation S-K, to the best of management's knowledge.

Code of Ethics

The Company has adopted the Code of Business Conduct and
Ethics (the Code of Ethics). The Code of Ethics can be
found at the Company's website at www.mreic.com, as well as
attached to this filing at Exhibit 14.

ITEM 11 - EXECUTIVE COMPENSATION

Summary Compensation Table

The following Summary Compensation Table shows
compensation paid or accrued by the Company for services
rendered during 2003, 2002 and 2001 to the Chairman of the
Board and President, and Executive Vice President. There were
no other executive officers whose aggregate cash compensation
exceeded $100,000:

Annual Compensation
Name and
Principal Options
Position Year Salary Bonus Granted Other
____ ______ _____ _______ _____

Eugene W. Landy 2003 $150,000 $30,000 65,000 $94,000(1)
Chairman of the 2002 150,000 30,000 65,000 75,300 (1)
Board and 2001 150,000 30,000 65,000 105,200 (1)
President

Cynthia 2003 $139,077 $9,615 -0- $21,905(2)
Morgenstern 2002 121,250 8,462 50,000 6,438(2)
Executive Vice 2001 78,269 -0- -0- -0-
President

(1) Represents Director's fees of $17,500, $16,300 and $8,700
for 2003, 2002 and 2001, respectively, paid to Mr. Landy;
accrual for pension and other benefits of $59,000, $59,000 and
$49,000 for 2003, 2002 and 2001, respectively, in accordance
with Mr. Landy's employment contract; and legal fees of
$17,500, $-0- and $47,500 for 2003, 2002 and 2001,
respectively.

(2) Represents Director's fees and discretionary contributions
by the Company to the Company's 401(k) Plan allocated to an
account of the named executive officer.

Page 28

ITEM 11 - EXECUTIVE COMPENSATION, (CONT'D.)

Stock Option Plan

The following table sets forth, for the executive officers
named in the Summary Compensation Table, information regarding
individual grants of stock options made during the year ended
September 30, 2003:

Potential Realized
Value at Assumed
Percent Price Annual
Options Granted to Per Expiration Rates for Option
Name Granted Employees Share Date 5% 10%

Eugene W. Landy 65,000 100% $6.90 1/22/11 $181,500 $465,500

The following table sets forth for the executive officers
named in the Summary Compensation Table, information regarding
stock options outstanding at September 30, 2003:

Value of
Number of Unexercised
Unexercised Options
Options at Year-End At Year-End
Shares Value Exercisable/ Exercisable/
Name Exercised Realized Unexercisable Unexercisable

Eugene W. -0- N/A 195,000/65,000 $320,775/$78,650
Landy

Cynthia
Morgenstern -0- N/A 50,000/-0- $49,000/-0-

Employment Agreements

On December 9, 1994, the Company and Eugene W. Landy
entered into an Employment Agreement under which Mr. Landy
receives an annual base compensation of $150,000 (as amended,
increased in 2001), plus bonuses and customary fringe benefits,
including health insurance and five weeks vacation.
Additionally, there will be bonuses awarded as voted by the
Board of Directors. The Employment Agreement is terminable by
either party at any time, subject to certain notice
requirements. On severance of employment for any reason, Mr.
Landy will receive severance of $300,000, payable $100,000 on
severance and $100,000 on the first and second anniversaries of
severance. In the event of disability, Mr. Landy's
compensation shall continue for a period of three years,
payable monthly. On retirement, Mr. Landy shall receive a
pension of $40,000 a year for ten years, payable in monthly
installments. In the event of death, Mr. Landy's designated
beneficiary shall receive $300,000, $150,000 thirty days after
death and the balance one year after death. The Employment
agreement terminated December 31, 2000, and was automatically
renewed and extended for successive one-year periods.

Effective January 15, 2003, the Company and Cynthia J.
Morgenstern entered into a one year employment agreement under
which Ms. Morgenstern receives an annual base salary of
$145,000 plus bonuses and customary fringe benefits. In the
event of disability, her salary shall continue for a period of
two years.

Page 29

ITEM 11 - EXECUTIVE COMPENSATION, (CONT'D.)

Other Information

During 2001, the Directors received a fee of $1,000 for
each Board Meeting attended, and an additional fixed annual fee
of $7,600 payable quarterly. Effective April 1, 2002, the
meeting fee was increased to $1,500 and the fixed annual fee
was increased to $10,000. Directors appointed to house
committees receive $150 for each meeting attended. Those
specific committees are Compensation Committee, Audit Committee
and Stock Option Committee.

Except as provided in the specific agreements described
above, the Company has no pension or other post-retirement
plans in effect for Officers, Directors or employees and, at
present, has no intention of instituting such plans.

Daniel D. Cronheim is a Director of the Company and
Executive Vice President of David Cronheim Company. The David
Cronheim Company received $14,377 in lease brokerage
commissions in 2003. Cronheim Management Services, a division
of David Cronheim Company, received the sum of $258,626 in 2003
for management fees. In 1998, the Company entered into a new
management contract with Cronheim Management Services. Under
this contract, Cronheim Management Services receives 3% of
gross rental income on certain properties for management fees.
Cronheim Management Services provides sub-agents as regional
managers for the Company's properties and compensates them out
of this management fee. Management believes that the aforesaid
fees are no more than what the Company would pay for comparable
services elsewhere.

Report of Board of Directors on Executive Compensation

Overview and Philosophy

The Company has a Compensation Committee consisting of two
independent outside Directors. This Committee is responsible
for making recommendations to the Board of Directors concerning
compensation. The Compensation Committee takes into
consideration three major factors in setting compensation.

The first consideration is the overall performance of the
Company. The Board believes that the financial interests of
the executive officers should be aligned with the success of
the Company and the financial interests of its shareholders.
Increases in funds from operations, the enhancement of the
Company's equity portfolio, and the success of the Dividend
Reinvestment and Stock Purchase Plan all contribute to
increases in stock prices, thereby maximizing shareholders'
return.

The second consideration is the individual achievements
made by each officer. The Company is a small real estate
investment trust (REIT). The Board of Directors is aware of
the contributions made by each officer and makes an evaluation
of individual performance based on their own familiarity with
the officer.

The final criteria in setting compensation is comparable
wages in the industry. In this regard, the REIT industry
maintains excellent statistics.

Page 30

ITEM 11 - EXECUTIVE COMPENSATION, (CONT'D.)

Evaluation

The Company's funds from operations continue to increase.
The Committee reviewed the growth of the Company and progress
made by Eugene W. Landy, Chief Executive Officer and whether
his accomplishments met the bonus goals outlined in his
employment contract. His base compensation under this contract
was increased in 2001 to $150,000 per year, and his bonus for
2003 was $30,000.
Compensation Committee:
Daniel D. Cronheim
Matthew I. Hirsch

Comparative Stock Performance

The following line graph compares the total return of
the Company's common stock for the last five fiscal years to
the NAREIT All REIT Total Return Index, published by the
National Association of Real Estate Investment Trusts (NAREIT),
and the S&P 500 Index for the same period. The total return
reflects stock price appreciation and dividend reinvestment for
all three comparative indices. The information herein has been
obtained from sources believed to be reliable, but neither its
accuracy nor its completeness is guaranteed.

Monmouth
Real Estate
Investment
Year Corporation NAREIT S&P 500

1998 100 100 100
1999 95 91 126
2000 101 109 141
2001 135 124 102
2002 168 136 80
2003 210 172 98

Page 31

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table lists information with respect to the
beneficial ownership of the Company's Common Stock (the Shares)
as of September 30, 2003 by:

- each person known by the Company to beneficially own
more than five percent of the Company's outstanding
Shares;

- the Company's directors;

- the Company's executive officers; and

- all of the Company's executive officers and directors
as a group.

Unless otherwise indicated, the person or persons named
below have sole voting and investment power and that person's
address is c/o Monmouth Real Estate Investment Corporation,
Juniper Business Plaza, 3499 Route 9 North, Suite 3-C,
Freehold, New Jersey 07728. In determining the number and
percentage of Shares beneficially owned by each person, Shares
that may be acquired by that person under options exercisable
within 60 days of September 30, 2003 are deemed beneficially
owned by that person and are deemed outstanding for purposes of
determining the total number of outstanding Shares for that
person and are not deemed outstanding for that purpose for all
other shareholders.

Percentage
Amount and Nature of Shares
Name and Address of Beneficial Outstanding
of Beneficial Owner Ownership (1) (2)
___________________ _________________ _________

United Mobile Homes, Inc.
3499 Route 9, Suite 3-C
Freehold, NJ 07728 794,480 5.27%

Oakland Financial Corporation
34200 Mound Road
Sterling Heights, MI 48310 1,073,618 (3) 7.11%

Palisades Capital Management LLC
One Bridge Plaza
Suite 695
Fort Lee, NJ 07027 1,257,253 8.33%

Ernest V. Bencivenga 47,255 (4) 0.31%

Anna T. Chew 96,896 (5) 0.64%

Daniel D. Cronheim 60,289(6) 0.40%

Matthew I. Hirsch 44,186 (7) 0.29%

Page 32

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT, (CONT'D.)

Percentage
Amount and Nature of Shares
Name and Address of Beneficial Outstanding
of Beneficial Owner Ownership (1) (2)
___________________ ________________ __________

Charles P. Kaempffer 68,012 (8) 0.45%

Eugene W. Landy 851,842 (9) 5.57%

Samuel A. Landy 227,860 (10) 1.51%

Cynthia J. Morgenstern 56,608 (11) 0.37%

John R. Sampson 40,687 (12) 0.27%

Peter J. Weidhorn 21,000 (13) 0.14%

Stephen B. Wolgin 2,500 0.02%

Directors and Officers as a 1,517,135 (14) 9.79%
Group

(1) Except as indicated in the footnotes to this table and
pursuant to applicable community property laws, the Company
believes that the persons named in the table have sole
voting and investment power with respect to all Shares
listed.

(2) Based on the number of shares outstanding on September
30, 2003 which was 15,090,649.

(3) Based upon correspondence dated October 21, 2003
from Oakland Financial Corporation (Oakland), Liberty
Bell Agency, Inc. (Liberty Bell), and Cherokee
Insurance Company (Cherokee), as of June 30, 2003, Oakland
owns 6,833 Shares, Liberty Bell owns 580,436 Shares and
Cherokee owns 452,074 Shares, and Matthew T. Moroun owns
34,275 Shares. Amendment No. 2 to Schedule 13-D dated
October 1, 2002 filed with the SEC by Oakland, indicates
that Oakland shares voting and dispositive power with
respect to those Shares with Liberty Bell and Cherokee, both
of which are wholly-owned subsidiaries of Oakland. Matthew
T. Moroun is the Chairman of the Board and controlling
stockholder of Oakland, Liberty Bell and Cherokee.

(4) Includes 15,000 Shares issuable upon exercise of a Stock
Option.

(5) Includes (a) 35,863 Shares owned jointly with Ms. Chew's
husband; and (2) 11,033 Shares held in Ms. Chew's 401(k)
Plan. Includes 50,000 Shares issuable upon exercise of a
Stock Option.

(6) Includes 15,000 Shares issuable upon exercise of a Stock
Option.

(7) Owned jointly with Mr. Hirsch's wife. Includes 15,500
Shares issuable upon exercise of a Stock Option.

(8) Includes 15,534 Shares owned b y Mr. Kaempffer's wife:
(b) 1,080 Shares in joint name with Mrs. Kaempffer; and (c)
1,425 Shares held in the Charles P. Kaempffer Defined
Benefit Pension Plan of which Mr. Kaempffer is Trustee with
power to vote. Includes 15,000 Shares issuable upon
exercise of a Stock Option.

Page 33

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT, (CONT'D.)

(9) Includes 83,405 Shares owned by Mr. Landy's wife; (b)
161,764 Shares held in the Landy & Landy Employees' Profit
Sharing Plan of which Mr. Landy is a Trustee with power to
vote; (c) 126,585 Shares held in the Landy & Landy
Employees' Pension Plan of which Mr. Landy is a Trustee with
power to vote; and (d) 60,000 Shares held in the Eugene W.
and Gloria Landy Family Foundation, a charitable trust, of
which Mr. Landy has power to vote. Includes 195,000 shares
issuable upon exercise of Stock Options. Excludes 65,000
Shares issuable upon exercise of a Stock Option, which Stock
Option is not exercisable until January 22, 2004.

(10) Includes 6,546 Shares owned by Mr. Landy's wife; (b)
72,927 Shares held in custodial accounts for Mr. Landy's
minor children under the New Jersey Uniform Transfer to
Minors Act in which he disclaims any beneficial interest but
has power to vote; (c) 1,000 Shares held in the Samuel Landy
Family Limited Partnership and; (d) 29,822 Shares held in
Mr. Landy's 401(k) Plan. Includes 15,000 Shares issuable
upon exercise of a Stock Option.

(11) Includes 557 Shares held in Ms. Morgenstern's 401(k)
Plan. Includes 50,000 Shares issuable upon exercise of a
Stock Option.

(12) Includes 2,000 Shares held in custodial accounts for Mr.
Sampson's minor children under the New Jersey Uniform Gifts
to Minors Act in which he disclaims any beneficial interest
but has power to vote. Includes 20,000 Shares issuable upon
exercise of a Stock Option.

(13) Includes 15,000 Shares issuable upon exercise of a Stock
Option.

(14) Excludes 794,480 Shares (5.27%) owned by United Mobile
Homes, Inc. Eugene W. Landy owns beneficially approximately
10% of the shares of United Mobile Homes, Inc.

There are no equity compensation plans other than the 1997
Stock Option Plan. See Note 7 in the notes to the financial
statements for a description of that plan.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Certain relationships and related party transactions are
incorporated herein by reference to Item 14 (a) (1) (vi) Note 9
of the Notes to the Financial Statements - Related Party
Transactions.

ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES

This item is not applicable since this report is filed for a
period ending prior to December 15, 2003.

Page 34

PART IV

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K

PAGE(S)

(a) (1) The following Financial Statements are filed
as part of this report:

(i) Independent Auditors' Report 37

(ii) Balance Sheets as of September 30, 2003 and 38
2002

(iii) Statements of Income for the years ended
September 30, 2003, 2002 and 2001 39

(iv) Statements of Shareholders' Equity for the
years ended September 30, 2003, 2002 and 2001 40-41

(v) Statements of Cash Flows for the years ended
September 30, 2003, 2002 and 2001 42

(vi) Notes to the Financial Statements 43-62

(a) (2) The following Financial Statement Schedule is
filed as part of this report:

(i) Schedule III - Real Estate and Accumulated
Depreciation as of September 30, 2003 63-64

All other schedules are omitted for the reason that they
are not required, are not applicable, or the required
information is set forth in the financial statements or notes
hereto.

Page 35

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K

(a) Exhibits
(3)

(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession
(i) Reference is hereby made to the Agreement and Plan of
Merger dated April 23,1990 by and between Monmouth
Real Estate Investment Trust and Monmouth Real Estate
Investment Corporation filed with The Securities
and Exchange Commission on April 3, 1990 on Form S-4
(Registration No. 33-34103).
(ii) Reference is hereby made to the Agreement and Plan of
Merger dated March 24, 2003 by and between MREIC Maryland,
Inc., a Maryland corporation ("Monmouth Maryland"), and
Monmouth Real Estate Investment Corporation, a
Delaware corporation ("Monmouth Delaware") filed with
The Securities and Exchange Commission on April 7, 2003 in
The 2002 proxy (Registration No. 000-04258).

(3) Articles of Incorporation and By-Laws
(i) Reference is hereby made to the Articles of Incorporation
of MREIC Maryland, Inc. filed with The Securities and
Exchange Commission on April 7, 2003 in the 2002
proxy (Registration No. 000-04258).
(ii) Reference is hereby made to the Bylaws of MREIC
Maryland, Inc. filed with the Securities and Exchange
Commission on April 7, 2003 in the 2002 proxy
(Registration No. 000-04258).

(10) Material Contracts
(i) Employment Agreement with Mr. Eugene W. Landy
dated December 9, 1994 is incorporated by reference to that
filed with the Company's Form 10-K filed with The
Securities and Exchange Commission on December 28, 1994.
(ii) Employment Agreement with Mr. Ernest V. Bencivenga dated
November 9, 1993 is incorporated by reference to that
Filed with the Company's Form 10-K filed with The
Securities and Exchange Commission on December 28, 1994.
(iii)Employment Agreement with Cynthia J. Morgenstern dated
January 15, 2003.

(14) Code of Business Conduct and Ethics.

(23) Consent of KPMG LLP.

(31.1) Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Sectiion 302 of the Sarbanes-Oxley Act of 2002.

(31.2) Certification pursuant to 18 U.S.C.Section 1350 as adopted
pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.

(32) Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Reports on Form 8-K - None
Page 36

Independent Auditors' Report

The Board of Directors and Shareholders
Monmouth Real Estate Investment Corporation:

We have audited the financial statements of Monmouth Real
Estate Investment Corporation as listed in the accompanying
index. In connection with our audits of the financial
statements, we also have audited the financial statement
schedule as listed in the accompanying index. These financial
statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Monmouth Real Estate Investment Corporation as of
September 30, 2003 and 2002, and the results of its operations
and its cash flows for each of the years in the three-year
period ended September 30, 2003 in conformity with accounting
principles generally accepted in the United States of America.
Also in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects,
the information set forth therein.

/s/ KPMG LLP

Short Hills, New Jersey
December 12, 2003

Page 37

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
BALANCE SHEETS
AS OF SEPTEMBER 30,

ASSETS 2003 2002
______ ____ ____

Real Estate Investments:
Land $ 25,426,213 $ 21,011,214
Buildings, Improvements and Equipment,
net of Accumulated Depreciation of
$17,429,990 and $13,869,844,
respectively 127,344,122 108,096,042
___________ ___________
Total Real Estate Investments 152,770,335 129,107,256

Cash and Cash Equivalents 1,070,556 693,572
Securities Available for Sale at Fair
Value 25,421,551 15,223,942
Interest and Other Receivables 1,364,885 909,234
Prepaid Expenses 117,450 37,674
Financing Costs - Net of Accumulated
Amortization 1,193,157 1,010,473
Lease Costs - Net of Accumulated
Amortization 108,539 125,809
Investments in Hollister '97, LLC 900,399 900,399
Other Assets 227,002 1,003,134
___________ ___________
TOTAL ASSETS $ 183,173,874 $ 149,011,493
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Mortgage Notes Payable $ 90,909,299 $ 78,220,163
Loans Payable 12,324,926 10,775,467
Other Liabilities 1,626,360 1,010,847
___________ ___________
Total Liabilities 104,860,585 90,006,477
___________ ___________
Shareholders' Equity:
Common Stock - $.01 Par Value,
20,000,000 Shares Authorized;
15,090,649 and 12,132,748 Shares
Issued and Outstanding in 2003 and
2002, respectively 150,906 121,327
Excess Stock - $.01 Par Value, 5,000,000
Shares Authorized; No Shares Issued or
Outstanding -0- -0-
Additional Paid-In Capital 76,657,545 58,388,761
Accumulated Other Comprehensive Income 2,829,839 1,844,929
Loans to Officers, Directors and Key
Employees (1,325,001) (1,350,001)
Undistributed Income -0- -0-
___________ ___________
Total Shareholders' Equity 78,313,289 59,005,016
___________ ___________
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 183,173,874 $ 149,011,493
=========== ===========

See Accompanying Notes to the Financial Statements

Page 38

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30,

2003 2002 2001
____ ____ ____
INCOME:

Rental and Occupancy Charges $17,888,495 $14,519,670 $10,524,575
Interest and Dividend Income 1,798,448 1,137,220 1,751,137
Gain on Securities Available
For Sale Transactions, Net 1,018,862 909,704 632,492
___________ ___________ ___________
TOTAL INCOME 20,705,805 16,566,594 12,908,204
___________ ___________ ___________
EXPENSES:

Interest Expense 6,906,078 6,059,415 4,590,757
Management Fees 258,626 245,597 220,521
Real Estate Taxes 971,199 365,641 239,828
Professional Fees 278,823 291,816 464,826
Operating Expenses 904,316 768,779 590,052
Office and General Expense 1,517,624 1,075,628 429,789
Director Fees 188,650 165,100 83,050
Depreciation 3,560,146 2,941,097 2,166,327
___________ ___________ _________
TOTAL EXPENSES 14,585,462 11,913,073 8,785,150
___________ ___________ ___________
Income Before Gains 6,120,343 4,653,521 4,123,054
(Loss) Gain on Sale of Assets -
Investment Property -0- (175,376) -0-
___________ ___________ ___________
NET INCOME $6,120,343 $4,478,145 $ 4,123,054
=========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 13,844,056 11,177,294 9,504,806
=========== =========== ===========
Diluted 13,872,650 11,196,388 9,506,644
=========== =========== ===========
PER SHARE INFORMATION:

Income Before Gains $ .44 $ .42 $ .43
Loss (Gain) on Sale of Assets -
Investment Property -0- (.02) -0-
___________ ___________ ___________
NET INCOME - PER SHARE
BASIC AND DILUTED $ .44 $ .40 $ .43
=========== =========== ===========

See Accompanying Notes to the Financial Statements

Page 39

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2003, 2002, AND 2001

Loans to
Officers,
Additional Directors
Common Stock Issued Paid-In And Key
Number Amount Capital Employees
______ ______ ______ ______

Balance September 30, 2000 8,707,960 $87,080 $41,530,173 -0-

Shares Issued in
Connection with
the Dividend
Reinvestment and
Stock Purchase Plan 1,556,768 15,567 8,164,278 -0-
Distributions -0- -0- (1,409,604) -0-
Net Income -0- -0- -0- -0-
Unrealized Net Holding Gains
on Securities Available for
Sale -0- -0- -0- -0-
_________ _________ _________ _________
Balance September 30, 2001 10,264,728 102,647 48,284,847 -0-

Shares Issued in Connection
with the Dividend
Reinvestment and
Stock Purchase Plan 1,613,020 16,130 10,519,181 -0-
Shares Issued through the
Exercise of Stock Options 255,000 2,550 1,614,938 (1,439,363)
Distributions -0- -0- (2,030,205) -0-
Payments on Loans to Officers,
Directors and Key Employees -0- -0- -0- 89,362
Net Income -0- -0- -0- -0-
Unrealized Net Holding Gains
on Securities Available for
Sale Net of Reclassification
Adjustment -0- -0- -0- -0-
_________ _________ _________ _________
Balance September 30, 2002 12,132,748 121,327 58,388,761 (1,350,001)

Shares Issued in Connection
with the Dividend
Reinvestment and
Stock Purchase Plan 1,691,148 16,911 11,870,958 -0-
Shares Issued in Connection
With a Private Placement
(net of offering costs of
$106,826) 1,257,253 12,573 8,205,502 -0-
Shares Issued through the
Exercise of Stock Options 9,500 95 52,780 -0-
Distributions -0- -0- (1,867,281) -0-
Payments on Loans to Officers,
Directors and Key Employees -0- -0- -0- 25,000
Net Income -0- -0- -0- -0-
Stock Compensation Expense -0- -0- 6,825 -0-
Unrealized Net Holding Gains
on Securities Available for
Sale Net of Reclassification
Adjustment -0- -0- -0- -0-
_________ _________ _________ _________
Balance September 30, 2003 15,090,649 $150,906 $76,657,545 $(1,325,001)
======== ======== ======== ========

See Accompanying Notes to the Financial Statements
Page 40

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001, CONT'D.

Accumulated
Other
Undistributed Comprehensive Comprehensive
Income Income (Loss) Income

Balance September 30, 2000 -0- $(603,327)

Shares Issued in
Connection with
the Dividend
Reinvestment and
Stock Purchase Plan -0- -0-
Distributions (4,123,054) -0-
Net Income 4,123,054 -0- $4,123,054
Unrealized Net Holding
Gains on Securities
Available for Sale -0- 2,145,372 2,145,372
________ ________ ________
Balance September 30, 2001 -0- 1,542,045 $6,268,426
========
Shares Issued in Connection
with the Dividend
Reinvestment and
Stock Purchase Plan -0- -0-
Shares Issued through the
Exercise of Stock Options -0- -0-
Distributions (4,478,145) -0-
Payments on Loans to Officers,
Directors and Key Employees -0- -0-
Net Income 4,478,145 -0- $4,478,145
Unrealized Net Holding Gains
on Securities Available for
Sale Net of Reclassification
Adjustment -0- 302,884 302,884
________ ________ ________
Balance September 30, 2002 $ -0- $ 1,844,929 $4,781,029
========
Shares Issued in Connection
with the Dividend
Reinvestment and
Stock Purchase Plan -0- -0-
Shares Issued in Connection
with a Private Placement
(net of offering costs of
$106,826) -0- -0-
Shares Issued through the
Exercise of Stock Options -0- -0-
Distributions (6,120,343) -0-
Payments on Loans to Officers,
Directors and Key Employees -0- -0-
Net Income 6,120,343 $6,120,343
Stock Compensation Expense -0- -0-
Unrealized Net Holding Gains on
Securities Available for Sale
Net of Reclassification
Adjustment -0- 984,910 984,910
________ ________ ________
Balance September 30, 2003 $ -0- $2,829,839 $7,105,253
======== ======== ========

See Accompanying Notes to the Financial Statements
Page 41

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,

2003 2002 2001
____ ____ ____

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $6,120,343 $4,478,145 $4,123,054
Noncash Items Included in Net
Income:
Depreciation 3,560,146 2,941,097 2,166,327
Amortization 253,786 187,323 141,479
Stock Compensation Expense 6,825 -0- -0-
Loss on Sales of Assets-Investment
Property -0- 175,376 -0-

Gains on Sales of Securities (1,018,862) (909,704) (632,492)
Changes in:
Interest & Other Receivables (455,651) (62,104) (130,386)
Prepaid Expenses (79,776) 15,583 1,551
Other Assets and Lease Costs 723,574 (170,304) (895,772)
Other Liabilities 615,513 136,631 11,475
__________ __________ __________
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 9,725,898 6,792,043 4,785,236
__________ __________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Land, Buildings and
Improvements (27,223,225) (31,520,915) (38,994,718)

Proceeds from Sale of Assets-
Investment Property -0- 2,019,270 -0-

Distribution from Hollister '97 LLC -0- -0- 25,000
Purchase of Securities Available
for Sale (16,286,262) (5,706,901) (828,963)
Proceeds from Sale of Securities
Available for Sale 8,092,425 4,643,905 7,497,270

__________ __________ __________
NET CASH USED IN INVESTING (35,417,062) (30,564,641) (32,301,411)
__________ __________ __________
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Mortgages 19,100,000 23,350,000 27,220,000
Proceeds from Loans 20,972,865 16,070,530 17,243,367
Principal Payments on Mortgages (6,410,864) (5,554,591) (2,899,989)
Principal Payments of Loans (19,423,406) (13,500,024) (17,060,901)
Financing Costs on Debt (366,642) (341,772) -0-
Proceeds from Issuance of Common
Stock 16,777,987 8,271,484 6,308,324
Proceeds from Exercise of Options 52,875 178,125 -0-
Dividends Paid (4,659,667) (4,244,523) (3,661,137)
Payments on Loans to Officers,
Directors and Key Employees 25,000 89,362 -0-

__________ __________ __________
NET CASH PROVIDED FROM FINANCING
ACTIVITIES 26,068,148 24,318,591 27,149,664
__________ __________ __________
Net Increase (Decrease) in Cash and
Cash Equivalents 376,984 545,993 (366,511)
Cash and Cash Equivalents at
Beginning of Year 693,572 147,579 514,090
__________ __________ __________
CASH AND CASH EQUIVALENTS AT END
OF YEAR $1,070,556 $ 693,572 $ 147,579

========== ========== ==========

See Accompanying Notes to the Financial Statements
Page 42

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Description of the Business

Monmouth Real Estate Investment Corporation (the Company)
operates as a real estate investment trust (REIT) deriving its
income primarily from real estate rental operations. As of
September 30, 2003 and 2002, rental properties consist of
thirty-three and thirty commercial holdings, respectively.
These properties are located in New Jersey, New York,
Pennsylvania, North Carolina, Mississippi, Massachusetts,
Kansas, Iowa, Missouri, Illinois, Michigan, Nebraska, Florida,
Virginia, Ohio, Connecticut, Wisconsin, Maryland and Arizona.
The Company also owns a portfolio of investment securities.

On May 15, 2003, Monmouth Real Estate Investment
Corporation changed its state of incorporation from Delaware to
Maryland (the Reincorporation). The Reincorporation was
approved by the Company's shareholders at the Company's annual
meeting on May 6, 2003.

The Reincorporation was accomplished by the merger (the
Merger) of the Company with and into its holly-owned
subsidiary, MREIC Maryland, Inc., a Maryland Corporation,
(Monmouth Maryland), which was the surviving corporation in the
Merger. In connection with the Merger, Monmouth Maryland
changed its name to Monmouth Real Estate Investment
Corporation.

As a result of the Merger each outstanding share of the
Company's Class A Common stock, $.01 par value per share (the
Delaware Common Stock), was converted into one share of common
stock, $.01 par value, of Monmouth Maryland (the Maryland
Common Stock). In addition, each outstanding option to
purchase Delaware Common Stock was converted into the right to
purchase Maryland Common Stock upon the same terms and
conditions as immediately prior to the Merger. The Company's
1997 Stock Option Plan, as amended, was assumed and will be
continued by Monmouth Maryland.

The conversion of the Delaware Common Stock into Maryland
Common Stock occurred without an exchange of certificates.
Accordingly, certificates formerly representing shares of
Delaware Common Stock are now deemed to represent the same
number of shares of Maryland Common Stock.

Prior to the Merger, Monmouth Maryland had no assets or
liabilities, other than nominal assets or liabilities. As a
result of the Merger, Monmouth Maryland acquired all of the
assets and all of the liabilities and obligations of the
Company. The Merger was accounted for as if it were a "pooling
of interests" rather than a purchase for financial reporting
and related purposes, with the result that the historical
accounts of the Company and Monmouth Maryland have been
combined for all periods presented. Monmouth Maryland has the
same business, properties, directors, management, status as a
real estate investment trust under the Internal Revenue Code of
1986, as amended, and principal executive offices as Monmouth
Delaware.

Use of Estimates

In preparing the financial statements, management is
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. Actual results
could differ from these estimates.

Page 43

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, (CONT'D.)

Buildings, Improvements and Equipment

Buildings, improvements and equipment are stated at the
lower of depreciated cost or net realizable value.
Depreciation is computed based on the straight-line method over
the estimated useful lives of the assets utilizing a half-year
convention in the year of purchase. These lives range from 5
to 40 years. The Company accounts for its undivided interest
in the Somerset, NJ property based upon its pro rata share of
assets, liabilities, revenues and expenses. If there is an
event or change in circumstances that indicates that the basis
of an investment property may not be recoverable, management
assesses the possible impairment of value through evaluation of
the estimated future cash flows of the property, on an
undiscounted basis, as compared to the property's current
carrying value. A property's carrying value would be adjusted
to fair value, if necessary, to reflect an impairment in the
value of the property.

Cash Equivalents

Cash equivalents consist of money market funds.

Lease Costs and Financing Costs

Costs incurred in connection with the execution of leases
are deferred and are amortized over the term of the respective
leases. Unamortized lease costs are charged to expense upon
cancellation of leases prior to the expiration of lease terms.
Costs incurred in connection with obtaining mortgages and other
financings and refinancings are deferred and are amortized over
the term of the related obligations. Unamortized costs are
charged to expense upon prepayment of the obligation.

Investment in Hollister `97, LLC

The Company's 25% investment in Hollister `97, LLC is
accounted for under the equity method. Under the equity
method, the initial investment is recorded at cost. The
carrying amount of the investment is increased or decreased to
reflect the Company's share of income or loss and is also
reduced to reflect any dividends received. An unrelated New
Jersey limited partnership owns the remaining 75%.

Securities Available for Sale

The Company classifies its securities among three
categories: Held-to-maturity, trading and available-for-sale.
The Company's securities at September 30, 2003 and 2002 are all
classified as available-for-sale and are carried at fair value.
Gains or losses on the sale of securities are calculated based
on the average cost method and are accounted for on a trade
date basis. Unrealized holding gains and losses are excluded
from earnings and reported as a separate component of
Shareholders' Equity until realized.

A decline in the market value of any security below cost
that is deemed to be other than temporary results in a
reduction in the carrying amount to fair value. Any impairment
would be charged to earnings and a new cost basis for the
security established.

Page 44

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, (CONT'D.)

Revenue Recognition

Rental income from tenants with leases having scheduled
rental increases are recognized on a straight-line basis over
the term of the lease.

Gains and Deferred Gains on Installment Sales

Gains on the sale of real estate investments are
recognized by the full accrual method when the criteria for the
method are met. Generally, the criteria are met when the
profit on a given sale is determinable, and the seller is not
obliged to perform significant activities after the sale to
earn the profit. Alternatively, when the foregoing criteria
are not met, the Company recognizes gains by the installment
method.

Net Income Per Share

Basic net income per share is calculated by dividing net
income by the weighted-average number of common shares
outstanding during the period (13,844,056, 11,177,294 and
9,504,806 in 2003, 2002 and 2001, respectively). Diluted net
income per share is calculated by dividing net income by the
weighted-average number of common shares outstanding plus the
weighted-average number of net shares that would be issued upon
exercise of stock options pursuant to the treasury stock method
(13,872,650 11,196,388 and 9,506,644 in 2003, 2002 and 2001,
respectively). Options in the amount of 28,594, 19,094 and
1,838 are included in the diluted weighted average shares
outstanding for 2003, 2002 and 2001, respectively.

Stock Option Plan

Prior to October 1, 2002 the Company's stock option plan
was accounted for under the intrinsic value based method as
prescribed by Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees". As such,
compensation expense was recorded on the date of grant only if
the current market price on the underlying stock exceeded the
exercise price. Included in Note 7 to these Financial
Statements are the pro forma disclosures required by Statement
of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," which assumes the fair value based
method of accounting had been adopted.

The Company adopted the fair value recognition provisions
of SFAS No. 123, "Accounting for Stock Based Compensation" on
October 1, 2002. Under the prospective method of adoption
selected by the Company under the provisions of SFAS No. 148.
"Accounting for Stock Based Compensation, Transition and
Disclosure", compensation costs of $6,825 have been recognized
in 2003, as the Company granted stock-based compensation during
2003. See Note 7 for the assumptions used to calculate
compensation expense.

Income Tax

The Company has elected to be taxed as a Real Estate
Investment Trust (REIT) under Sections 856-860 of the Internal
Revenue Code. The Company will not be taxed on the portion of
its income which is distributed to shareholders, provided it
distributes at least 90% of its taxable income, has at least
75% of its assets in real estate investments and meets certain
other requirements for qualification as a REIT. The Company is
subject to franchise taxes in some of the states in which the
Company owns property.

Page 45

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, (CONT'D.)

Comprehensive Income

Comprehensive income is comprised of net income and other
comprehensive income. Other comprehensive income includes
items that are otherwise recorded directly in equity, such as
unrealized gains or losses on securities available for sale.

Reclassifications

Certain amounts in the financial statements for the prior
years have been reclassified to conform to the statement
presentation for the current year.

Page 46

NOTE 2 - REAL ESTATE INVESTMENTS

The following is a summary of the cost and
accumulated depreciation of the Company's land, buildings,
improvements and equipment at September 30, 2003 and 2002:

Buildings,
Improvements,
September 30, 2003 Land And Accumulated
Equipment Depreciation

NEW JERSEY:
Ramsey Industrial $ 52,639 $ 1,358,148 $ 745,203
Building
Somerset(1) Shopping 55,182 1,152,220 932,992
Center
South Brunswick Industrial 1,128,000 4,386,885 1,444,378
Building
PENNSYLVANIA:
Monaca Industrial 330,772 2,106,056 1,366,207
Park
NEW YORK:
Orangeburg Industrial 694,720 2,977,373 1,028,039
Building
NORTH CAROLINA:
Fayetteville Industrial 172,000 4,485,245 745,055
Building
Greensboro Industrial 327,100 1,853,700 615,757
Building
Monroe Industrial 500,000 4,981,022 191,570
Building
Winston-Salem Industrial 980,000 5,610,000 215,760
Building
MISSISSIPPI:
Jackson Industrial 218,000 1,340,001 404,543
Building
Richland Industrial 211,000 1,195,000 291,095
Building
MASSACHUSETTS:
Franklin Industrial 566,000 4,148,000 1,010,371
Building
KANSAS:
Wichita Industrial 268,000 1,542,245 371,121
Building
Edwardsville Industrial 1,185,000 5,815,148 74,535
Building
IOWA:
Urbandale Industrial 310,000 1,760,736 428,283
Building
MISSOURI:
Liberty Industrial 723,000 6,510,546 918,074
Building
O'Fallon Industrial 264,000 3,309,000 719,686
Building
St. Joseph Industrial 800,000 11,753,964 753,422
Building
VIRGINIA:
Charlottesville Industrial 1,170,000 2,845,000 328,266
Building
Richmond Industrial 1,160,000 6,416,305 412,291
Building
ILLINOIS:
Burr Ridge Industrial 270,000 1,236,599 174,338
Building
Schaumburg Industrial 1,039,800 3,694,320 615,699
Building
Granite City Industrial 340,000 12,046,675 463,412
Building
Elgin Industrial 1,280,000 5,529,488 212,664
Building
MICHIGAN:
Romulus Industrial 531,000 3,665,961 518,850
Building
FLORIDA:
Jacksonville Industrial 1,165,000 4,671,136 539,208
Building
Ft. Myers Industrial 1,910,000 2,499,093 32,040
Building
NEBRASKA:
Omaha Industrial 1,170,000 4,425,500 510,614
Building
OHIO:
Union Township Industrial 695,000 4,150,873 299,977
Building
CONNECTICUT:
Newington Industrial 410,000 2,966,486 189,804
Building
WISCONSIN:
Cudahy Industrial 980,000 5,053,615 323,903
Building
MARYLAND:
Beltsville Industrial 3,200,000 5,958,773 381,959
Building
ARIZONA
Tolleson Industrial 1,320,000 13,329,000 170,874
Building
_________ _________ ________

Total at September 30, 2003 $25,426,213 $144,774,112 $17,429,990

========== ========== ==========

(1) This represents the Company's 2/3 undivided interest in this property.

Page 47

NOTE 2 - REAL ESTATE INVESTMENTS, (CONT'D.)

Buildings,
Improvements,
September 30, 2002 Land And Accumulated
Equipment Depreciaiton

NEW JERSEY:
Ramsey Industrial $ 52,639 $1,358,148 $ 701,621
Building
Somerset(1) Shopping 55,182 1,148,906 889,384
Center
South Brunswick Industrial 1,128,000 4,190,598 1,290,001
Building
PENNSYLVANIA:
Monaca Industrial 330,773 2,100,605 1,269,546
Park

NEW YORK:
Orangeburg Industrial 694,720 2,977,372 933,503
Building
NORTH CAROLINA:
Fayetteville Industrial 172,000 4,467,885 630,060
Building
Greensboro Industrial 327,100 1,853,700 556,873
Building
Monroe Industrial 500,000 4,981,022 63,857
Building
Winston-Salem Industrial 980,000 5,610,000 71,920
Building
MISSISSIPPI:
Jackson Industrial 218,000 1,234,586 363,312
Building
Richland Industrial 211,000 1,195,000 260,447
Building
MASSACHUSETTS:
Franklin Industrial 566,000 4,148,000 904,017
Building
KANSAS:
Wichita Industrial 268,000 1,518,000 330,850
Building
IOWA:
Urbandale Industrial 310,000 1,760,736 383,138
Building
MISSOURI:
Liberty Industrial 723,000 6,510,546 751,144
Building
O'Fallon Industrial 264,000 3,309,000 634,846
Building
St. Joseph Industrial 800,000 11,753,964 452,054
Building
VIRGINIA:
Charlottesville Industrial 1,170,000 2,845,000 255,318
Building
Richmond Industrial 1,160,000 6,413,305 247,255
Building
ILLINOIS:
Burr Ridge Industrial 270,000 1,236,599 142,632
Building
Schaumburg Industrial 1,039,800 3,694,321 520,977
Building
Granite City Industrial 340,000 12,054,175 154,535
Building
Elgin Industrial 1,280,000 5,529,488 70,888
Building
MICHIGAN:
Romulus Industrial 531,000 3,665,961 423,934
Building
FLORIDA:
Jacksonville Industrial 1,165,000 4,668,080 418,909
Building
NEBRASKA:
Omaha Industrial 1,170,000 4,425,500 397,147
Building
OHIO:
Union Township Industrial 695,000 3,342,000 214,288
Building
CONNECTICUT:
Newington Industrial 410,000 2,961,000 113,884
Building
WISCONSIN:
Cudahy Industrial 980,000 5,053,615 194,328
Building
MARYLAND:
Beltsville Industrial 3,200,000 5,958,773 229,175
Building
_________ _________ _________

Total at September 30, 2002 $21,011,214 $121,965,886 $13,869,844
========= ========== =========

(1) This represents the Company's 2/3 undivided interest in the property.

Page 48

NOTE 3 - ACQUISITIONS AND DISPOSITIONS

Fiscal 2003

On November 6, 2002, the Company purchased a 288,211
square foot manufacturing and warehouse facility in Tolleson,
Arizona. This facility is 100% net leased to Western Container
Corporation, which manufactures plastic bottles for Coca-Cola
soft drink products. The lease is guaranteed by Coca-Cola
Enterprises. The purchase price was approximately
$14,800,000. The Company paid approximately $550,000 in cash,
borrowed approximately $2,200,000 against its security
portfolio with Prudential Securities, used approximately
$1,100,000 of its revolving credit line with Fleet Bank and
obtained a mortgage of approximately $10,950,000. This
mortgage payable is at an interest rate of 5.8% and is due
November 1, 2012.

On November 21, 2002 the Company purchased a 90,020 square
foot warehouse facility in Fort Meyers, Florida. This
warehouse facility is 100% net leased to Fed Ex Ground Package
System, Inc., a subsidiary of Federal Express Corporation. The
purchase price was approximately $4,400,000. The Company paid
approximately $1,200,000 in cash, and obtained a mortgage of
approximately $3,200,000. This mortgage payable is at a rate
of 6.33% and matures December 1, 2012.

On April 1, 2003, the Company purchased a 179,280 square
foot industrial building in Wyandotte County, in the City of
Edwardsville, Kansas. This industrial building is 100% net-
leased to Carlisle Tire and Wheel Company, for ten years. The
purchase price was approximately $7,000,000. To fund this
purchase, the Company used approximately $2,050,000 of its
revolving credit line with Fleet Bank and assumed a mortgage of
$4,950,000. This mortgage payable is at an interest rate of
7.375% and is due in 2017.

Fiscal 2002

On October 12, 2001, the Company purchased a 184,800
square foot warehouse facility in Granite City, Illinois. This
warehouse facility is 100% net-leased to Anheuser-Busch, Inc.
The purchase price was approximately $12,400,000. To fund this
purchase, the Company used approximately $100,000 in cash,
borrowed approximately $1,000,000 against its security
portfolio with Prudential Securities, used approximately
$1,800,000 of its credit line with Fleet Bank and obtained a
mortgage of approximately $9,500,000. This mortgage payable is
at an interest rate of 7.11% and is due November 1, 2016.

On November 2, 2001, the Company purchased a 160,000
square foot warehouse facility in Monroe, North Carolina. This
warehouse facility is 100% net-leased to Hughes Supply Inc.
The purchase price was approximately $5,500,000. To fund this
purchase, the Company used approximately $100,000 in cash, used
approximately $1,300,000 of its credit line with Fleet Bank and
obtained a mortgage of approximately $4,100,000. This mortgage
payable is at an interest rate of 7.11% and is due December 1,
2016.

Page 49

NOTE 3 - ACQUISITIONS AND DISPOSITIONS, (CONT'D.)

On January 31, 2002, the Company purchased a 106,507
square foot warehouse facility in Winston-Salem, North
Carolina. This warehouse facility is 100% net-leased to Fed Ex
Ground Package System, a subsidiary of Federal Express
Corporation. The purchase price was approximately $6,700,000.
To fund this purchase, the Company used approximately $200,000
in cash, used approximately $1,700,000 of its credit line with
Fleet Bank and obtained a mortgage of approximately
$4,800,000. This mortgage payable is at an interest rate of
7.1% and is due February 1, 2012.

On April 8, 2002, the Company purchased a 89,052 square
feet warehouse facility located in Elgin, Illinois from Jones
Elgin, LLC, and unrelated entity. This warehouse facility is
100% net leased to Reynolds Metals Company, which merged with
Alcoa, Inc. The purchase price, including closing costs, was
approximately $6,800,000. The Company used approximately
$100,000 in cash, $1,700,000 of its Revolving Credit line with
Fleet Bank and obtained a mortgage of $5,000,000. This
mortgage is payable at a rate of 6.97% and matures on May 1,
2017.

On May 1, 2002, the Company sold the warehouse facility in
Virginia Beach, VA. The net proceeds from this sale was
$2,019,270 resulting in a net loss of $175,376.

NOTE 4 - SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

The Company has approximately 3,500,000 square feet of
property, of which approximately 1,034,000 square feet or 29%
is leased to Federal Express Corporation and subsidiaries and
approximately 274,000 square feet, or 8%, is leased to Keebler
Company. Rental and occupancy charges from Federal Express
Corporation and subsidiaries totaled approximately $6,538,000,
$5,662,000 and $4,113,000 for the years ended September 30,
2003, 2002 and 2001, respectively. Rental and occupancy
charges from Keebler Company, (a subsidiary of the Kellogg
Company) totaled approximately $1,967,000, $1,853,000 and
$1,702,000 for the years ended September 30, 2003, 2002 and
2001. During 2003, 2002 and 2001, rental income and occupancy
charges from properties leased to these companies approximated
48%, 52%, 55% of total rental and occupancy charges,
respectively.

Information on these tenants is provided below. The
information has been obtained from sources believed to be
reliable, but neither its accuracy nor its completeness is
guaranteed.

S&P Credit Rating
Tenant September 30, 2003 Current Assets
________ ________ ________

Federal Express
Corporation $4,093,000 at August 31,2003
(FDX) BBB/Stable/NR per 10-Q

Kellogg Company $1,881,600 at June 28, 2003
(K) BBB/Positive/A-2 per 10-Q

Page 50

NOTE 5 - SECURITIES AVAILABLE FOR SALE

During the year ended September 30, 2001, the Company
realized a loss of $226,842 due to a writedown to fair value of
securities available for sale which was considered other than
temporarily impaired. This loss is included in the gain on
securities available for sales transaction, net.

Dividend income for the years ended September 30, 2003,
2002 and 2001 amounted to $1,346,706, $915,904 and $1,534,255,
respectively. Interest income for the years ended September
30, 2003, 2002 and 2001 amounted to $451,742, $221,316 and
$216,882, respectively.

The Company received proceeds of $8,092,425 on sales or
redemptions of securities available for sale and recorded gross
realized gains of $1,074,554 and gross realized losses of
$55,692 during 2003. The Company received proceeds of
$4,643,905 on sales and redemptions of securities available for
sale and recorded gross realized gains of $976,544 and gross
realized losses of $66,840 in 2002. The Company received
proceeds of $7,497,270 on sales and redemptions of securities
available for sale and recorded gross realized gains of
$1,051,771, gross realized losses of $226,842, and an
impairment loss of $226,842 (as noted above)in 2001.

Page 51

NOTE 5 - SECURITIES AVAILABLE FOR SALE, (CONT'D.)

The following is a summary of Securities Available for
Sale at September 30, 2003 and 2002:
2003
Shares Cost Market
Debt Securities:
Sizeler Property Investors
Convertible Subordinated SBJ
to SPL RDMPT RO JJ 8.000
07/15/2003 DTD 5/15/93
Callable 07/15/99 at 100.00
1,914,000 $1,884,333 $2,047,980
_________ _________

Total Debt Securities 1,884,333 2,047,980
_________ _________
Equity Securities:
Preferred Stock:
Alexandria Real Estate 9.50% Sr A 2,000 46,695 52,700
AMB Property Corp Sr L 6.5% 4,000 100,000 100,000
Apartment Inv. 8.75% Class D Cum 11,300 280,965 283,065
Apartment Inv. Sr H -0- -0- -0-
Apartment Inv. Cl R 10% 3,000 80,250 79,800
Apartment Inv. 8.00% Class T 16,000 400,000 400,000
Archstone Smith 8.75% 2,000 51,491 51,880
Associated Estates Realty Corp
DEP SHS REPSTG 1/10 SH
9.75% CL A Cum Redeem -0- -0- -0-
Boykin Lodging Inc. 5,200 133,560 139,880
CarrAmerica Realty Corp 8,000 200,000 202,400
CBL&Assoc 7.75& PRC 8,000 200,000 205,600
CBL&Assoc 8.75& PRB 4,100 207,315 221,810
Colonial Properties 8.75% -0- -0- -0-
Commerical NetLease SrA 1,000 26,248 26,750
Crown American 11% Ser 10,000 458,810 575,000
Developers Div CL G 8% 4,000 100,000 105,000
Developers Div. CL C 8.375% -0- -0- -0-
Developers Div. CL D 9.68% -0- -0- -0-
Developers Div. CL H 7.375% 25,000 625,000 622,500
Developers Div. Dep Shs CL F 2,000 49,762 52,960
Duke Realty Corp 6.625% CL 4,000 100,000 99,720
Equity Inns 8.75% Sr B 30,000 750,000 775,500
Equity Inns 9.50% Sr A cum -0- -0- -0-
Equity Office Trust 8.625% Sr Cum 1,000 26,000 25,380
Equity Res. Ppts 9.125% 1,000 27,040 27,600
Felcor Lodging 1.95% PFD 3,000 55,208 68,520
Felcor Lodging 9%B 21,500 488,127 529,115
First Industrial Realty 7.95% 7,000 175,480 175,070
G&L Realty 10.25% Sr A 1,000 23,320 24,890
Gleimcher Realty 9.25% B 23,500 574,291 590,085
Glenborough R/E 7.75% Sr A 21,900 505,061 524,943
Healthcare Dep Shrs 8.60% -0- -0- -0-
Healthcare Prop 7.25% 5,000 125,000 129,250
Healthcare Prop. 7.875% Sr A -0- -0- -0-
Healthcare Prop. 8.70% Sr B 1,000 17,932 24,980
Healthcare Prop. 8.875% -0- -0- -0-
Healthcare Reit 7.875 SrD 14,000 351,000 357,000
Highwoods Properties Inc. 8% 8,500 203,920 210,800
Hospitality Ppts 8.875 Sr B 6,000 152,131 159,900
Hospitality Ppts 9.50% Sr A 10,000 210,133 257,500
Host Marriott 10% CL C 1,000 25,600 25,000
HRPT 8.75% Sr B 15,000 378,730 402,150
HRPT 9.875% Sr A 5,500 145,660 148,775
Innkeepers USA 8.625% 31,500 772,961 790,650
iStar Financial Inc. 7.875% 20,000 500,000 509,000
iStar Financial Inc. 8% Sr D 6,000 89,641 150,840
iStar Financial Inc. 9.20% Sr 1,000 17,708 25,300
JDN Realty 9.375% -0- -0- -0-

Page 52A

NOTE 5 - SECURITIES AVAILABLE FOR SALE,
(CONT'D.)

2002

Shares Cost Market
Debt Securities:
Sizeler Property Investors
Convertible Subordinated SBJ
to SPL RDMPT RO JJ 8.000
07/15/2003 DTD 5/15/93
Callable 07/15/99 at 100.00 1,914,000 $1,884,333 $1,949,889
_________ _________
Total Debt Securities 1,884,333 1,949,889
_________ _________
Equity Securities:
Preferred Stock:
Alexandria Real Estate 9.50% Sr A 2,000 19,870 26,470
AMB Property Corp Sr L 6.5% 4,000 -0- -0-
Apartment Inv. 8.75% Class D Cum 11,300 18,120 24,260
Apartment Inv. Sr H -0- 20,580 25,030
Apartment Inv. Cl R 10% 3,000 80,250 78,450
Apartment Inv. 8.00% Class T 16,000 -0- -0-
Archstone Smith 8.75% 2,000 51,491 53,800
Associated Estates Realty Corp
DEP SHS REPSTG 1/10 SH
9.75% CL A Cum Redeem -0- 18,063 24,900
Boykin Lodging Inc. 5,200 -0- -0-
CarrAmerica Realty Corp 8,000 -0- -0-
CBL&Assoc 7.75& PRC 8,000 -0- -0-
CBL&Assoc 8.75& PRB 4,100 202,100 210,600
Colonial Properties 8.75% -0- 63,475 62,575
Commerical NetLease SrA 1,000 26,248 26,000
Crown American 11% Ser 10,000 458,810 555,000
Developers Div CL G 8% 4,000 -0- -0-
Developers Div. CL C 8.375% -0- 105,290 105,000
Developers Div. CL D 9.68% -0- 28,204 27,621
Developers Div. CL H 7.375% 25,000 -0- -0-
Developers Div. Dep Shs CL F 2,000 49,762 50,600
Duke Realty Corp 6.625% CL J 4,000 -0- -0-
Equity Inns 8.75% Sr B 30,000 -0- -0-
Equity Inns 9.50% Sr A cum -0- 210,007 269,724
Equity Office Trust 8.625% Sr Cum 1,000 33,117 41,664
Equity Res. Ppts 9.125% 1,000 63,923 80,790
Felcor Lodging 1.95% PFD 3,000 15,350 21,200
Felcor Lodging 9%B 21,500 410,096 439,200
First Industrial Realty 7.95% SRD 7,000 -0- -0-
G&L Realty 10.25% Sr A 1,000 -0- -0-
Gleimcher Realty 9.25% B 23,500 204,116 224,460
Glenborough R/E 7.75% Sr A Conv 21,900 52,311 66,300
Healthcare Dep Shrs 8.60% -0- 50,164 50,000
Healthcare Prop 7.25% 5,000 -0- -0-
Healthcare Prop. 7.875% Sr A -0- 189,749 265,860
Healthcare Prop. 8.70% Sr B 1,000 72,667 102,400
Healthcare Prop. 8.875% -0- 51,400 49,900
Healthcare Reit 7.875 SrD 14,000 -0- -0-
Highwoods Properties Inc. 8% SrD 8,500 17,245 23,550
Hospitality Ppts 8.875 Sr B 6,000 -0- -0-
Hospitality Ppts 9.50% Sr A 10,000 129,983 182,700
Host Marriott 10% CL C 1,000 25,600 25,170
HRPT 8.75% Sr B 15,000 299,880 298,440
HRPT 9.875% Sr A 5,500 145,660 143,000
Innkeepers USA 8.625% 31,500 98,924 93,000
iStar Financial Inc. 7.875% Sr E 20,000 -0- -0-
iStar Financial Inc. 8% Sr D 6,000 166,641 271,400
iStar Financial Inc. 9.20% Sr 1,000 44,288 62,675
JDN Realty 9.375% -0- 609,208 706,434

Page 52B

NOTE 5 - SECURITIES AVAILABLE FOR SALE,
(CONT'D.)

2003

Shares Cost Market

Kimco Realty 8.375% A -0- -0- -0-
Kramont Realty 9.50% Sr D 54,700 1,259,352 1,394,850
Lasalle Hotel 10.25% Sr A 14,500 376,245 391,500
Lexington Properties 8.05% B 20,000 500,000 525,000
Mid-America Apt Communities 8.875% -0- -0- -0-
Mid-America Apt Communities 9.5% Sr A -0- -0- -0-
Mid-America Apt Communities Sr H 10,000 254,500 261,800
Mills Corp 9% Sr B 18,000 467,975 478,800
Mills Corp 9% Sr C 24,500 633,495 654,150
New Plan Excel 7.625% Sr E 14,000 352,200 371,000
New Plan Excel 8.625% -0- -0- -0-
Parkway Properties 8.75% Sr A -0- -0- -0-
Post Properties 7.625% -0- -0- -0-
Post Properties SR B 8,000 197,370 204,800
Post Properties SR C 1,000 23,440 24,750
Prime Retail Inc Sr A 10.50% 1,000 15,433 18,100
Prime Retail Inc Sr B 8.50% 8,000 26,720 56,400
Reckson Assoc 7.625% 1,000 18,707 24,750
Shurgard Storage 8.70% Sr C 1,000 26,264 25,450
Sizeler Sr B 9.75% 1,000 25,000 28,250
SNH Capital 10.125% 6,000 159,004 159,720
Sovran Self Storage 9.85% Sr B 2,000 39,115 53,480
Thornburg Mortgage 9.68% Sr A -0- -0- -0-
Vornado Realty Trust 8.5% 14,000 326,910 360,360
Winston Hotels Sr A 9.25% 12,000 286,835 302,880

__________ __________
Total Preferred Stock 13,663,604 14,487,353
__________ __________
Common Stock:
American Financial Realty Trust 1,000 12,500 14,100
BNP Residential Properties Inc. 18,000 192,595 189,900
Centertrust Retail Properties -0- -0- -0-
Crown American Realty Trust 30,000 245,694 357,000
Equity Properties Trust 8,000 210,250 220,240
First Industrial Realty 1,000 28,400 32,070
Five Star Quality Care Inc. -0- -0- -0-
Gables Residential Trust 1,000 24,859 32,320
Getty Realty Corp 20,090 404,344 492,205
Healthcare Property Invest. 25,000 883,627 1,167,500
Healthcare Realty Trust 10,400 286,930 332,592
HPRT Properties 89,000 706,726 813,460
Humphrey Hospitality 10,000 26,932 29,690
IRT Properties -0- -0- -0-
JDN Realty -0- -0- -0-
Lasalle Hotel Properties 9,000 115,824 155,970
Mid Atlantic Realty Trust 1,000 9,582 21,000
Monmouth Capital Corp 37,071 131,531 188,689
Nationwide Health Properties 21,500 294,425 376,035
New Plan Realty 62,000 1,126,498 1,444,600
Penn R/E Trust -0- -0- -0-
Price Legacy Corp 10,000 27,724 35,000
RFS Hotel Investors -0- -0- -0-
Senior Housing 29,000 339,222 417,890
Sizeler Property Inv. 105,500 894,676 1,105,668
Trizec Ppts Inc 35,000 379,371 429,100
United Mobile Homes 60,200 651,145 907,214
Urstadt Biddle Properties 9,500 50,920 123,975

__________ __________
Total Common Stock
7,043,775 8,886,218
__________ __________
Total Equity Securities
20,707,379 23,373,571
__________ __________
Total Securities Available for
Sale $22,591,712 $25,421,551
========== ==========

Page 53A

NOTE 5 - SECURITIES AVAILABLE FOR SALE,
(CONT'D.)

2002

Shares Cost Market

Kimco Realty 8.375% A 9,100 $218,224 $231,140
Kramont Realty 9.50% Sr D 34,500 743,817 871,125
Lasalle Hotel 10.25% Sr A 6,000 153,000 151,200
Lexington Properties 8.05% B -0- -0- -0-
Mid-America Apt Communities 8.875% 4,000 92,670 100,000
Mid-America Apt Communities SrA 6,000 119,584 152,400
Mid-America Apt Communities Sr H -0- -0- -0-
Mills Corp 9% Sr B -0- -0- -0-
Mills Corp 9% Sr C -0- -0- -0-
New Plan Excel 7.625% Sr E -0- -0- -0-
New Plan Excel 8.625% 18,000 443,077 450,900
Parkway Properties 8.75% Sr A 8,000 205,600 203,600
Post Properties 7.625% 1,000 23,440 23,010
Post Properties SR B -0- -0- -0-
Post Properties SR C -0- -0- -0-
Prime Retail Inc Sr A 10.50% 1,000 15,433 5,200
Prime Retail Inc Sr B 8.50% 8,000 26,720 21,600
Reckson Assoc 7.625% 1,000 18,707 23,700
Shurgard Storage 8.70% Sr C -0- -0- -0-
Sizeler Sr B 9.75% 1,000 25,000 26,100
SNH Capital 10.125% 1,000 26,460 25,790
Sovran Self Storage 9.85% Sr B 2,000 39,115 52,800
Thornburg Mortgage 9.68% Sr A 2,000 40,740 53,800
Vornado Realty Trust 8.5% 6,000 119,393 151,800
Winston Hotels Sr A 9.25% 4,000 92,842 89,000

__________ __________
Total Preferred Stock
6,436,414 7,321,338
__________ __________
Common Stock:
American Financial Realty Trust -0- -0- -0-
BNP Residential Properties Inc. 18,000 192,595 176,400
Centertrust Retail Properties 28,500 135,120 165,300
Crown American Realty Trust 41,000 324,564 376,790
Equity Properties Trust -0- -0- -0-
First Industrial Realty -0- -0- -0-
Five Star Quality Care Inc. 540 4,050 621
Gables Residential Trust -0- -0- -0-
Getty Realty Corp 5,000 94,076 95,400
Healthcare Property Invest. -0- -0- -0-
Healthcare Realty Trust -0- -0- -0-
HPRT Properties 64,000 470,835 528,000
Humphrey Hospitality 5,000 16,028 10,750
IRT Properties 26,500 256,864 311,375
JDN Realty 545 6,584
Lasalle Hotel Properties 1,000 12,394 12,000
Mid Atlantic Realty Trust 11,000 117,259 176,990
Monmouth Capital Corp 32,280 113,653 122,665
Nationwide Health Properties -0- -0- -0-
New Plan Realty 45,731 776,616 843,280
Penn R/E Trust 17,000 330,960 437,920
Price Legacy Corp -0- -0- -0-
RFS Hotel Investors 1,000 10,769 10,070
Senior Housing 6,000 73,891 67,320
Sizeler Property Inv. 105,500 894,676 1,061,328
Trizec Ppts Inc 10,000 132,775 113,500
United Mobile Homes 100,200 1,050,225 1,327,650
Urstadt Biddle Properties 9,500 50,920 108,775

Total Common Stock 5,058,270 5,952,718
__________ __________
Total Equity Securities
11,494,684 13,274,056
__________ __________
Total Securities Available for
Sale $13,379,017 $15,223,945
========== ==========

Page 53B

NOTE 6 - MORTGAGE NOTES AND LOANS PAYABLE

The following is a summary of the mortgage notes payable at
September 30, 2003 and 2002:

Fixed Fiscal Balance Balance
Property Rate Maturity 9/30/03 9/30/02
_______ _______ _______ _______ _______

Orangeburg, NY 7.00% 2005 $ 364,498 $ 677,351
Jackson, MS 8.50% 2008 373,626 433,634
Franklin, MA 7.00% 2005 414,965 771,137
Wichita, KS (1) 10.25% 2017 -0- 1,104,099
Urbandale, IA 7.00% 2005 182,989 353,642
Richland, MS 7.50% 2004 207,819 314,919
O'Fallon, MO 8.50% 2008 1,095,093 1,310,326
Fayetteville, NC 7.80% 2007 2,801,133 2,923,508
Schaumburg, IL 8.48% 2012 2,545,793 2,734,241
Burr Ridge, IL 8.00% 2014 883,861 937,527
Romulus, MI 7.56% 2013 2,151,940 2,295,913
Liberty, MO 7.065% 2013 3,637,322 3,900,105
Omaha, NE 7.15% 2014 3,236,441 3,443,297
Charlottesville, VA 6.90% 2014 2,233,032 2,368,604
Jacksonville, FL 6.92% 2017 3,440,326 3,621,281
Union Township, OH 8.25% 2015 2,577,450 2,708,147
Richmond, VA 6.12% 2016 4,928,959 5,193,920
St. Joseph, MO 8.12% 2016 7,980,478 8,338,783
Newington, CT 8.10% 2016 2,235,607 2,335,074
Cudahy, WI 8.15% 2016 3,862,951 4,032,368
Beltsville, MD 7.53% 2016 5,427,127 5,676,839
Granite City, IL 7.11% 2017 8,770,809 9,163,601
Monroe, NC 7.11% 2017 3,753,546 3,920,014
Winston Salem, NC 7.10% 2012 4,607,334 4,725,650
Elgin, IL 6.97% 2017 4,735,617 4,936,183
Tolleson, AZ 5.80% 2013 10,615,499 -0-
Ft. Myers, FL 6.33% 2013 3,131,807 -0-
Edwardsville, KS 7.375% 2017 4,713,277 -0-
_______ _______
Total Mortgage
Notes Payable $90,909,299 $78,220,163
======== ========

(1) Mortgage was paid off once the prepayment penalty expired.

Page 54

NOTE 6 - MORTGAGE NOTES AND LOANS PAYABLE,
(CONT'D.)

Principal on the foregoing debt is scheduled to be paid as follows:

Year Ending
September 30, 2004 $ 5,879,387
2005 5,193,303
2006 7,889,835
2007 5,768,439
2008 5,885,711
Thereafter 60,292,624

__________
$90,909,299
==========

Line of Credit

The Company had a $8,000,000 line of
credit with Fleet Bank at an interest rate
of prime. As of September 30, 2003 and
2002, -0- and $4,576,211 was outstanding,
respectively.

In May 2003, the Company received a
new line of credit (the "new line") from
United Trust Bank (the Bank), which
replaced the line with Fleet Bank. The
amount of the facility is $10,000,000
during the first year and $15,000,000
thereafter and matures on the third
anniversary of the closing date. The
interest rate charged on the new line is
the Bank's prime rate. The interest rate
as of September 30, 2003 was 4%. The
amount outstanding on the new line at
September 30, 2003 was $3,361,198.

Margin Loans

During fiscal 2003, the Company
purchased securities on margin. The
margin loans are at 2.75% and 3.50% and
are due on demand. At September 30, 2003
and 2002, the margin loans amounted to
approximately $8,513,000 and $5,728,000,
respectively and are collateralized by the
Company's securities portfolio. The
Company must maintain a coverage ratio of
approximately 50%.

Other

In connection with the St. Joseph,
Missouri property, the Company issued a
$500,000 note to Butler at an interest
rate of 8.12% due February 29, 2016. The
balance of this note at September 30, 2003
was $450,875. The Company prepaid this
note on October 21, 2003 for a discounted
amount of $439,555 pursuant to an
agreement with Butler.

Page 55

NOTE 7 - STOCK OPTION PLAN

On April 24, 1997, the shareholders
approved and ratified the Company's 1997
Stock Option Plan (the Plan) authorizing
the grant to officers, directors and key
employees options to purchase up to
750,000 shares of common stock. On April
25, 2002, the shareholders approved an
increase to the number of shares of common
stock under the Plan to 1,500,000 shares.
Options may be granted any time up to
December 31, 2006. No option shall be
available for exercise beyond ten years.
All options are exercisable after one year
from the date of grant. The option price
shall not be below the fair market value
at date of grant. Canceled or expired
options are added back to the "pool" of
shares available under the Plan.

The Company elected to follow APB
Opinion No. 25 in accounting for its stock
option plan prior to October 1, 2002, and
accordingly, no compensation cost has been
recognized prior to October 1, 2002. Had
compensation cost been determined
consistent with SFAS No. 123, the
Company's net income and earnings per
share would have been reduced to the
proforma amounts as follows:

2003 2002 2001

Net Income Prior to $6,127,168 $ 4,478,145 $4,123,054
Compensation
Expense for grants
in FY 2003
Compensation Expense 6,825
recognized - -
__________ __________ __________
Net Income as Reported $6,120,343 $ 4,478,145 $4,123,054
Compensation Expense if 29,250
the fair value method had 20,840 13,985
been applied to grants in
FY 2002 and 2001
__________ __________ __________
Net Income Proforma $6,091,093 $ 4,457,305 $4,109,069
========== ========== ==========
Net Income per share -
Basic and Diluted as $ 0.44 $ 0.40 $ 0.43
reported

Net Income per share -
Basic and Diluted $ 0.44 $ 0.40 $ 0.43
Proforma

The Company adopted the fair value
recognition provisions of SFAS No. 123,
"Accounting for Stock Based
Compensation" on October 1, 2002.
During the year ended September 30, 2003,
one officer was grated 65,000 options.
The fair value of those options was $9,100
based on the assumptions noted below and
is being amortized over the 1-year vesting
period.

The fair value of each option grant is
estimated on the date of grant using the
Black-Sholes option-pricing model with the
following weighted-average assumptions
used for grants in 2003, 2002, and 2001:

Page 56

NOTE 7 - STOCK OPTION PLAN, (CONT'D.)

2003 2002 2001
____ ____ ____

Divident Yield 8.0% 8.0% 9%
Expected volatility 13.3% 13.0% 25%
Risk-free interest rate 3.4% 3.4% 4.75%
Expected lives (years) 8 5 5

During the year ended September 30,
2003, two directors, officers and key
employees exercised their stock options
and purchased 9,500 shares for a total of
$52,875.

A summary of the status of the
Company's stock option plan as of
September 30, 2003, 2002 and 2001 is as
follows:

2003 2002 2001
Weighted Weighted Weighted
Average Average Average
2003 Exercise 2002 Exercise 2001 Exercise
Shares Price Shares Price Shares Price

Outstanding at
beginning of
year 465,000 $6.80 385,000 $6.19 385,000 $6.20
Granted 65,000 6.90 365,000 7.06 15,000 5.65
Exercised (9,500) 5.57 (255,000) 6.34 -0- -0-
Expired (20,000) 7.25 (30,000) 5.94 (15,000) 5.94
_______ _______ _______ _______
Outstanding at
end of year 500,500 6.83 465,000 6.80 385,000 6.19
======= ======= =======
Exercisable at
end of year 435,500 100,000 370,000
======= ======= =======
Weighted-average
fairvalue of options
granted during the
year .14 .12 .54
======== ======== ========

The following is a summary of stock options outstanding as of
September 30, 2003:

Date of Number of Number of Option Price Expiration Date
Grant Grants Shares

4/12/00 1 65,000 5.50 4/12/05
3/6/01 1 500 5.25 3/6/06
6/20/01 1 5,000 5.85 6/20/06
10/4/01 1 65,000 6.765 10/4/06
6/21/02 15 300,000 7.13 6/21/10
1/22/03 1 65,000 6.90 1/22/11
________
500,500
========
As of September 30, 2003, there
were 735,000 shares available for grant
under this plan.

Page 57

NOTE 8 - INCOME FROM LEASES

The Company derives income primarily
from operating leases on its commercial
properties. In general, these leases are
written for periods up to ten years with
various provisions for renewal. These
leases generally contain clauses for
reimbursement (or direct payment) of real
estate taxes, maintenance, insurance and
certain other operating expenses of the
properties. Minimum rents due under
noncancellable leases at September 30,
2003 are scheduled as follows: 2004 -
$16,484,000; 2005 - $15,381,000; 2006
- $14,572,000; 2007 - $13,059,000; 2008
- $11,592,000; thereafter - $34,754,000.

NOTE 9 - RELATED PARTY TRANSACTIONS

Eugene W. Landy received $17,500,
$16,300 and $8,700 during 2003, 2002 and
2001 as Director. The firm of Eugene W.
Landy received $17,500, $-0-, and $47,500
during 2003, 2002 and 2001, respectively,
as legal fees. On December 9, 1994, the
Company and Eugene W. Landy entered into
an Employment Agreement under which, on
severance of employment for any reason,
Mr. Landy will receive severance of
$300,000 payable $100,000 on severance and
$100,000 on the first and second
anniversaries of severance. In the event
of disability, Mr. Landy's compensation
shall continue for a period of three
years, payable monthly. On retirement,
Mr. Landy shall receive a pension of
$40,000 a year for ten years, payable in
monthly installments. In the event of
death, Mr. Landy's designated beneficiary
shall receive $300,000, $150,000 thirty
days after death, and the balance one year
after death. The Employment Agreement
terminated December 31, 2000 and was
automatically renewed and extended for
successive one-year periods. An accrual of
$59,000, $59,000 and $49,000 was made as
of September 30, 2003, 2002 and 2001,
respectively, for pension and other
benefits in accordance with Mr. Landy's
employment agreement. Additionally, the
Board of Directors has granted to Mr.
Landy loans totaling $1,312,501 at
interest rates ranging from 5% to 7% and
maturity dates ranging from 2003 to 2012.
In fiscal 2003, Mr. Landy was also paid a
bonus of $30,000.

Effective January 15, 2003, the
Company and Cynthia J. Morgenstern entered
into a one year employment agreement under
which Ms. Morgenstern receives an annual
base salary of $145,000 plus bonuses and
customary fringe benefits. In the event
of disability, her salary shall continue
for a period of two years. Ms.
Morgenstern received $17,500, $5,500 and -
0- during 2003, 2002 and 2001,
respectively, as Director.

Daniel D. Cronheim is a Director of
the Company and Executive Vice President
of David Cronheim Company. Cronheim
Management Services, a division of David
Cronheim Company, received the sum of
$258,626, $245,597 and $220,521 for
management fees during the years ended
2003, 2002 and 2001, respectively.
Effective August 1, 1998, the Company
entered into a management contract with
Cronheim Management Services. Under this
contract, Cronheim Management Services
receives 3% of gross rental income on
certain properties for management fees.
The David Cronheim Company received
$14,377, $20,194 and $26,708 in lease
brokerage commissions in 2003, 2002 and
2001, respectively. Daniel Cronheim
received $16,150, $16,300 and $8,700 for
Director and Committee fees in 2003, 2002
and 2001, respectively.

Page 58

NOTE 9 - RELATED PARTY TRANSACTIONS,
(CONT'D.)

The Company operates as part of a
group of three public companies (all
REITs) which includes the Company, United
Mobile Homes, Inc. and Monmouth Capital
Corporation (the affiliated companies).
Some general and administrative expenses
are allocated between the affiliated
companies based on use or services
provided. Allocations of salaries and
benefits are made based on the amount of
the employees' time dedicated to each
affiliated company.

There are five Directors of the
Company who are also Directors and
shareholders of United Mobile Homes, Inc.
and there are five Directors of the
Company who are also Directors and
shareholders of Monmouth Capital
Corporation.

The Company holds common stock of the
affiliated companies in its securities
portfolios. See footnote 5 for holdings.
The Company sold 40,000, 42,000 and -0-
shares of United Mobile Homes, Inc during
2003, 2002, and 2001, respectively and
recorded a gain on sale of $230,152,
$105,902, and -0- during 2003, 2002, and
2001, respectively.

NOTE 10 - TAXES

Income Tax

The Company has elected to be taxed
as a Real Estate Investment Trust under
the applicable provisions of the Internal
Revenue Code and the comparable New Jersey
Statutes. Under such provisions, the
Company will not be taxed on that portion
of its taxable income distributed
currently to shareholders, provided that
at least 90% of its taxable income is
distributed. As the Company has and
intends to continue to distribute all of
its income currently, no provision has
been made for income taxes.

Federal Excise Tax

The Company does not have a Federal
excise tax liability for the calendar
years 2003, 2002 and 2001, since it
intends to or has distributed all of its
annual income.

NOTE 11 - DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN/EQUITY

The Company implemented a dividend
reinvestment and stock purchase plan (the
"Plan") effective December 15, 1987.
Under the terms of the Plan and subsequent
offerings, shareholders who participate
may reinvest all or part of their
dividends in additional shares of the
Company at approximately 95% of market
price. According to the terms of the
Plan, shareholders may also purchase
additional shares, at approximately 95% of
market price by making optional cash
payments monthly.

Page 59

NOTE 11 - DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN/EQUITY, (CONT'D.)

Amounts received, including dividend
reinvestment of $3,327,957 and $2,263,827
in 2003 and 2002, respectively, and shares
issued in connection with the Plan for the
years ended September 30, 2003 and 2002
were as follows:

2003 2002

Amounts Received $11,887,869 $10,535,311
Shares Issued 1,691,148 1,613,020

On February 27, 2003, the Company
sold 1,257,253 shares in a private
placement with Palisade Concentrated
Equity Partnership, L.P. for cash of
$8,324,901 or $6.6215 a share. The
proceeds of the private placement were
used to pay down the Company's outstanding
credit facility and will be used for
working capital. The Company paid
approximately $107,000 in offering costs
which were recorded as a reduction to
Additional Paid-In Capital.

NOTE 12 - DISTRIBUTIONS

The following cash distributions were
paid to shareholders during the years
ended September 30, 2003 and 2002:

2003 2002

Quarter Amount Per Share Amount Per Share
Ended
December 31 $1,815,746 $.145 $1,519,885 $.145
March 31 1,898,483 .145 1,587,414 .145
June 30 2,113,024 .145 1,683,029 .145
September 30 2,160,371 .145 1,718,022 .145
________ _______ ________ ______
$7,987,624 $ .58 $6,508,350 $ .58
======== ===== ========= =====

On October 1, 2003, the Company
declared a dividend of $ .145 per share to
be paid on December 15, 2003 to
shareholders of record November 17, 2003.

NOTE 13 - FAIR VALUE OF FINANCIAL
INSTRUMENTS

The Company is required to disclose
certain information about fair values of
financial instruments, as defined in
Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair
Value of Financial Instruments."

Page 60

NOTE 13 - FAIR VALUE OF FINANCIAL
INSTRUMENTS, (CONT'D.)

Limitations

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 the
Company's entire holdings of a particular
financial instrument. For a portion of
the Company's 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. Use of
different assumptions or methodologies is
likely to result in significantly
different fair value estimates.

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
securities available for sale is based
upon quoted market values. The fair value
of variable rate mortgage notes payable
and loans payable approximate their
current carrying amounts since such
amounts payable are at approximately a
weighted-average current market rate of
interest. At September 30, 2003, the fair
value (estimated based upon expected cash
outflows discounted at current market
rates) and carrying value of fixed rate
mortgage notes payable amounted to
$95,315,781 and $90,909,299, respectively.
At September 30, 2002, the fair value and
carrying value of fixed rate mortgage
notes payable amounted to $81,951,074 and
$78,220,163, respectively.

NOTE 14 - CASH FLOW AND COMPREHENSIVE
INCOME INFORMATION

Cash paid during the years ended
September 30, 2003, 2002 and 2001, for
interest is $6,885,146, $6,030,744 and
$4,590,757, respectively.

During 2003, 2002 and 2001, the
Company had $3,327,957, $2,263,827 and
$1,871,521, respectively, of dividends
which were reinvested that required no
cash transfers.

The following are the
reclassification adjustments related to
securities available for sale included in
Other Comprehensive Income.

2003 2002 2001

Unrealized holding gains
arising during the year $2,003,772 $1,212,588 $ 2,777,864
Less: reclassification
adjustment for gains
realized in income (1,018,862) (909,704) (632,492)
_________ _________ _________

Net unrealized gains $ 984,910 $302,884 $ 2,145,372
======== ======== ========

Page 61

NOTE 15 - SUBSEQUENT EVENTS

In October, 2003, the Company sold
approximately $3,959,000 in investment
securities and recognized $1,091,000 in
gains in income.

In connection with the St. Joseph,
Missouri property, the Company issued a
$500,000 note to Butler at an interest
rate of 8.12% due February 29, 2016. The
balance of this note at September 30, 2003
was $450,875. The Company prepaid this
note on October 21, 2003 for a discounted
amount of $439,555 pursuant to an
agreement with Butler.

On October 23, 2003, the Company
invested $500,000 in the Convertible
Debenture Private Placement Offering of
Monmouth Capital Corporation (the MCC
Debenture), an affiliated company. The
MCC Debenture pays interest at 8% and is
convertible into 83,333 shares of Common
Stock of Monmouth Capital Corporation at
any time prior to redemption or maturity.
The MCC debenture is due in 2013.

Page 62

NOTE 15 - SUBSEQUENT EVENTS, (CONT'D.)

REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE III
SEPTEMBER 30, 2003

Column A Column B Column C Column D
________ ________ __________________ ________
Capitalization
Buildings Subsequent
and to
Description Encumbrances Land Improvements Acquisition
___________ __________ _________ __________ ___________

Shopping Center
Somerset, NJ $ -0- $ 55,182 $637,097 $515,123
Industrial
Building
Ramsey, NJ -0- 52,639 291,500 1,066,648
Monaca, PA -0- 330,773 878,081 1,208,751
Orangeburg, NY 364,498 694,720 2,977,372 -0-
South
Brunswick, NJ -0- 1,128,000 4,087,400 299,485
Greensboro, NC -0- 327,100 1,853,700 -0-
Jackson, MS 373,626 218,000 1,233,500 106,501
Franklin , MA 414,965 566,000 4,148,000 -0-
Wichita, KS -0- 268,000 1,518,000 24,245
Urbandale, IO 182,989 310,000 1,758,000 2,736
Richland, MS 207,819 211,000 1,195,000 -0-
O'Fallon, MO 1,095,093 264,000 3,302,000 7,000
Fayetteville, NC 2,801,133 172,000 4,467,885 17,360
Schaumburg, IL 2,545,793 1,039,800 3,694,321 -0-
Burr Ridge, IL 883,861 270,000 1,236,599 -0-
Romulus, MI 2,151,940 531,000 3,653,883 12,078
Liberty, MO 3,637,322 723,000 6,510,546 -0-
Omaha, NE 3,236,441 1,170,000 4,425,500 -0-
Charlottsville, VA 2,233,032 1,170,000 2,845,000 -0-
Jacksonville, FL 3,440,326 1,165,000 4,668,080 3,056
Union City, OH 2,557,450 695,000 3,342,000 808,873
Richmond, VA 4,928,959 1,160,000 6,413,305 3,000
St. Joseph, MO 7,980,478 800,000 11,753,964 -0-
Newington, CT 2,235,607 410,000 2,961,000 5,486
Cudahy, WI 3,862,951 980,000 5,050,997 2,618
Beltsville, MD 5,427,127 3,200,000 5,958,773 -0-
Granite City, IL 8,770,809 340,000 12,046,675 -0-
Monroe, NC 3,753,546 500,000 4,981,022 -0-
Winston-Salem, NC 4,607,334 980,000 5,610,000 -0-
Elgin, IL 4,735,617 1,280,000 5,529,488 -0-
Tolleson, AZ 10,615,499 1,320,000 13,329,000 -0-
Ft. Myers, FL 3,131,807 1,910,000 2,499,093 -0-
Edwardsville, KS 4,713,277 1,185,000 5,815,148 -0-

__________ _________ __________ __________
$90,909,299 $25,426,214 $140,671,929 $4,082,960
========== ========= ========== ==========
Buildings and improvements reacquired in 1986.
**Property was renovated in 2001.

Page 63A

NOTE 15 - SUBSEQUENT EVENTS,
(CONT'D.)

REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE III
SEPTEMBER 30, 2003

Column A Column E (1) (2)

Gross Amount at Which Carried
September 30, 2003

Description Land Bldg & Imp Total
________ ________ __________ ________
Shopping Center
Somerset, NJ $ 55,182 $1,152,220 $1,207,402
Industrial
Building
Ramsey, NJ 52,639 1,358,148 1,410,787
Monaca, PA 330,773 2,086,832 2,417,605
Orangeburg, NY 694,720 2,977,372 3,672,092
South
Brunswick, NJ 1,128,000 4,386,885 5,514,885
Greensboro, NC 327,100 1,853,700 2,180,800
Jackson, MS 218,000 1,340,001 1,558,001
Franklin , MA 566,000 4,148,000 4,714,000
Wichita, KS 268,000 1,542,245 1,810,245
Urbandale, IO 310,000 1,760,736 2,070,736
Richland, MS 211,000 1,195,000 1,406,000
O'Fallon, MO 264,000 3,309,000 3,573,000
Fayetteville, NC 172,000 4,485,245 4,657,245
Schaumburg, IL 1,039,800 3,694,321 4,734,121
Burr Ridge, IL 270,000 1,236,599 1,506,599
Romulus, MI 531,000 3,665,961 4,196,961
Liberty, MO 723,000 6,510,546 7,233,546
Omaha, NE 1,170,000 4,425,500 5,595,500
Charlottesville, VA 1,170,000 2,845,000 4,015,000
Jacksonville, FL 1,165,000 4,671,136 5,836,136
Union City, OH 695,000 4,150,873 4,845,873
Richmond, VA 1,160,000 6,416,305 7,576,305
St. Joseph, MO 800,000 11,753,964 12,553,964
Newington, CT 410,000 2,966,486 3,376,486
Cudahy, WI 980,000 5,053,615 6,033,615
Beltsville, MD 3,200,000 5,958,773 9,158,773
Granite City, IL 340,000 12,046,675 12,386,675
Monroe, NC 500,000 4,981,022 5,481,022
Winston-Salem, NC 980,000 5,610,000 6,590,000
Elgin, IL 1,280,000 5,529,488 6,809,488
Tolleson, AZ 1,320,000 13,329,000 14,649,000
Ft. Myers, FL 1,910,000 2,499,093 4,409,093
Edwardsville, KS 1,185,000 5,815,148 7,000,148

_________ _________ _________
25,426,214 144,754,889 170,181,103
========== =========== ===========

*Buildings and improvements reacquired in 1986.
**Property was renovated in 2001.

Page 63B

NOTE 15 - SUBSEQUENT EVENTS,
(CONT'D.)

REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE III
SEPTEMBER 30, 2003

Column A Column F Column G Column H Column I

________ ________ ________ ________ _______

Accumulated Date of
Deprecia- Construc- Date Depreciable
Description tion tion Acquired Life
__________ __________ ________ ________ ___________

Shopping Center
Somerset, NJ $ 932,992 1970 1970 10-33

Industrial
Building
Ramsey, NJ 745,203 1969 1969 7-40
Monaca, PA 1,366,207 1977 1977* 5-31.5
Orangeburg, NY 1,028,039 1990 1993 31
South Brunswick, NJ 1,444,378 1974 1993 31.5
Greensboro, NC 615,757 1988 1993 31.5
Jackson, MS 404,543 1988 1993 39
Franklin , MA 1,010,371 1991 1994 39
Witchita, KS 371,121 1995 1994 39
Urbandale, IO 428,283 1985 1994 39
Richland, MS 291,095 1986 1994 39
O'Fallon, MO 719,686 1989 1994 39
Fayetteville, NC 745,055 1996 1997 39
Schaumburg, IL 615,699 1997 1997 39
Burr Ridge, IL 174,338 1997 1997 39
Romulus, MI 518,850 1998 1998 39
Liberty, MO 918,074 1997 1998 39
Omaha, NE 510,61 1999 1999 39
Charlottesville, VA 328,266 1998 1999 39
Jacksonville, FL 539,208 1998 1999 39
Union City, OH 299,977 1999 2000 39
Richmond, VA 412,291 2000 2001 39
St. Joseph, MO 753,422 2000 2001 39
Newington, CT 189,804 2001 2001 39
Cudahy, WI 323,903 2000 2001 39
Beltsville, MD 381,959 2000 2001 39
Granite City, IL 463,412 2001 2001 39
Monroe, NC 191,570 2001 2001 39
Winston-Salem, NC 215,760 2001 2002 39
Elgin, IL 212,664 2002 2002 39
Tolleson, AZ 170,874 2002 2002 39
Ft. Myers, FL 32,040 1974** 2002 39
Edwardsville, KS 74,535 2002 2003 39

__________
$ 17,429,990
==========
*Buildings and improvements reacquired in 1986.
**Property was renovated in 2001.

Page 63C

MONMOUTH REAL ESTATE
INVESTMENT
CORPORATION
SCHEDULE III
REAL ESTATE AND
ACCUMULATED
DEPRECIATION,
(CONT'D.)

(1) Reconciliation

REAL ESTATE INVESTMENTS

9/30/03 9/30/02 9/30/01

Balance-Beginning
of Year $ 142,957,878 $ 113,971,563 $ 74,996,066
Additions:
Acquisitions 26,058,241 31,274,685 38,688,039

Improvements 1,164,984 246,230 287,458

__________ __________ __________
Total Additions 27,223,225 31,520,915 38,975,497
__________ __________ __________
Sales -0- (2,534,600) -0-
__________ __________ __________

Balance-End of $ 170,181,103 $ 142,957,878 $ 113,971,563
Year =========== =========== ===========

ACCUMULATED DEPRECIATION

9/30/03 9/30/02 9/30/01

Balance-Beginning
of Year $ 13,869,844 $ 11,268,700 $ 9,102,373
Depreciation 3,560,146 2,941,097 2,166,327

Sales -0- (339,954) -0-
__________ __________ __________

Balance-End of $ 17,429,990 $ 13,869,844 $ 11,268,700
Year ========== ========== ==========

Page 64

MONMOUTH REAL ESTATE
INVESTMENT
CORPORATION
NOTES TO SCHEDULE
III
SEPTEMBER 30,
(1) Reconciliation
2003 2002 2001

Balance - Beginning
of Year 142,957,878 $ 113,971,563 $ 74,996,066
__________ __________ __________
Additions:
Ramsey, NJ -0- 3,997 178,937
Somerset, NJ 3,314 30,488 -0-
Monaca, PA 5,450 154,154 84,543
Orangeburg, NY -0- -0- -0-
South Brunswick, NJ 196,287 45,237 11,900
Greensboro, NC -0- -0- -0-
Jackson, MS 105,415 -0- -0-
Franklin, MA -0- -0- -0-
Wichita, KA 24,245 -0- -0-
Urbandale, IA -0- 2,736 -0-
Richland, MS -0- -0- -0-
O'Fallon, MO -0- 7,000 -0-
Fayetteville, NC 17,360 -0- -0-
Schaumburg, IL -0- -0- -0-
Burr Ridge, IL -0- -0- -0-
Romulus, MI -0- -0- 12,078
Liberty, MO -0- -0- -0-
Omaha, NE -0- -0- -0-
Charlottesville, VA -0- -0- -0-
Jacksonville, FL 3,056 -0- -0-
Union Township, OH 808,873 -0- -0-
Richmond, VA 3,000 -0- 7,573,305
St. Joseph, MO -0- -0- 12,553,964
Newington, CT 5,486 -0- 3,371,000
Cudahy, WI -0- 2,618 6,030,997
Beltsville, MD -0- -0- 9,158,773
Granite City, IL (7,502) 12,394,175 -0-
Monroe, NC 5,481,022 -0-
Winston Salem, NC -0- 6,590,000 -0-
Elgin, IL -0- 6,809,488 -0-
Tolleson, AZ 14,649,000 -0- -0-
Ft. Myers, FL 4,409,093 -0- -0-
Edwardsville, KS 7,000,148 -0- -0-
__________ __________ __________

Total Additions 27,223,225 31,520,915 38,975,497
Sales: __________ __________ __________
Virginia Beach, VA -0- (2,534,600) -0-
__________ __________ __________

Balance - End of Year $ 170,181,103 $142,957,878 $113,971,563
========== ========== ==========

(2) The aggregate cost for Federal tax purposes approximates
historical cost.

Page 65

SIGNATURES

Pursuant to the requirements of Section 13 of 15 (d) 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.

Date: December 19, 2003 By: /s/ Eugene W. Landy
Eugene W. Landy, President

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Date: December 19, 2003 By: /s/ Eugent W. Landy
Eugene W. Landy, President

Date: December 19, 2003 By: /s/ Ernest V. Bencivenga
Ernest V. Bencivenga, Treasurer and
Director

Date: December 19, 2003 By: /s/ Anna T. Chew
Anna T. Chew, Chief Financial
Officer

Date: December 19, 2003 By: /s/ Daniel D. Cronheim
Daniel D. Cronheim,
Director

Date: December 19, 2003 By: /s/ Matthew I. Hirsch
Matthew I. Hirsch,
Director

Date: December 19, 2003 By: /s/ Charles P. Kaempffer
Charles P. Kaempffer,
Director

Date: December 19, 2003 By: /s/ Samuel A. Landy
Samuel A. Landy,
Director

Date: December 19, 2003 By: /s/ Cynthia J. Morgenstern
Cynthia J. Morgenstern,
Executive Vice President and
Director

Date: December 19, 2003 By: /s/ John R. Sampson
John R. Sampson,
Director

Date: December 19, 2003 By: /s/ Peter J. Weidhorn
Peter J. Weidhorn,
Director

Date: December 19, 2003 By: /s/ Stephen B. Wolgin
Stephen B. Wolgin,
Director

Page 66