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, 1999

[ ] 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)
Delaware 22-1897375
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

125 Wyckoff Road Eatontown, NJ 07724
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (732) 542-4927
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 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 .

The aggregate market value of voting stock held by non-affiliates of the
Registrant was $34,726,935 (based on 6,945,387 shares of common stock at the
closing price of $5.00 per share) December 8, 1999.

There were 7,664,950 shares of common stock outstanding as of
December 8, 1999.

DocumentsIncorporated 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 under
Sections 856-858 of the Internal Revenue Code.

Currently, the Company derives its income primarily from real estate rental
operations. The Company has approximately 1,650,000 square feet of property, of
which approximately 415,300 square feet, or 25%, is leased to Federal Express
Corporation and 282,000 square feet, or 17%, is leased to Keebler Company.
During 1999, 1998 and 1997 rental and occupancy charges from properties leased
to these companies approximated 49%, 39% and 38%, respectively, of total rental
and occupancy charges.

At September 30, 1999, the Company had investments in twenty-one
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 and Virginia. All properties are managed by a management
company. All properties are leased on a net basis except Monaca, Pennsylvania.

The Company does not have an advisory contract. Its properties are
managed by Cronheim Management Services. Effective August 1, 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 $161,146, $41,466, and $17,681 in 1999,
1998 and 1997, respectively, for the management of various properties.

The David Cronheim Company received $136,229, $45,786, and $46,188 in
lease brokerage commissions in 1999, 1998 and 1997, respectively.

Page 2

ITEM 1 - BUSINESS (CONT'D)

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.

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.

The Company also invests in both debt and equity securities of other
real estate investment trusts (REITs). 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. Based upon the Company's current market risk sensitive
security holdings, the Company faces equity price risks relating to financial
instruments.

In fiscal 1999, the Company acquired approximately $15,000,000 of net-
leased industrial properties. In fiscal 2000, the Company anticipates a
similar amount of acquisitions. 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. To the
extent that funds or appropriate properties are not available, fewer
acquisitions will be made.

Under New Jersey Environmental Laws, inspections of the properties are
made and certificates of compliance are obtained upon the sale of property or
upon a change of tenancy. Therefore, there is no assurance that, in
connection with compliance with state environmental regulations, substantial
capital expenditures would not be incurred at the time the Company desired to
sell its properties or at the time of a change of tenancy. Management is not
aware of any material environmental problems affecting the Company's
properties.

ITEM 2 - DETAILED DESCRIPTION OF PROPERTIES

The Company operates as a real estate investment trust. Its portfolio is
primarily in equity 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 is a brief description of the Company's
equity holdings at September 30, 1999. (See Item 14, Schedule III for
additional information on Real Estate and Accumulated Depreciation and
Item 14, Note 7 of the Notes to the Financial Statements for a discussion of
encumbrances on these equity holdings).

Page 3

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

SOMERSET, NEW JERSEY

The Company owns a two-thirds undivided interest in this Somerset, New
Jersey shopping center. The remaining one-third interest is owned by D & E
Realty, an unrelated entity. All assets, liabilities, income and expense are
allocated to the owners based upon their respective ownership percentages.
The total rentable space in this shopping center is approximately 42,800
square feet. In addition, 21,365 square feet of land was leased to Taco Bell,
Inc. on which a freestanding restaurant was completed during 1993. This
shopping center was 100% occupied at September 30, 1999. The main store lease
expires on September 30, 2000. The Company's portion of the annual gross
rental income on this facility was approximately $307,000.

RAMSEY, NEW JERSEY

Ramsey Industrial Park, located on E. Crescent Avenue in Ramsey, New
Jersey is a 42,719 square foot building net-leased to Bogen Photo, Inc.
This lease expires on September 30, 2001. The current annual gross rental
income is approximately $224,000.

MONACA, PENNSYLVANIA

The Moor Industrial Park is located in Monaca, Pennsylvania. It consists
of approximately 292,000 feet of rentable space located on 23 acres. The
leases are all short term at relatively low rents compared to the Company's
other properties. The current annual gross rental income is approximately
$442,000. At September 30, 1999, this property was 74% occupied. This
property has 1,200 feet of undeveloped river frontage.

ORANGEBURG, NEW YORK

This 50,400 square foot warehouse facility, located in Orangeburg, New
York, is net-leased to the Keebler Company . The average annual rental
income over the term of the lease is approximately $433,000. This lease
expires on November 30, 2000.

SOUTH BRUNSWICK, NEW JERSEY

This 144,520 square foot warehouse facility, located in South Brunswick,
New Jersey, is net-leased to McMaster Carr Supply Co. This lease expires on
December 31, 2000. The average annual rental income over the term of the
lease is $614,210.

Page 4

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

GREENSBORO, NORTH CAROLINA

This 40,560 square foot distribution center, located in Greensboro,
North Carolina is net-leased to the Keebler Company. This lease expires
February 14, 2003. The average annual rental income over the term of the
lease is approximately $233,000.

JACKSON, MISSISSIPPI

This 26,340 square foot warehouse facility, located in Jackson,
Mississippi, is net-leased to the Keebler Company. The average annual rental
income over the term of the lease is approximately $169,000. This lease
expires September 30, 2003. The Keebler Company has sub-leased this facility.

FRANKLIN, MASSACHUSETTS

This 84,376 square foot warehouse facility, located in Franklin,
Massachusetts, is net-leased to the Keebler Company. The average annual
rental income over the term of the lease is approximately $516,000. This
lease expires on January 31, 2004.

WICHITA, KANSAS

This 44,136 square foot warehouse facility, located in Wichita, Kansas, is
net-leased to the Keebler Company. The average annual rental income over the
term of the lease is approximately $195,000. This lease expires May 30, 2005.
The Keebler Company has sub-leased this facility.

URBANDALE, IOWA

This 36,150 square foot warehouse facility, located in Urbandale, Iowa, is
net-leased to the Keebler Company. The average annual rental income over the
term of the lease is approximately $225,000. This lease expires June 30,
2000. The Keebler Company has sub-leased this facility.

RICHLAND, MISSISSIPPI

This 36,000 square foot warehouse facility, located in Richland,
Mississippi, is 100% net-leased to the Federal Express Corporation for an
average annual rental income of approximately $140,000 over the term of the
lease. This lease expires on March 31, 2004.

Page 5

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

O'FALLON MISSOURI

This 102,135 square foot warehouse facility, located in O'Fallon,
Missouri, is 100% net-leased to PPG Industries, Inc. The average annual
rental income over the term of the lease is approximately $353,000. This
lease expires June 30, 2001.

VIRGINIA BEACH, VIRGINIA

This 67,926 square foot warehouse facility, located in Virginia Beach,
Virginia, is 100% net-leased to the Raytheon Service Company. The annual
rental income is approximately $307,000. This lease expires February 28,
2001. Raytheon Service Company has sub-leased this facility.

FAYETTEVILLE, NORTH CAROLINA

This 148,000 square foot warehouse facility, located in Fayetteville,
North Carolina, is 100% net-leased to Belk Enterprises, Inc. The average
annual rental income over the term of the lease is approximately $473,000.
This lease expires June 4, 2006.

SCHAUMBURG, ILLINOIS

This 73,500 square foot warehouse facility, located in Schaumburg,
Illinois, is 100% net-leased to Federal Express Corporation. The average
annual rental income over the term of the lease is approximately $463,000.
This lease expires April 1, 2007.

TETERBORO, NEW JERSEY

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.

BURR RIDGE, ILLINOIS

This 12,477 square foot warehouse facility, located in Burr Ridge,
Illinois, is 100% net-leased to Sherwin-Williams Company. The average annual
rental income over the term of the lease is $151,000. This lease expires on
October 31, 2009.

Page 6

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

ROMULUS, MICHIGAN

This 72,000 square foot warehouse facility, located in Romulus,
Michigan, is 100% net-leased to the Federal Express Corporation. The average
annual rental over the term of the lease is approximately $396,000. This
lease expires on November 30, 2007.

LIBERTY, MISSOURI

This 98,200 square foot warehouse facility, located in Liberty, Missouri,
is 100% net-leased to Johnson Controls, Inc. The average annual rental
income over the term of the lease is approximately $705,000. This lease
expires on December 18, 2007.

OMAHA, NEBRASKA

This 88,140 square foot warehouse facility, located in Omaha, Nebraska,
was purchased in fiscal 1999. This warehouse facility is 100% net-leased to
Federal Express Corporation. The average annual rental income over the term
of the lease is approximately $516,000. This lease expires October 31, 2008.

CHARLOTTESVILLE, VIRGINIA

This 49,900 square foot warehouse facility, located in Charlottesville,
Virginia, was purchased in fiscal 1999. This warehouse facility is 100% net-
leased to Federal Express Corporation. The average annual rental income over
the term of the lease is approximately $363,000. This lease expires
October 31, 2008.

JACKSONVILLE, FLORIDA

This 95,883 square foot warehouse facility, located in Jacksonville,
Florida, was purchased in fiscal 1999. This warehouse facility is 100% net-
leased to Federal Express Corporation. The average annual rental over the
term of the lease is approximately $526,000. This lease expires May 31, 2008.

ITEM 3 - LEGAL PROCEEDINGS

None.

Page 7

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

A special meeting of shareholders was held on July 22, 1999 to amend the
Certificate of Incorporation authorizing the Company to increase the number of
authorized Class A Common Stock, $.01 par value, from 8,000,000 to 16,000,000
shares. Proxies for the meeting were solicited pursuant to Regulation 14
under the Securities and Exchange Act of 1934.

PART II

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

The shares of Class A 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:

1999 1998
Market Price Market Price
Fiscal Qtr. High Low Distrib. Fiscal Qtr. High Low Distrib.
First 6-1/8 5 $ .1375 First 6-3/4 6 $ .13
Second 5-1/2 5-1/8 .14 Second 7-3/4 6-3/16 .13
Third 5-7/8 5-1/4 .145 Third 7-3/4 6-1/2 .135
Fourth 5-5/8 5-1/4 .145 Fourth 6-23/32 5-9/16 .135
_____ _____
$ .5675 $ .53
===== =====

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, 1999, the closing price was 5-3/8.

As of September 30, 1999, there were approximately 1,080 shareholders of
record who held shares of Class A common stock of the Company.

It is the Company's intention to continue distributing quarterly dividends.
On September 22, 1999, the Company declared a dividend of $.145 per share to be
paid on December 15, 1999 to shareholders of record November 15, 1999.

Page 8

ITEM 6 - SELECTED FINANCIAL DATA

September 30,

1999 1998 1997 1996 1995

INCOME STATEMENT DATA:

Total Income $8,751,219 $6,963,825 $5,798,699 $4,607,434 $4,240,859
Total Expenses 6,214,993 4,493,595 3,965,002 3,233,584 3,293,692
Gains on Sales
of Assets-
Investment
Property 1,260,534 29,692 47,457 22,249 38,766
Net Income 3,796,760 2,499,922 1,881,154 1,396,099 985,933
Net Income Per
Share-Basic
and Diluted .57 .50 .46 .39 .31

BALANCE SHEET DATA:

Total Assets $79,424,958 $55,582,845 $44,942,723 $32,538,076 $30,289,860
Long-Term
Obligations 33,182,307 24,436,941 20,498,016 14,197,529 14,522,503
Shareholders'
Equity 36,276,677 27,404,822 19,889,288 16,109,382 14,247,867

OTHER INFORMATION:

Average Number
of Shares
Outstanding 6,627,344 4,997,775 4,047,759 3,584,364 3,212,064
Funds from
Operations* $4,220,279 $3,647,345 $2,821,902 $2,226,079 $1,730,871
Cash Dividends
Per Share .5675 .53 .51 .50 .50

*Defined as net income, excluding gains (or losses)from sales of assets, plus
depreciation plus adjustments for unconsolidated partnerships ($84,601 for
1999). Funds from Operations do not replace net income determined in
accordance with generally accepted accounting principles (GAAP) as a
measure of performance or net cash flows as a measure of liquidity. Funds
from Operations is not a GAAP measure of operating performance and should
be considered as a supplemental measure of operating performance used by
real estate investment trusts.

Page 9

ITEM 6 - SELECTED FINANCIAL DATA (CONT'D)

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

1999 1998 1997
Net Rental Income

Somerset, New Jersey $ 257,143 $262,871 $238,494
Ramsey, New Jersey 165,994 180,278 183,459
Monaca, Pennsylvania 190,435 191,100 133,483
Monsey, New York 115,534 154,411 200,811
Orangeburg, New York 203,916 198,855 186,985
South Brunswick, New Jersey 404,304 712,373 656,756
Greensboro, North Carolina 182,442 93,498 32,362
Jackson, Mississippi 70,372 71,881 70,433
Franklin, Massachusetts 259,637 254,003 239,977
Wichita, Kansas 23,714 27,198 26,328
Urbandale, Iowa 110,817 106,012 99,184
Richland, Mississippi 51,872 52,418 48,818
O'Fallon, Missouri 85,811 82,100 74,447
Virginia Beach, Virginia 107,227 99,402 124,429
Fayetteville, North Carolina 93,972 84,451 5,953
Schaumburg, Illinois 64,422 72,551 5,815
Burr Ridge, Illinois 9,448 32,872 -0-
Romulus, Michigan 90,261 9,276 -0-
Liberty, Missouri 120,806 11,766 -0-
Omaha, Nebraska 121,793 -0- -0-
Charlottesville, Virginia 77,251 -0- -0-
Jacksonville, Florida (18,300) -0- -0-
___________ ___________ __________

Net Rental Income 2,788,871 2,697,316 2,327,734

Net Investment and Other Income 465,602 472,898 129,871
___________ ___________ __________

TOTAL 3,254,473 3,170,214 2,457,605

General & Administrative Expenses (718,247) (699,984) (623,908)
___________ ___________ __________

Income Before Gains 2,536,226 2,470,230 1,833,697

Gain on Sale of Assets-
Investment Property 1,260,534 29,692 47,457
___________ ___________ __________

NET INCOME $3,796,760 $2,499,922 $1,881,154
=========== =========== ==========

Page 10

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

Liquidity and Capital Resources

Monmouth Real Estate Investment Corporation (the Company) operates as a
real estate investment trust deriving its income primarily from real estate
rental operations. At September 30, 1999, the Company's shareholders' equity
increased to $36,276,677 as compared to $27,404,822 in 1998.

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, 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.

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 equity investments. During the past seven
years, the Company purchased eighteen net-leased warehouse facilities at an
aggregate cost of approximately $66,000,000.

The Company financed these purchases primarily through mortgages on its
acquisitions. The Company also has a secured $6,345,000 line of credit of
which approximately $3,876,000 was available at September 30, 1999. Interest is
at Prime and is due monthly. This credit line expires on July 29, 2000.

The Company expects to make additional real estate investments from time to
time. In 2000, the Company plans to acquire approximately $15,000,000 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. To the extent that
funds or appropriate properties are not available, fewer acquisitions will be
made.

The Company also invests in debt and equity securities of other REITs.
During fiscal 1999, the Company invested approximately $11,000,000 in these
securities. Although the securities portfolio at September 30, 1999 has
experienced an approximate 6% decline in value from cost, management believes
that this is temporary in nature.

Page 11

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

Funds generated are expected to be sufficient to meet debt service
requirements and capital expenditures of the Company.

Cash provided from operating activities amounted to $4,493,792 in 1999 as
compared to $3,431,422 in 1998 and $2,594,380 in 1997.

At September 30, 1999, the Company had total liabilities of $43,148,281
and total assets of $79,424,958. The Company believes that it has the ability
to meet its obligations and to generate funds for new investments.

The Company has a Dividend Reinvestment and Stock Purchase Plan. During
1999, a total of $9,578,367 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 1999. It is anticipated, although no assurances can
be given, that a comparable level of participation will continue in the Plan in
fiscal 2000. Therefore, the Company anticipates that the Plan will result in
further increased liquidity and capital resources in 2000.

Results of Operations

The Company's activities primarily generate rental income. Net income
for the fiscal year ended September 30, 1999 was $3,796,760 as compared to
$2,499,922 in 1998 and $1,881,154 in 1997. Net rental income for the fiscal
year ended September 30, 1999 was $2,788,871 as compared to $2,697,316 in
1998 and $2,327,734 in 1997. The following is a discussion of the results of
operations by location for 1999 as compared to 1998 and 1998 as compared to
1997:

Somerset, New Jersey

During 1999, net rental income remained relatively stable as compared to
1998. During 1998, net rental income increased due to a decrease in
operating expenses as a result of lower snow removal costs.

Ramsey, New Jersey

Net rental income decreased during 1999 primarily as a result of an
increase in management fees. Net rental income remained relatively stable
for 1998 and 1997.

Monaca, Pennsylvania

Net rental income remained relatively stable for 1999 as compared to 1998.
Net rental income increased in 1998 as compared to 1997 due primarily to an
increase in tenant reimbursements.

Monsey, New York

Due to the sale of the property in March, 1999, net rental income
decreased for 1999 as compared to 1998. Net rental income decreased in
1998 as compared to 1997 due primarily to an increase in repairs and
maintenance due to new tenants.

Page 12

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

Orangeburg, New York

Net rental income remained relatively stable in 1999 as compared to 1998.
Net rental income increased in 1998 as compared to 1997 due to lower
interest costs on related borrowings outstanding.

South Brunswick, New Jersey

Net rental income decreased during 1999 and increased during 1998 due
primarily to a lease extension by Amway Corporation from July 1, 1997 to
December 31, 1997 at a monthly rental of $162,585 which was triple the
normal rent. The new monthly rental is $51,184.

Greensboro, North Carolina

Net rental income increased in 1999 and 1998 due to a decrease in
interest expense as a result of the payoff of the mortgage on this
property during 1998.

Jackson, Mississippi

Net rental income remained relatively stable during 1999, 1998 and 1997.

Franklin, Massachusetts

Net rental income remained relatively stable during 1999, 1998 and 1997.

Wichita, Kansas

Net rental income remained relatively stable during 1999, 1998and 1997.

Urbandale, Iowa

Net rental income remained relatively stable during 1999, 1998 and 1997.

Richland, Mississippi

Net rental income remained relatively stable during 1999, 1998 and 1997.

O'Fallon, Missouri

Net rental income remained relatively stable during 1999, 1998 and 1997.

Virginia Beach, Virginia

Net rental income increased during 1999 and decreased during 1998 as a
result of an increase in tenant reimbursements during 1999.

Fayetteville, North Carolina

Net rental income increased during 1999 due to an increase in tenant
reimbursements. Net rental income increased in 1998 due to a full
year's income.

Schaumburg, Illinois

Net rental income decreased in 1999 due to an increase in management
fees. Net rental income increased in 1998 due to a full year's income.

Page 13

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

Burr Ridge, Illinois

This warehouse facility was acquired during December, 1997. It is net-
leased to Sherwin-Williams. Average monthly rental over the term of the
lease is $12,622. Net rental income decreased in 1999 as compared to
1998 due to an increase in depreciation expense over 1998's half year
convention.

Romulus, Michigan

Net rental income increased in 1999 as compared to 1998 due to a full
year's income and Expenses. This warehouse facility was acquired in June,
1998. It is net-leased to Federal Express Corporation. Average monthly
rental income over the term of the lease is $32,962.

Liberty, Missouri

Net rental income increased in 1999 as compared to 1998 due to a full
year's income and Expenses. This warehouse facility was acquired in
August, 1998. It is net-leased to Johnson Controls, Inc. Average
monthly rental over the term of the lease is $58,852.

Omaha, Nebraska

This warehouse facility was acquired in December, 1998. It is net-
leased to Federal Express Corporation. Average monthly rental over the
term of the lease is $43,036.

Charlottesville, Virginia

This warehouse facility was acquired in April, 1999. It is net-leased
to Federal Express Corporation. Average monthly rental over the term of
the lease is $30,236.

Jacksonville, Florida

This warehouse facility was acquired in July, 1999. It is net-leased to
Federal Express Corporation. Average monthly rental over the term of
the lease is $43,815. The excess of expenses over income for 1999 was
due to the half year convention for depreciation expense.

The Company also generated net investment and other income from its
investments in securities available for sale, mortgages receivable and
Hollister `97, LLC. Net interest and other income decreased in 1999 as
compared to 1998 due to the gain on sale of securities available for sale
in 1998 partially offset by an increase in dividend income as a result of
the purchases of additional securities. These securities have a dividend
yield in excess of 10%. Net interest and other income increased during 1998
primarily due to a gain of $222,276 on the sale of securities available for
sale.

During 1999, general and administrative expenses remained relatively
stable compared to 1998. General and administrative expenses increased
during 1998 as compared to 1997 primarily as a result of increased
personnel costs.

Page 14

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

Funds from operations (FFO), defined as net income, excluding gains
(or losses) from sales of depreciable assets, plus depreciation, plus
adjustments for unconsolidated partnerships ($84,601, $-0-, $-0- for 1999,
1998 and 1997), respectively, increased from $2,821,902 for the year ended
September 30, 1997 to $3,647,345 for the year for the year ended September 30,
1998 to $4,220,279 for the year ended September 30, 1999. FFO does not
replace net income (determined in accordance with generally accepted
accounting principles) as a measure of performance or net cash flows as a
measure of liquidity. FFO should be considered as a supplemental measure
of operating performance used by real estate investment trusts.

During 1999, the Company realized a gain of approximately $1,240,000 on
the sale of the Monsey, New York property. The Company also recognized a
deferred gain from the Howell Township installment sale of approximately
$20,000, $30,000 and $47,000 for 1999, 1998 and 1997, respectively.

YEAR 2000

The Company has completed its Year 2000 compliance plan. The Company
has assessed all hardward and software for Year 2000 readiness. The Company
has completed its renovation and testing plans, including hardware
replacement and software upgrades, to ensure all hardware and software is
Year 2000 compliant. The Company has no significant suppliers or vendors.

The Company has developed contingency plans for each of its critical
systems which includes moving many of the Company's operations to a manual
system. There can be no assurances given that the Year 2000, in which event
the Company could incur additional costs to implement its contingency plans.
Manaagement does not anticipate that such costs would be significant to the
Company. The total costs associated with the Company's Year 2000 plan are
anticipated to be less than $20,000.

Successful and timely completion of the Year 2000 plan is based on
management's best estimates derived from various assumptions of future
events, which are inherently uncertain, including the effectiveness of
remediation and validation plans, and all vendors and suppliers readiness.

ITEM 7a - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Item 1 - Business.

Page 15

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 1999 12/31/98 3/31/99 6/30/99 9/30/99

Total Income $1,918,858 $2,256,483 $2,261,316 $2,314,562
Total Expenses 1,362,097 1,705,508 1,591,439 1,555,949
Gains on Sales of
Assets-Investment
Property 6,000 1,246,325 6,000 2,209
Net Income 562,761 1,797,300 675,877 760,822
Net Income per Share .10 .28 .09 .10

FISCAL 1998 12/31/97 3/31/98 6/30/98 9/30/98

Total Income $1,899,569 $1,671,150 $1,600,854 $1,792,252
Total Expenses 1,204,013 1,109,865 1,001,438 1,178,279
Gains on Sales of
Assets-Investment
Property 6,000 6,000 6,000 11,692
Net Income 701,556 567,285 605,416 625,665
Net Income per Share .15 .12 .12 .11

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

None.

Page 16

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Principal Occupation Director Shares Percent
Name, Age and Title Past Five Years Since Owned(1) of Stock

Ernest V. Bencivenga Financial Consultant; 1968 10,327 0.14%
(81) Treasurer and Director
Treasurer and Director (1961 to present)and
Secretary (1967 to
present) of Monmouth
Capital Corporation;
Director (1969 to present)
and Secretary/Treasurer
(1984 to present) of United
Mobile Homes, Inc.

Anna T. Chew Certified Public Accountant; 1993 12,556(2) 0.17%
(41) Controller (1991 to present) and
Controller and Director (1994 to present) of
Director Monmouth Capital Corporation;
Vice President (1995 to present),
Director (1994 to present), and
Chief Financial Officer (1991 to
present) of United Mobile Homes,
Inc.

Daniel D. Cronheim Attorney at Law, Daniel D. 1989 20,653 0.27%
(44) Cronheim, Esq. (1982 to present);
Director Executive Vice President (1989
to present) and General Counsel
(1983 to present), of David
Cronheim Company.

Boniface DeBlasio Chairman of the Board (1968 to 1968 10,788 0.14%
(78) present) and Director (1961 to
Director present) of Monmouth Capital
Corporation.

Charles P. Kaempffer Investor; Director (1970 to 1974 37,185(3)0.49%
(62) present) of Monmouth Capital
Director Corporation; Director (1969
to present) of United Mobile
Homes, Inc.

Page 17

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

Principal Occupation Director Shares Percent
Name, Age and Title Past Five Year Since Owned(1) of Stock

Eugene W. Landy Attorney at Law, President 1968 351,381(4) 4.68%
(66) and Director (1961 to
Presiden,CEO present) of Monmouth Capital
and Director Corporation; Chairman of the
Board (1995 to present),
Director (1969 to present) and
President (1969 to 1995) of
United Mobile Homes, Inc.

Samuel A. Landy Attorney at Law; President 1989 134,150(5) 1.79%
(38) (1995 to present), Director
Director (1991 to present), and Vice
President (1991 to 1995) of
United Mobile Homes, Inc.;
Director (1994 to present) of
Monmouth Capital Corporation.

W. Dunham Morey Certified Public Accountant, 1968 63,620(6) 0.85%
(77) W. Dunham Morey, CPA;
Director Director (1961 to present) of
Monmouth Capital Corporation.

Robert G. Sampson Investor; Director (1963 to 1968 78,903(7) 1.05%
(74) present) of Monmouth Capital
Director Corporation; Director (1969 to
present) of United Mobile Homes,
Inc.; General Partner (1983 to present)
of Sampco, Ltd., an investment
group.

Page 18

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

(1) Beneficial ownership, as defined herein, includes Class A Common Stock as
to which a person has or shares voting and/or investment power.

(2) Held jointly with Ms. Chew's husband; includes 4,649 shares held in Ms.
Chew's 401 (k) Plan.

(3) Includes (a) 14,207 shares owned by Mr. Kaempffer's wife; and (b) 1,080
shares in joint name with Mrs. Kaempffer.

(4) Includes (a) 80,790 shares owned by Mr. Landy's wife; (b) 138,972 shares
held in the Landy & Landy, P.C. Profit Sharing Plan, of which Mr. Landy
is a Trustee with power to vote; and (c) 105,221 shares held in the Landy
& Landy, P.C. Pension Plan, of which Mr. Landy is a Trustee with power to
vote. Excludes 40,953 shares held by Mr. Landy's adult children, in which
he disclaims any beneficial interest.

(5) Includes (a) 3,575 shares owned by Mr. Landy's wife, and (b) 36,456 shares
held in custodial accounts for Mr. Landy's minor children under the
Uniform Gift to Minors' Act in which he disclaims any beneficial
interest, but has power to vote and (c) 1,000 shares held in the Samuel
Landy Family Limited Partnership and (d) 15,301 shares held in Mr. Landy's
401(k) Plan.

(6) Includes 15,896 shares owned by the estate of Mr. Morey's wife.

(7) Includes (a) 2,451 shares owned by Mrs. Sampson, and 13,262 shares held
by Sampco, Ltd. in which he has a beneficial interest.

The Directors as a class own 719,563 shares, which is 9.58% of the
outstanding shares.

Page 19

ITEM 11 - EXECUTIVE COMPENSATION

Summary Compensation Table

The following Summary Compensation Table shows compensation paid or accrued
by the Company for services rendered during 1999, 1998 and 1997 to the Chief
Executive Officer. There were no other executive officers whose aggregate
cash compensation exceeded $100,000:

Annual Compensation
Name and Principal Position Year Salary Bonus Other
Eugene W. Landy 1999 $110,000 None $ 79,700(1)
Chief Executive Officer 1998 27,500 55,000 165,700
1997 None 50,000 200,700

(1) Represents Director's fees of $3,200 paid to Mr. Landy, legal fees of
$17,500 paid to the firm of Landy & Landy, and $59,000 accrual for pension
and other benefits in accordance with Mr. Landy's employment contract.

Stock Option Plan

There were no stock options granted to the executive officer named in
the Summary Compensation Table, during the year ended September 30, 1999.

The following table sets forth for the executive officer named in the
Summary Compensation Table, information regarding stock options outstanding
at September 30, 1999:

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

Eugene W. Landy 0- N/A 50,000 / -0- $-0- / $-0-

Employment Agreement

On December 9, 1994, the Company and Eugene W. Landy entered into an
Employment Agreement under which Mr. Landy receives an annual base
compensation (management fee) of $110,000 (as amended) plus bonuses and
customary fringe benefits, including health insurance and five weeks
vacation. Additionally, there will be bonuses voted by the Board of
Directors. The Employment Agreement is terminable by either party at
any time, subject to certain notice requirements.

Page 20

ITEM 11 - EXECUTIVE COMPENSATION (CONT'D)

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 terminates December 31, 1999. Thereafter, the
term of the Employment Agreement shall be automatically renewed and
extended for successive one-year periods.

Other Information

The Directors received a fee of $800 for each Board Meeting attended.

Except for specific agreements, the Company has no retirement plan
in effect for Officers, Directors or employees and, at present, has no
intention of instituting such a plan.

Cronheim Management Services received the sum of $161,146 in 1999
for management fees. Effective August 1, 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
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.

Page 21

ITEM 11 - EXECUTIVE COMPENSATION (CONT'D)

Overview and Philosophy (Cont'd)

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

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. Mr. Landy is under an employment agreement with the
Company. His base compensation under this contract was increased in 1997 to
$110,000 per year.

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

1994 100 100 100
1995 96 112 130
1996 110 134 156
1997 141 187 219
1998 144 160 239
1999 137 146 305

Page 22

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

On September 30, 1999, no person owned of record or was known by the
Company to own beneficially more than five percent of the shares of the
Company except as follows:

Amount and Nature
Title of Name and Address of Beneficia Percent
Class of Beneficial Owner Ownership of Class

Class A Eugene W. Landy 351,381 4.68%
Common 20 Tuxedo Road
Stock Rumson, NJ 07760

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Certain relationships and related party transactions are incorporated
herein by reference to Item 14 and Note 10 of the Notes to the Financial
Statements - Related Party Transactions.

Page 23

PART IV

ITEM 14 - 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 26

(ii) Balance Sheets as of September 30, 1999 and 1998 27

(iii) Statements of Income for the years ended
September 30, 1999, 1998 and 1997 28

(iv) Statements of Shareholders' Equity for the years ended
September 30, 1999, 1998 and 1997 29

(v) Statements of Cash Flows for the years ended
September 30, 1999, 1998 and 1997 30

(vi) Notes to the Financial Statements 31 - 45

(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, 1999 46 - 48

Page 24

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K

(a) (3) Exhibits

(3) Articles of Incorporation and By-Laws

(i) Reference is hereby made to the Certificate of Incorporation of
Monmouth Real Estate Investment Corporation filed with the
Securities and Exchange Commission on April, 13, 1999 on
Form S-4 (Registration No. 33-34103).

(ii) Reference is hereby made to the By-laws of Monmouth Real Estate
Investment Corporation filed with the Securities and Exchange
Commission on April 3, 1990 on Form S-4 (Registration
No. 33-34103).

(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.

(28) Additional Exhibits

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).

Report on Form 8-K

On July 28, 1999, the Company filed a report on Form 8-K for the purchase
of an Industrial building in Jacksonville, Florida.

Page 25

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 generally accepted auditing
standards. 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, 1999 and 1998, and the results of
its operations and its cash flows for each of the years in the three-year
period ended September 30, 1999 in conformity with generally accepted
accounting principles. 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
November 29, 1999

Page 26

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

ASSETS
1999 1998

Real Estate Investments:

Land $ 11,050,814 $ 7,665,724
Buildings, Improvements and Equipment,
net of Accumulated Depreciation of
$7,406,901 and $6,659,642,
respectively 52,421,455 42,952,713
Mortgage Loans Receivable 125,135 153,663
____________ ____________

Total Real Estate Investments 63,597,404 50,772,100

Cash and Cash Equivalents 1,242,457 147,976
Securities Available for Sale at Fair Value 12,324,709 2,050,500
Interest and Other Receivables 558,348 597,723
Prepaid Expenses 64,001 130,911
Lease Costs - Net of Accumulated
Amortization 120,803 196,320
Investments in Hollister '97, LLC 925,399 1,010,000
Other Assets 591,837 677,315
___________ ___________

TOTAL ASSETS $79,424,958 $55,582,845
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Mortgage Notes Payable $35,237,759 $25,949,782
Loans Payable 6,947,038 1,335,382
Deferred Gains - Installment Sales 88,631 108,840
Other Liabilities 874,853 784,019
___________ ___________

Total Liabilities 43,148,281 28,178,023

Shareholders' Equity:
Common Stock-Class A-$.01 Par Value,
16,000,000 Shares Authorized;
7,509,649 and 5,703,544 Shares
Issued and Outstanding in 1999
and 1998, respectively 75,096 57,035
Common Stock - Class B - $.01 Par
Value, 100,000 Shares Authorized,
No Shares Issued or Outstanding -0- -0-
Additional Paid-in Capital 36,924,039 27,375,711
Accumulated Other Comprehensive Loss (722,458) (27,924)
Undistributed Income -0- -0-
___________ ___________

Total Shareholders' Equity 36,276,677 27,404,822
___________ ___________

TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $79,424,958 $55,582,845
=========== ===========

See Accompanying Notes to the Financial Statements
Page 27

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

1999 1998 1997

INCOME:

Rental and Occupancy Charges $7,982,324 $6,397,840 $5,354,301
Investment and Other Income 768,895 565,985 444,398
__________ __________ __________

TOTAL INCOME 8,751,219 6,963,825 5,798,699
__________ __________ __________
EXPENSES:

Interest Expense 2,607,520 1,802,590 1,711,466
Management Fees 161,146 41,466 17,681
Real Estate Taxes 696,637 330,372 295,830
Professional Fees 383,269 437,847 419,854
Operating Expenses 428,699 425,289 319,883
Office and General Expense 309,170 249,016 181,083
Director Fees 29,100 29,900 31,000
Depreciation 1,599,452 1,177,115 988,205
__________ __________ __________

TOTAL EXPENSES 6,214,993 4,493,595 3,965,002
__________ __________ __________

Income Before Gains 2,536,226 2,470,230 1,833,697
Gains on Sale of Assets -
Investment Property 1,260,534 29,692 47,457
__________ __________ __________

NET INCOME $3,796,760 $2,499,922 $1,881,154
========== ========== ==========

PER SHARE INFORMATION:

Income Before Gains $.38 $.49 $.45
Gains on Sale of Assets -
Investment Property .19 .01 .01
__________ __________ __________

NET INCOME - BASIC AND DILUTED $.57 $.50 $.46
========== ========== ==========

See Accompanying Notes to the Financial Statements
Page 28

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY

Additional
Common Stock Paid-In
Number Amount Capital

Balance September 30, 1996 3,800,924 $ 38,009 $16,044,359
Shares Issued in connection
with the Dividend
Reinvestment and Stock
Purchase Plan 620,923 6,209 3,580,029
Distributions -0- -0- (174,251)

Net Income -0- -0- -0-

Unrealized Net Holding
Gains on Securities
Available for Sale
Net of Reclassification
Adjustment -0- -0- -0-
__________ _________ __________

Balance September 30, 1997 4,421,847 44,218 19,450,137
---------- -------- ----------

Shares Issued in connection
with the Dividend
Reinvestment and Stock
Purchase Plan 1,281,697 12,817 8,093,663
Distributions -0- -0- (168,089)

Net Income -0- -0- -0-

Unrealized Net Holding
Gains on Securities
Available for Sale
Net of Reclassification
Adjustment -0- -0- -0-
__________ _________ __________

Balance September 30, 1998 5,703,544 57,035 27,375,711
__________ _________ __________
Shares Issued in connection
with the Dividend
Reinvestment and Stock
Purchase Plan 1,806,105 18,061 9,560,306
Distributions -0- -0- (11,978)

Net Income -0- -0- -0-

Unrealized Net Holding
Losses on Securities
Available for Sale -0- -0- -0-
__________ _________ __________

Balance September 30, 1999 7,509,649 $75,096 $36,924,039
========== ========= ===========

See Accompanying Notes to the Financial Statements
Page 29

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY (CONT'D)

Accumulated
Other
Undistributed Comprehensive Comprehensive
Income Income (Loss) Income

Balance September 30, 1996 $ -0- $ 27,014

Shares Issued in connection
with the Dividend
Reinvestment and Stock
Purchase Plan -0- -0-
Distributions (1,881,154) -0-

Net Income 1,881,154 -0- $ 1,881,154

Unrealized Net Holding
Gains on Securities
Available for Sale
Net of Reclassification
Adjustment -0- 367,919 367,919
__________ __________ ____________

Balance September 30, 1997 -0- 394,933 $ 2,249,073
__________ _________ ============

Shares Issued in connection
with the Dividend
Reinvestment and Stock
Purchase Plan -0- -0-
Distributions (2,499,922) -0-

Net Income 2,499,922 -0- $ 2,499,922

Unrealized Net Holding
Losses on Securities
Available for Sale
Net of Reclassification
Adjustment -0- (422,857) (422,857)
___________ __________ ___________

Balance September 30, 1998 -0- (27,924) $ 2,077,065
__________ __________ ===========

Shares Issued in connection
with the Dividend
Reinvestment and Stock
Purchase Plan -0- -0-
Distributions (3,796,760) -0-

Net Income 3,796,760 -0- $ 3,796,760

Unrealized Net Holding
Losses on Securities
Available for Sale -0- (694,534) (694,534)
___________ ___________ ___________

Balance September 30, 1999 $ -0- $ (722,458) $ 3,102,226
============ =========== ===========

See Accompanying Notes to the Financial Statements

Page 29A

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

1999 1998 1997

CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income $ 3,796,760 $ 2,499,922 $ 1,881,154
Noncash Items Included
in Net Income:
Depreciation 1,599,452 1,177,115 988,205
Amortization 106,082 77,402 36,861
Gains on Sales of Assets-
Investment Property (1,260,534) (29,692) (47,457)
Gains on Sales of Securities -0- (222,276) (75,323)
Changes In:
Interest & Other Receivables 39,375 (55,546) 9,914
Prepaid Expenses 66,910 (5,413) (1,829)
Other Assets and Lease Costs 54,913 (148,954) (316,205)
Other Liabilities 90,834 138,864 119,060
___________ ___________ __________

NET CASH PROVIDED FROM
OPERATING ACTIVITIES 4,493,792 3,431,422 2,594,380
___________ ___________ __________
CASH FLOWS FROM
INVESTING ACTIVITIES
Additions to Land,
Buildings and Improvements (13,212,959) (13,047,608) (9,511,526)
Distribution from (Investment
in) Hollister '97, LLC 84,601 -0- (1,010,000)
Collections on
Installment Sales 28,528 41,920 67,002
Purchase of Securities
Available for Sale (10,968,743) (798,581) (2,778,904)
Proceeds from Sale of
Securities Available for Sale -0- 1,797,647 579,974
___________ ___________ ___________

NET CASH USED IN
INVESTING ACTIVITIES (24,068,573) (12,006,622) (12,653,454)
___________ ___________ ___________
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from Mortgages 10,968,470 8,700,000 6,930,776
Proceeds from Loans 13,616,656 10,686,871 9,390,510
Principal Payments
of Mortgages (1,680,493) (3,829,456) (1,068,148)
Principal Payments of Loans (8,005,000) (12,541,999) (6,700,000)
Proceeds from Issuance of
Class A Common Stock 8,190,962 6,989,925 2,677,007
Dividends Paid (2,421,333) (1,551,456) (1,146,174)
___________ ___________ ___________

NET CASH PROVIDED FROM
FINANCING ACTIVITIES 20,669,262 8,453,885 10,083,971
___________ ___________ ___________

Net Increase (Decrease) in Cash
and Cash Equivalents 1,094,481 (121,315) 24,897
Cash and Cash Equivalents At
Beginning of Year 147,976 269,291 244,394
___________ ___________ ___________
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 1,242,457 $ 147,976 $ 269,291
=========== =========== ===========

See Accompanying Notes to the Financial Statements

Page 30

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Business

Monmouth Real Estate Investment Corporation (the Company) operates as
a real estate investment trust deriving its income primarily from real
estate rental operations. As of September 30, 1999 and 1998, rental
properties consist of twenty-one and nineteen commercial holdings,
respectively, These properties are located in New Jersey, New York,
Pennsylvania, North Carolina, Mississippi, Massachusetts, Kansas, Iowa,
Missouri, Illinois, Michigan, Nebraska, Florida and Virginia.

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.

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 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.

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. At September 30, 1999
and 1998, there was one deferred gain related to the 1986 sale of property
located in Howell Township in the amount of $ 88,631 and $108,840,
respectively.

Page 31

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

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, 1999 and 1998 are all
classified as available-for-sale and are carried at fair value. Gains or
losses on the sale of securities are based on identifiable cost 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.

Cash Equivalents

Cash equivalents consist of money market funds.

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%.

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
(6,627,344, 4,997,775 and 4,047,759 in 1999, 1998 and 1997, 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 (6,627,344, 5,032,950 and 4,047,759 in
1999, 1998 and 1997, respectively). Options in the amount of 35,175, are
included in the diluted weighted average shares outstanding for 1998. Options
in the amount of 320,000 and 300,000 were not included for 1999 and 1997,
respectively, since they were anti-dilutive.

Stock Option Plan

The Company's stock option plan is 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 would be recorded on the date of grant only if the current market
price on the underlying stock exceeds the exercise price. Included in Note 8
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.

Page 32

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

Income Tax

The Company has elected to be taxed as a Real Estate Investment Trust
(REIT) under Sections 856-858 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 95% 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.

Comprehensive Income

Comprehensive income is divided into 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.

NOTE 2 - MORTGAGE LOANS RECEIVABLE

The following is a summary of the mortgage loans receivable at September
30, 1999 and 1998:

Rate Maturity 1999 1998
Bonim Associates, Inc.
Howell Township Property 9% 1999 $125,135 $153,663

Page 33

NOTE 3 - 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,
1999 and 1998:

Buildings,
Improvements, Accumulated
September 30, 1999 Land and Equipment Depreciation

NEW JERSEY:
Ramsey Industrial Building $ 52,639 $ 1,175,214 $ 584,395
Somerset(1) Shopping Center 55,182 1,065,995 765,462
Eatontown Admin. Office -0- 7,515 7,515
South
Brunswick Industrial Building 1,128,000 4,120,487 863,990
PENNSYLVANIA:
Monaca Industrial Park 330,773 1,820,673 1,007,423
NEW YORK:
Orangeburg Industrial Building 694,720 2,977,372 649,903
NORTH CAROLINA:
FayettevilleIndustrial Building 172,000 4,467,885 286,392
Greensboro Industrial Building 327,100 1,853,700 380,220
MISSISSIPPI:
Jackson Industrial Building 218,000 1,234,586 244,146
Richland Industrial Building 211,000 1,195,000 168,519
MASSACHUSETTS:
Franklin Industrial Building 566,000 4,148,000 584,951
KANSAS:
Wichita Industrial Building 268,000 1,518,000 214,087
IOWA:
Urbandale Industrial Building 310,000 1,758,000 247,913
MISSOURI:
Liberty Industrial Building 723,000 6,510,546 250,352
O'Fallon Industrial Building 264,000 3,302,000 380,857
VIRGINIA:
Charlottes-
ville Industrial Building 1,170,000 2,845,000 36,474
Virginia
Beach Industrial Building 384,600 2,150,000 192,941
ILLINOIS:
Burr Ridge Industrial Building 270,000 1,236,599 47,516
Schaumburg Industrial Building 1,039,800 3,694,321 236,805
MICHIGAN:
Romulus Industrial Building 531,000 3,653,883 140,460
FLORIDA:
Jackson-
ville Industrial Building 1,165,000 4,668,080 59,845
NEBRASKA:
Omaha Industrial Building 1,170,000 4,425,500 56,735
___________ ___________ __________

Total at September 30, 1999 $11,050,814 $59,828,356 $7,406,901
=========== =========== ==========

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

Page 34

NOTE 3 - REAL ESTATE INVESTMENTS (CONT'D)

Buildings,
Improvements, Accumulated
September 30, 1998 Land and Equipment Depreciation

NEW JERSEY:
Ramsey Industrial Building $ 52,639 $ 1,175,214 $ 553,275
Somerset(1) Shopping Center 55,182 1,065,995 726,584
Eatontown Admin. Office -0- 7,517 3,008
South
Brunswick Industrial Building 1,128,000 4,120,487 723,199
PENNSYLVANIA:
Monaca Industrial Park 330,773 1,797,526 930,492
NEW YORK:
Monsey Industrial Building 119,910 1,757,588 823,065
Orangeburg Industrial Building 694,720 2,977,372 555,371
NORTH CAROLINA:
Fayette-
ville Industrial Building 172,000 4,467,885 171,835
Greensboro Industrial Building 327,100 1,853,700 321,335
MISSISSIPPI:
Jackson Industrial Building 218,000 1,233,500 204,423
Richland Industrial Building 211,000 1,195,000 137,877
MASSACHUSETTS:
Franklin Industrial Building 566,000 4,148,000 478,596
KANSAS:
Wichita Industrial Building 268,000 1,518,000 175,165
IOWA:
Urbandale Industrial Building 310,000 1,758,000 202,838
MISSOURI:
Liberty Industrial Building 723,000 6,507,000 13,903
O'Fallon Industrial Building 264,000 3,302,000 296,193
VIRGINIA:
Virginia
Beach Industrial Building 384,600 2,150,000 137,815
ILLINOIS:
Burr Ridge Industrial Building 270,000 1,233,250 15,810
Schaumburg Industrial Building 1,039,800 3,694,321 142,083
MICHIGAN:
Romulus Industrial Building 531,000 3,650,000 46,775
__________ ___________ __________

Total at September 30, 1998 $7,665,724 $49,612,355 $6,659,642
========== =========== ==========

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

Page 35

NOTE 4 - ACQUISITIONS

Fiscal 1999

On December 11, 1998, the Company purchased an 88,140 square foot
warehouse facility in Omaha, Nebraska. This warehouse facility is 100% net-
leased to Federal Express Corporation. The total price, including closing
costs, was approximately $5,596,000. The Company paid approximately $600,000
in cash, used approximately $900,000 of its revolving credit line with Summit
Bank, and obtained a mortgage of $4,100,000. This mortgage payable is at an
interest rate of 7.15% and is due January 1, 2014.

On March 16, 1999, the Company sold the warehouse facility located at
40 Robert Pitt Drive, Monsey, New York. The net proceeds from this sale
amounted to $2,265,632 and resulted in a gain of $1,240,325. These funds
were placed into an escrow account. This sale was part of a tax free
exchange for the warehouse facility purchased on April 6, 1999.

On April 6, 1999, MREIC purchased a 49,900 square foot warehouse facility
in Albemarle County, Virginia. This warehouse is 100% net-leased to Federal
Express Corporation. The total purchase price, including closing costs was
approximately $4,015,000. MREIC used $1,360,000 of its credit line with
Summit Bank. On June 1, 1999, the Company secured a $2,750,000 mortgage at
an interest rate of 6.90% which is due July 1, 2014.

On July 28, 1999, the Company purchased a 95,883 square foot warehouse
facility in Jacksonville, Florida. This warehouse facility is 100% net-
leased to Federal Express Corporation. The total purchase price, including
closing costs, was approximately $5,833,000. The Company paid approximately
$200,000 in cash, used approximately $1,600,000 of its revolving line of
credit with Summit Bank and assumed a mortgage of approximately $4,100,000.
This mortgage payable is at an interest rate of 6.92% and is due December 1,
2016.

Fiscal 1998

On December 18, 1997, the Company purchased a 12,477 square foot
warehouse facility in Burr-Ridge, Illinois from SK Properties II, LLC, an
unrelated entity. This warehouse facility is 100% net leased to Sherwin-
Williams Company. The purchase price, including closing costs, was
approximately $1,503,000. The Company paid approximately $120,000 in cash,
used approximately $280,000 of its revolving line of credit with Summit Bank
and obtained a mortgage of $1,100,000. This mortgage is at an interest
rate of 8% and is due January 1, 2014.

On June 22, 1998, the Company purchased a 72,000 square foot
warehouse facility in Romulus, Michigan from SK Properties I, LLC, an
unrelated entity. This warehouse facility is 100% net leased to Federal
Express Corporation. The purchase price, including closing costs, was
approximately $4,181,000. The Company utilized $1,200,000 of its revolving
credit line with Summit Bank and obtained a mortgage of $2,800,000. This
mortgage is at an interest rate of 7.56% and is due June 22, 2013.

Page 36

NOTE 4 - ACQUISITIONS (CONT'D)

On August 26, 1998, the Company purchased a 98,200 square foot
warehouse facility in Liberty, Missouri. This warehouse facility is 100%
net-leased to Johnson Controls, Inc. The total price, including closing
costs, was approximately $7,230,000. The Company obtained a mortgage for
$4,800,000, used approximately $1,500,000 of its revolving credit line, and
paid approximately $900,000 in cash. This mortgage is at an interest rate
of 7.065% and matures March 1, 2013.

NOTE 5 - SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

The Company has approximately 1,650,000 square feet of property of
which approximately 415,300 square feet or 25% is leased to Federal Express
Corporation and approximately 282,000 square feet, or 17%, is leased to
Keebler Company. Rental and occupancy charges from Federal Express
Corporation totaled approximately $2,070,000 and $716,000 and $286,000 for
the years ended September 30, 1999, 1998 and 1997, respectively. Rental and
occupancy charges from Keebler Company totaled approximately $1,800,000, for
each of the years ended September 30, 1999, 1998 and 1997. During 1999, 1998
and 1997, rental income and occupancy charges from properties leased to these
companies approximated 49%, 39% and 38% of total rental and occupancy charges,
respectively.

NOTE 6 - SECURITIES AVAILABLE FOR SALE

During the fiscal years ended September 30, 1999, 1998 and 1997, gross
gains on sales of securities amounted to $-0-, $222,276, and $75,323 ,
respectively, which have been included in Investment and Other Income.

Dividend income for the years ended September 30, 1999, 1998 and 1997
amounted to $651,657, $224,632 and $221,033, respectively. Interest income
for the years ended September 30, 1999, 1998 and 1997 amounted to $115,270,
$111,770 and $116,770, respectively.

Page 37

NOTE 6 - SECURITIES AVAILABLE FOR SALE (CONT'D)

The following is a summary of Securities Available for Sale at
September 30, 1999 and 1998:

1999 1998
Shares/
$ Amount Cost Market Cost Market

Debt Securities:
Center Trust Inc.
7.5% Subordinated
dtd 12/27/93
due 01/15/2001 450,000 $ 425,010 $ 428,625 $ 329,550 $ 333,376
Sizeler Property 8%
Convertible Subor-
dinated dtd 5/13/93
due 7/15/2003 869,000 809,238 808,170 713,800 720,937
___________ __________ __________ __________

Total Debt Securities 1,234,248 1,236,795 1,043,350 1,054,313
___________ __________ __________ __________

Equity Securities:
Preferred Stock:
Associated Estates
Realty Corp 9.75%
Class A Cumulative
Redeemable 6,000 135,004 121,878 -0- -0-
Bradley Real Estate
Inc. 8.40%
Convertible 21,000 500,626 479,073 -0- -0-
Crown American Realty
Trust 11% Series 19,000 907,958 783,750 -0- -0-
First Union Real
Estate Equity and
Mortgage Investments
8.4% Convertible
Series A 18,000 381,810 400,500 -0- -0-
First Washington
Realty Trust Inc.
9.75% Partially
Convertible Series A 5,000 129,438 137,500 -0- -0-
Kranzco Realty Trust
9.5% Series D
Cumulative
Redeemable Shares 8,000 162,819 148,000 -0- -0-
Prime Retail Inc.
Convertible Series B 6,000 101,368 83,628 -0- -0-
United Dominion Realty
Trust 9.25% Series A
Cumulative
Redeemable 10,000 245,348 220,630 -0- -0-
Common Stock:
Associated Estates
Realty Corp 90,000 1,018,456 826,920 -0- -0-
American Health
Properties Inc 10,000 177,550 201,250 -0- -0-
American Industrial
Properties REIT New 22,100 244,916 294,217 -0- -0-
Banyan Strategic
Realty Trust 25,000 120,711 129,700 -0- -0-
Boddie Noell
Properties Inc 45,000 492,761 450,000 -0- -0-
Center Trust Inc. 18,500 203,424 205,813 500,627 488,249
Crown American Realty
Trust 79,300 563,894 510,533 -0- -0-
East Group
Properties Inc 7,000 132,023 126,875 -0- -0-
First Industrial
Realty Trust 15,000 382,086 371,250 -0- -0-
First Washington
Realty Trust 20,000 432,552 420,000 -0- -0-
IRT Property Company 25,500 248,782 229,500 -0- -0-
Mid Atlantic Realty
Trust 20,000 218,799 208,760 -0- -0-
New Plan Excell
Realty Inc 5,000 94,152 90,625 -0- -0-
Pacific Gulf
Properties Inc 5,000 101,506 99,690 -0- -0-
Pennsylvania Real
Estate Investment 37,000 762,519 698,375 232,000 205,000
RFS Hotel Investors
Inc 20,000 250,430 230,000 -0- -0-
Sizeler Properties
Investors Inc 70,500 616,071 612,504 115,700 108,000
United Dominion
Realty Trust Inc 108,000 1,169,313 1,208,304 -0- -0-
United Mobile Homes
Inc (a related
entity) 132,200 1,343,803 1,181,604 100,815 106,250
Urstadt Biddle
Properties Inc 25,000 198,342 173,222 85,932 88,688
Weingarten Realty Inv 3,000 120,375 112,125 -0- -0-
Western Properties
Trust 30,500 356,083 331,688 -0- -0-
___________ __________ _________ _________
Total Equity Securities 11,812,919 11,087,914 1,035,074 996,187
___________ __________ _________ _________

TOTAL SECURITIES
AVAILABLE FOR SALE $13,047,167$12,324,709 $2,078,424 $2,050,500
========== ========== ========= =========

Page 38

NOTE 7 - MORTGAGE NOTES AND LOANS PAYABLE

The following is a summary of the mortgage notes payable at September 30,
1999 and 1998:

Fixed Fiscal Balance
Property Rate Maturity 9/30/99 9/30/98

Orangeburg, New York 7% 2004 $1,494,955 $1,731,597

Jackson, Mississippi 8.5% 2008 585,868 628,610

Franklin, Massachusetts 7% 2004 1,701,949 1,971,357

Wichita, Kansas 10.25% 2016 1,199,087 1,224,815

Urbandale, Iowa 7% 2004 810,726 939,059

Richland, Mississippi 7.5% 2004 592,110 671,526

O'Fallon, Missouri 8.5% 2007 1,856,710 2,010,090

Virginia Beach, VA 8.5% 2021 1,433,063 1,455,163

Fayetteville, NC 7.8% 2006 3,238,398 3,328,065

Schaumburg, IL 8.48% 2012 3,212,812 3,347,211

Burr Ridge, IL 8% 2014 1,057,253 1,083,579

Romulus, MI 7.56% 2013 2,668,102 2,774,605

Liberty, MS 7.065% 2013 4,585,896 4,784,105

Omaha, NE 7.15% 2014 3,982,316 -0-

Charlottesville,VA 6.90% 2014 2,723,593 -0-

Jacksonville, FL 6.92% 2017 4,094,921 -0-
___________ ___________

Total Mortgage Notes Payable $35,237,759 $25,949,782
=========== ===========

Page 39

NOTE 7 - MORTGAGE NOTES AND LOANS PAYABLE (CONT'D)

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

Year Ending September 30, 2000 2,055,452
2001 2,213,652
2002 2,384,135
2003 2,567,864
2004 2,894,986
Thereafter 23,121,670
___________

$35,237,759
===========

Line of Credit

The Company had an $8,000,000 line of credit with Summit at an interest
rate of prime . This line of credit was reduced to $6,345,000 during 1999
due to the sale of the warehouse facility in Monsey, New York and is now
secured by a second mortgage on the South Brunswick Industrial Building.
This line of credit expires on July 29, 2000. As of September 30, 1999,
approximately $3,876,000 is available.

Margin Loan

During fiscal 1999, the Company purchased securities on margin. The
margin loan is at 7.5% and due on demand. At September 30, 1999, the margin
loan amounted to $4,478,000.

NOTE 8 - STOCK OPTION PLAN

On April 24, 1997, the shareholders approved and ratified the Company's
1997 Stock Option Plan authorizing the grant to officers, directors and key
employees options to purchase up to 750,000 shares of common stock. 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, and accordingly, no compensation cost has been recognized.
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 pro
forma amounts as follows:
1999 1998 1997
Net Income As reported $3,796,760 $2,499,922 $1,881,154
Pro forma 3,787,777 2,378,034 1,865,941
Net Income
Per share As reported-Basic
and Diluted $.57 $.50 $.46
Pro forma - Basic .57 .48 .46
Pro forma - Diluted .57 .47 .46

Page 40

NOTE 8 - STOCK OPTION PLAN (CONT'D)

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions used for grants in 1998 and 1997, respectively:
dividend yield of 9 %; expected volatility of 25 %; risk-free interest rates
of 6.0% and 6.5 %, respectively, and expected lives of five years.

A summary of the status of the Company's stock option plan as of
September 30, 1999, 1998 and 1997 is as follows:

1999 1998 1997
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price

Outstanding at
beginning of
year 320,000 $6.34 300,000 $6.28 -0- $ -0-
Granted -0- -0- 20,000 7.25 300,000 6.28
Exercised -0- -0- -0- -0- -0-
_______ _______ _______
Outstanding at
end of year 320,000 6.34 320,000 6.34 300,000 6.28
======= ======= =======
Options
exercisable
at end of
year 320,000 300,000 -0-
======= ======= =======

Weighted-average
fair value of
options granted
during the year -0- .77 .61

The following is a summary of stock options outstanding as of
September 30, 1999:

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

04/30/97 10 135,000 $5.9375 04/30/02
04/30/97 2 165,000 6.5625 04/30/02
04/30/98 2 20,000 7.2500 04/30/03

As of September 30, 1999, there were 430,000 shares available for grant
under this plan.

NOTE 9 - 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, 1999 are
scheduled as follows: 2000 - $7,612,000; 2001 - $6,018,000; 2002 -
$5,071,000; 2003 - $4,963,000; 2004 - $4,154,000; thereafter - $12,309,000.

Page 41

NOTE 10 - RELATED PARTY TRANSACTIONS

Eugene W. Landy received $3,200, for each of the years ended September
30, 1999, 1998 and 1997 as Director. The firm of Eugene W. Landy received
$17,500, $103,500, $138,500 during the years ended 1999, 1998 and 1997,
respectively, as management and legal fees. An accrual of $59,000, was
made in each of the years ended September 30, 1999, 1998 and 1997 for pension
and other benefits in accordance with Mr. Landy's employment agreement.
Additionally, the Board of Directors has granted to Mr. Landy a loan of
$100,000 at an interest rate of 10% due May 23, 2000. Principal and
accrued interest is payable at maturity.

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 terminates December 31, 1999. Thereafter,
the term of the Employment Agreement shall be automatically renewed and
extended for successive one-year periods. The Employment Agreement is
terminable by either party at any time, subject to certain notice
requirements.

Cronheim Management Services received the sum of $161,146, $41,466 and
$17,681 for management fees during the years ended 1999, 1998 and 1997,
respectively. Effective August 1, 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 for management
fees. The David Cronheim Company received $136,229, $45,786 and $46,188
in commissions in 1999, 1998 and 1997, respectively. Daniel Cronheim received
$2,400, $3,200 and $3,200 for Director and Committee fees in 1999, 1998 and
1997, respectively.

NOTE 11 - 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 95% 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 an excise tax liability for the calendar years
1999, 1998 and 1997, since it intends to or has distributed all of its annual
income.

Page 42

NOTE 12 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

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.

Amounts received, including dividend reinvestment of $1,387,405,
$1,116,555 in 1999 and 1998, respectively, and shares issued in connection
with the Plan for the years ended September 30, 1999 and 1998 were as follows:

1999 1998

Amounts Received* $9,578,367 $8,106,480
Shares Issued 1,806,105 1,281,697

*These amounts are net of the 5% discount under the Plan. The total discount
amounted to $284,751 and $307,766 during the fiscal years ended September 30,
1999 and 1998 respectively.

NOTE 13 - DISTRIBUTIONS

The following cash distributions were paid to shareholders during the years
ended September 30, 1999 and 1998:

1999 1998

Quarter Ended Amount Per Share Amount Per Share

December 31 $ 823,275 $.1375 $ 591,580 $.13
March 31 904,454 .14 621,185 .13
June 30 1,012,376 .145 702,755 .135
September 30 1,068,633 .145 752,491 .135
__________ _____ __________ _____

$3,808,738 $.5675 $2,668,011 $ .53
========== ====== ========== =====

The above amounts do not include discounts under the Dividend
Reinvestment and Stock Purchase Plan.

On September 22, 1999, the Company declared a dividend of $0.145 per
share to be paid on December 15, 1999 to shareholders of record November 15,
1999.

Page 43

NOTE 14 - 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."

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 and mortgage loans
receivable 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 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.

NOTE 15 - CASH FLOW AND COMPREHENSIVE INCOME INFORMATION

Cash paid during the years ended September 30, 1999, 1998 and 1997, for
interest is $2,607,520, $1,802,590 and $1,711,466, respectively.

During 1999, 1998 and 1997, the Company had $1,387,405, $1,116,555 and
$909,231, respectively, of dividends which were reinvested that required no
cash transfers.

During 1999, proceeds from the sale of investment property totaling
$2,265,632 were directly paid into an escrow account and required no cash
transfers by the Company. These proceeds were used to purchase investment
property.

In 1999, 1998 and 1997, equity securities available for sale are shown
at fair value . The resultant portfolio (decrease) increase of $(722,458),
$(27,924) and $394,933, respectively, relating to unrealized holding gains
and losses is shown as a separate component of shareholders' equity.

Page 44

NOTE 15 - CASH FLOW AND COMPREHENSIVE INCOME INFORMATION (CONT'D)

The following are the reclassification adjustments related to securities
available for sale included in Other Comprehensive Income (Loss):

1999 1998 1997
Unrealized holding (losses)
gains arising during the year $(694,534) $(200,581) $443,242
Less: reclassification
adjustment for gains realized
in income -0- (222,276) (75,323)
_________ _________ ________

Net unrealized (losses) gains $(695,534) $(422,857) $367,919
========= ========= ========

Page 45

SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1999

Column A Column B Column C Column D
__________ __________ _______________________ __________
Initial Cost
_______________________
Buildings, Capitalization
Improvements Subsequent to
Description Encumbrances Land & Equipment Acquisition
____________ ____________ __________ ____________

Shopping Center:
Somerset, NJ $ -0- $ 55,182 $ 637,097 $ 428,898
Industrial Buildings:

Ramsey, NJ -0- 52,639 291,500 883,714
Monaca, PA -0- 330,773 878,081 942,590
Orangeburg, NY 1,494,955 694,720 2,977,372 -0-
South Brunswick,NJ -0- 1,128,000 4,087,400 33,087
Greensboro, NC -0- 327,100 1,853,700 -0-
Jackson, MS 585,868 218,000 1,233,500 1,086
Franklin, MA 1,701,949 566,000 4,148,000 -0-
Wichita, KS 1,199,087 268,000 1,518,000 -0-
Urbandale, IO 810,726 310,000 1,758,000 -0-
Richland, MS 592,110 211,000 1,195,000 -0-
O'Fallon, MO 1,856,710 264,000 3,302,000 -0-
Virginia Beach, VA 1,433,063 384,600 2,150,000 -0-
Fayetteville, NC 3,238,398 172,000 4,467,885 -0-
Schaumburg, IL 3,212,812 1,039,800 3,694,321 -0-
Burr Ridge, IL 1,057,253 270,000 1,233,250 3,349
Romulus, MI 2,668,102 531,000 3,650,000 3,883
Liberty, MO 4,585,896 723,000 6,507,000 3,546
Omaha, NE 3,982,316 1,170,000 4,425,500 -0-
Charlotteville, VA 2,723,593 1,170,000 2,845,000 -0-
Jacksonville, FL 4,094,921 1,165,000 4,668,080 -0-
___________ ___________ ___________ __________
$35,237,759 $11,050,814 $57,520,686 $2,300,153
=========== =========== =========== ==========

*Buildings and Improvements reacquired in 1986.

Page 46

SCHEDULE III (CONT'D)
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1999

Column A Column E(1)(2)
Gross Amount at Which Carried
September 30, 1999

Description Land Bldg, Equip & Imp. Total
____________ ____________ _________________ ____________

Shopping Center:
Somerset, NJ $ 55,182 $ 1,065,995 $ 1,121,177
Industrial Buildings:
Ramsey, NJ 52,639 1,175,214 1,227,853
Monaca, PA 330,773 1,820,673 2,151,446
Orangeburg, NY 694,720 2,977,372 3,672,092
South Brunswick,NJ 1,128,000 4,120,487 5,248,487
Greensboro, NC 327,100 1,853,700 2,180,800
Jackson, MS 218,000 1,234,586 1,452,586
Franklin, MA 566,000 4,148,000 4,714,000
Wichita, KS 268,000 1,518,000 1,786,000
Urbandale, IO 310,000 1,758,000 2,068,000
Richland, MS 211,000 1,195,000 1,406,000
O'Fallon, MO 264,000 3,302,000 3,566,000
Virginia Beach, VA 384,600 2,150,000 2,534,600
Fayetteville, NC 172,000 4,467,885 4,639,885
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 3,653,883 4,184,883
Liberty, MO 723,000 6,510,546 7,233,546
Omaha, NE 1,170,000 4,425,500 5,595,500
Charlotteville, VA 1,170,000 2,845,000 4,015,000
Jacksonville, FL 1,165,000 4,668,080 5,833,080
___________ ___________ ___________

$11,050,814 $59,820,841 $70,871,655
=========== =========== ===========

*Buildings and Improvements reacquired in 1986.

Page 46A

SCHEDULE III (CONT'D)
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1999

Column A Column F Column G Column H Column I
____________ ____________ ____________ ___________ ____________

Accumulated Date of Date Depreciable
Description Depreciation Construction Acquired Life
___________ ____________ ____________ _________ ___________

Shopping Center:
Somerset, NJ $ 765,462 1970 1970 10-33
Industrial Buildings:
Ramsey, NJ 584,395 1969 1969 7-40
Monaca, PA 1,007,423 1977 1977* 5-31.5
Orangeburg, NY 649,903 1990 1993 31.5
South Brunswick,NJ 863,990 1974 1993 31.5
Greensboro, NC 380,220 1988 1993 31.5
Jackson, MS 244,146 1988 1993 39
Franklin, MA 584,951 1969 1994 39
Wichita, KS 214,087 1974 1994 39
Urbandale, IO 247,913 1985 1994 39
Richland, MS 168,519 1986 1994 39
O'Fallon, MO 380,857 1989 1994 39
Virginia Beach, VA 192,941 1976 1996 39
Fayetteville, NC 286,392 1996 1997 39
Schaumburg, IL 236,805 1997 1997 39
Burr Ridge, IL 47,516 1997 1997 39
Romulus, MI 140,460 1998 1998 39
Liberty, MO 250,352 1997 1998 39
Omaha, NE 56,735 1999 1999 39
Charlotteville, VA 36,474 1998 1999 39
Jacksonville, FL 59,845 1998 1999 39
___________

$ 7,399,386
===========

*Buildings and Improvements reacquired in 1986.

Page 46B

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

(1) Reconciliation

REAL ESTATE INVESTMENTS

9/30/99 9/30/98 9/30/97

Balance-Beginning of Year $57,270,562 $44,222,954 $34,718,945
__________ __________ __________
Additions:
Acquisitions 15,443,582 12,914,250 9,374,006
Improvements 35,009 133,358 130,003
___________ ___________ ___________
Total Additions 15,478,591 13,047,608 9,504,009
___________ ___________ ___________
Sales ( 1,877,498) -0- -0-
___________ ___________ ___________

Balance-End of Year (1) $70,871,655 $57,270,562 $44,222,954
=========== =========== ===========

ACCUMULATED DEPRECIATION

9/30/99 9/30/98 9/30/97

Balance-Beginning of Year $6,656,634 $5,481,022 $4,494,322

Depreciation 1,594,945 1,175,612 986,700
Sales (852,193) -0- -0-
__________ __________ __________

Balance-End of Year $7,399,386 $6,656,634 $5,481,022
========== ========== ==========

Page 47

MONMOUTH REAL ESTATE INVESTMENT CORPORATION
NOTES TO SCHEDULE III
SEPTEMBER 30,

(1) Reconciliation
1999 1998 1997

Balance - Beginning of Year $57,270,562 $44,222,954 $34,718,945
___________ ___________ ___________
Additions:

Ramsey, New Jersey -0- 45,000 6,375
Somerset, New Jersey -0- -0- 3,600
Monaca, Pennsylvania 23,147 40,204 85,060
Monsey, New York -0- 15,067 34,968
Orangeburg, New York -0- -0- -0-
South Brunswick, New Jersey -0- 33,087 -0-
Greensboro, North Carolina -0- -0- -0-
Jackson, Mississippi 1,086 -0- -0-
Franklin, Massachusetts -0- -0- -0-
Wichita, Kansas -0- -0- -0-
Urbandale, Iowa -0- -0- -0-
Richland, Mississippi -0- -0- -0-
O'Fallon, Missouri -0- -0- -0-
Virginia Beach, Virginia -0- -0- -0-
Fayetteville, North Carolina -0- -0- 4,639,885
Schaumburg, Illinois -0- -0- 4,734,121
Burr Ridge, Illinois 3,349 1,503,250 -0-
Romulus, Michigan 3,883 4,181,000 -0-
Liberty, Missouri 3,546 7,230,000 -0-
Omaha, Nebraska 5,595,500 -0- -0-
Charlottesville, Virginia 4,015,000 -0- -0-
Jacksonville, Florida 5,833,080 -0- -0-
__________ __________ _________
Total Additions 15,478,591 13,047,608 9,504,009
Sales:
Monsey, New York (1,877,498) -0- -0-
__________ __________ _________

Balance - End of Year $70,871,655 $57,270,562 $44,222,954
========== ========= ==========

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

Page 48

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 22, 1999 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 22, 1999 By: /s/Eugene W. Landy
Eugene W. Landy, President and Director

Date: December 22, 1999 By: /s/Ernest V. Bencivenga
Ernest V. Bencivenga, Treasurer and
Director

Date: December 22, 1999 By: /s/Anna T. Chew
Anna T. Chew, Controller and Director

Date: December 22, 1999 By: /s/Daniel D. Cronheim
Daniel D. Cronheim, Director

Date: December 22, 1999 By: /s/Boniface DeBlasio
Boniface DeBlasio, Director

Date: December 22, 1999 By: /s/Charles P. Kaempffer
Charles P. Kaempffer, Director

Date: December 22, 1999 By: /s/Samuel A. Landy
Samuel A. Landy, Director

Date: December 22, 1999 By: /s/W. Dunham Morey
W. Dunham Morey, Director

Date: December 22, 1999 By: /s/Robert G. Sampson
Robert G. Sampson, Director

Page 49