Monmouth’s 1Q AFFO Disappoints; Shares Drop

Monmouth Real Estate Investment reported weaker-than-expected adjusted funds from operation (AFFO) in the first quarter. In response, its shares fell about 3% in Thursday’s after-market trading.

Monmouth’s (MNR) AFFO decreased 9.5% to $0.19 per share and missed analysts’ expectations of $0.20. The year-over-year decline reflects a higher preferred dividend expense and lower dividend income. However, improvement in net operating income supported AFFO per share during the quarter.

Meanwhile, Monmouth’s 1Q revenues, which includes rental and reimbursement revenues, increased by 5.4% year-over-year to $44 million. Further, its 1Q earnings of $0.26 per share jumped over sixfold compared to the year-ago period’s earnings of $0.04 per share. Its occupancy rate improved by 50 basis points to 99.7% year-on-year. (See Monmouth stock analysis on TipRanks)

Following the results, BMO Capital analyst Frank Lee maintained a Hold rating and a price target of $18 (1.1% upside potential) on the stock. In a note to investors, the analyst said, “FY21 is off to a good start, with further progress made on upcoming expirations and $170mm of acquisitions closed with an additional ~$120mm expected this fiscal year. However, the focus remains on MNR’s strategic review, which includes potential sale or merger.”

Lee added, “While no further details/timing were provided, steps were taken to trim the securities portfolio in January, and we view additional sales would be a positive given strong gains in several holdings YTD.”

Overall, the Street has a cautiously optimistic outlook, with a Moderate Buy consensus rating based on 1 Buy and 2 Holds. The average analyst price target of $17.33 implies downside potential of about 2.6% to current levels. Shares gained about 27.8% over the past year.

What’s more, the TipRanks stock investors tool shows that investors currently have a Very Negative stance on MNR.