x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from __________________ to
____________________
|
FIRST
REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
|
||
(Exact
name of registrant as specified in its charter)
|
||
New
Jersey
|
22-1697095
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
505
Main Street, Hackensack, New Jersey
|
07601
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
Accelerated Filer
o
|
Accelerated
Filer
x
|
Non-Accelerated
Filer
o
|
Smaller
Reporting Company
o
|
Page
|
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|
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4
|
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|
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|
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23
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24
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24
|
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25
|
FIRST
REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND
SUBSIDIARIES
|
||||||||
CONSOLID
A
TED BALANCE SHEETS
|
||||||||
(Unaudited)
|
(Audited)
|
|||||||
July
31,
|
October
31,
|
|||||||
2008
|
2007
|
|||||||
(In
Thousands of Dollars)
|
||||||||
ASSETS
|
||||||||
Real
estate, at cost, net of accumulated depreciation
|
$ | 209,143 | $ | 204,732 | ||||
Construction
in progress
|
8,121 | 7,331 | ||||||
Cash
and cash equivalents
|
9,084 | 12,740 | ||||||
Tenants'
security accounts
|
2,315 | 2,369 | ||||||
Sundry
receivables
|
4,416 | 4,833 | ||||||
Secured
loans receivable
|
3,326 | 3,326 | ||||||
Prepaid
expenses and other assets
|
2,845 | 2,852 | ||||||
Acquired
over market leases and in-place lease costs
|
925 | 1,104 | ||||||
Deferred
charges, net
|
3,532 | 3,454 | ||||||
Interest
rate swap contract
|
- | 14 | ||||||
Totals
|
$ | 243,707 | $ | 242,755 | ||||
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Mortgages
payable
|
$ | 192,868 | $ | 189,389 | ||||
Accounts
payable and accrued expenses
|
4,800 | 5,193 | ||||||
Dividends
payable
|
2,054 | 2,704 | ||||||
Tenants'
security deposits
|
3,111 | 3,124 | ||||||
Acquired
below market value leases and deferred revenue
|
3,518 | 3,911 | ||||||
Total
liabilities
|
206,351 | 204,321 | ||||||
Minority
interest
|
13,265 | 13,304 | ||||||
Commitments
and contingencies
|
||||||||
Shareholders'
equity:
|
||||||||
Shares
of beneficial interest without par value:
|
||||||||
8,000,000
shares authorized;
|
||||||||
6,846,152
and 6,760,652 shares issued and outstanding
|
23,904 | 23,225 | ||||||
Treasury
stock, at cost: 5,000 shares
|
(120 | ) | - | |||||
Undistributed
earnings
|
307 | 1,891 | ||||||
Accumulated
other comprehensive income
|
- | 14 | ||||||
Total
shareholders'
equity
|
24,091 | 25,130 | ||||||
Totals
|
$ | 243,707 | $ | 242,755 | ||||
See
Notes to Condensed Consolidated Financial Statements.
|
FIRST
REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND
SUBSIDIARIES
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF INCOME, COMPREHENSIVE INCOME
|
||||||||||||||||
AND
UNDISTR
I
BUTED EARNINGS
|
||||||||||||||||
NINE
AND THREE MONTHS ENDED JULY 31, 2008 AND 2007
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||||||
July
31,
|
July
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(In
Thousands of Dollars, Except Per Share Amounts)
|
||||||||||||||||
Revenue:
|
||||||||||||||||
Rental
income
|
$ | 27,193 | $ | 26,480 | $ | 9,129 | $ | 8,980 | ||||||||
Reimbursements
|
3,932 | 3,601 | 1,475 | 1,227 | ||||||||||||
Sundry
income
|
310 | 415 | 124 | 234 | ||||||||||||
Totals
|
31,435 | 30,496 | 10,728 | 10,441 | ||||||||||||
Expenses:
|
||||||||||||||||
Operating
expenses
|
8,069 | 8,224 | 2,385 | 2,713 | ||||||||||||
Management
fees
|
1,396 | 1,321 | 479 | 451 | ||||||||||||
Real
estate taxes
|
4,300 | 4,277 | 1,409 | 1,424 | ||||||||||||
Depreciation
|
4,086 | 3,972 | 1,411 | 1,323 | ||||||||||||
Totals
|
17,851 | 17,794 | 5,684 | 5,911 | ||||||||||||
Operating
income
|
13,584 | 12,702 | 5,044 | 4,530 | ||||||||||||
Investment
income
|
437 | 382 | 124 | 157 | ||||||||||||
Interest
expense including amortization
|
||||||||||||||||
of
deferred financing costs
|
(8,694 | ) | (9,099 | ) | (2,876 | ) | (3,010 | ) | ||||||||
Minority
interest
|
(768 | ) | (386 | ) | (373 | ) | (129 | ) | ||||||||
Distribution
to certain minority interests
|
- | (150 | ) | - | - | |||||||||||
Income
from continuing operations
|
4,559 | 3,449 | 1,919 | 1,548 | ||||||||||||
Discontinued
operations:
|
||||||||||||||||
Earnings
from discontinued operations
|
- | 91 | - | 15 | ||||||||||||
Gain
on sale
|
- | 3,680 | - | 3,680 | ||||||||||||
Income
from discontinued operations
|
- | 3,771 | - | 3,695 | ||||||||||||
Net
income
|
$ | 4,559 | $ | 7,220 | $ | 1,919 | $ | 5,243 | ||||||||
Basic
earnings per share:
|
||||||||||||||||
Continuing
operations
|
$ | 0.67 | $ | 0.51 | $ | 0.28 | $ | 0.23 | ||||||||
Discontinued
operations
|
- | 0.56 | - | 0.55 | ||||||||||||
Net
income
|
$ | 0.67 | $ | 1.07 | $ | 0.28 | $ | 0.78 | ||||||||
Diluted
earnings per share:
|
||||||||||||||||
Continuing
operations
|
$ | 0.66 | $ | 0.50 | $ | 0.28 | $ | 0.22 | ||||||||
Discontinued
operations
|
- | 0.54 | - | 0.54 | ||||||||||||
Net
income
|
$ | 0.66 | $ | 1.04 | $ | 0.28 | $ | 0.76 | ||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
6,802 | 6,752 | 6,844 | 6,756 | ||||||||||||
Diluted
|
6,897 | 6,919 | 6,941 | 6,925 | ||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Net
income
|
$ | 4,559 | $ | 7,220 | $ | 1,919 | $ | 5,243 | ||||||||
Other
comprehensive income (loss):
|
||||||||||||||||
Unrealized
(loss) on interest
|
||||||||||||||||
rate
swap contract
|
- | (48 | ) | - | (19 | ) | ||||||||||
Comprehensive
income
|
$ | 4,559 | $ | 7,172 | $ | 1,919 | $ | 5,224 | ||||||||
UNDISTRIBUTED
EARNINGS
|
||||||||||||||||
Balance,
beginning of period
|
$ | 1,891 | $ | 1,735 | $ | 451 | $ | (340 | ) | |||||||
Net
income
|
4,559 | 7,220 | 1,919 | 5,243 | ||||||||||||
Less
dividends declared
|
(6,143 | ) | (6,079 | ) | (2,063 | ) | (2,027 | ) | ||||||||
Balance,
end of period
|
$ | 307 | $ | 2,876 | $ | 307 | $ | 2,876 | ||||||||
Dividends
declared per share
|
$ | 0.90 | $ | 0.90 | $ | 0.30 | $ | 0.30 | ||||||||
See
Notes to Condensed Consolidated Financial Statements.
|
FIRST
REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND
SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEM
E
NTS OF CASH FLOWS
|
||||||||
NINE
MONTHS ENDED JULY 31, 2008 AND 2007
|
||||||||
(Unaudited)
|
||||||||
Nine
Months Ended
|
||||||||
July
31,
|
||||||||
2008
|
2007
|
|||||||
(In
Thousands of Dollars)
|
||||||||
Operating
activities:
|
||||||||
Net
income
|
$ | 4,559 | $ | 7,220 | ||||
Adjustments
to reconcile net income to net cash provided by
|
||||||||
operating
activities (including discontinued operations):
|
||||||||
Depreciation
|
4,086 | 3,980 | ||||||
Amortization
|
516 | 570 | ||||||
Net
amortization of acquired leases
|
(72 | ) | (226 | ) | ||||
Deferred
revenue
|
(215 | ) | (389 | ) | ||||
Minority
interest
|
768 | 536 | ||||||
Gain
on sale of discontinued operations
|
- | (3,680 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Tenants'
security accounts
|
54 | (150 | ) | |||||
Sundry receivables, prepaid expenses and other assets
|
40 | 581 | ||||||
Accounts payable, accrued expenses and other liabilities
|
663 | 567 | ||||||
Tenants'
security deposits
|
(13 | ) | 229 | |||||
Net
cash provided by operating activities
|
10,386 | 9,238 | ||||||
Investing
activities:
|
||||||||
Capital
improvements - existing properties
|
(2,562 | ) | (1,752 | ) | ||||
Proceeds
from sale of discontinued operations
|
- | 3,796 | ||||||
Net
sale proceeds held in escrow
|
- | (3,796 | ) | |||||
Construction
and pre development costs
|
(7,736 | ) | (4,114 | ) | ||||
Net
cash used in investing activities
|
(10,298 | ) | (5,866 | ) | ||||
Financing
activities:
|
||||||||
Repayment
of mortgages
|
(7,552 | ) | (19,053 | ) | ||||
Proceeds
from mortgages
|
6,000 | 28,331 | ||||||
Proceeds
from construction loan
|
5,031 | - | ||||||
Deferred
financing costs
|
(282 | ) | (638 | ) | ||||
Proceeds
from exercise of stock options
|
679 | 37 | ||||||
Repurchase
of Company stock-Treasury shares
|
(120 | ) | - | |||||
Dividends
paid
|
(6,793 | ) | (7,427 | ) | ||||
Distribution
to minority interest
|
(707 | ) | (541 | ) | ||||
Net
cash (used in) provided by financing activities
|
(3,744 | ) | 709 | |||||
Net
increase (decrease) in cash and cash equivalents
|
(3,656 | ) | 4,081 | |||||
Cash
and cash equivalents, beginning of period
|
12,740 | 9,616 | ||||||
Cash
and cash equivalents, end of period
|
$ | 9,084 | $ | 13,697 | ||||
Supplemental
disclosure of cash flow data:
|
||||||||
Interest
paid, including capitalized construction period interest
|
||||||||
of
$245 in fiscal 2008.
|
$ | 8,540 | $ | 8,900 | ||||
Income
taxes paid
|
$ | 44 | $ | 18 | ||||
Supplemental
schedule of non cash financing activities:
|
||||||||
Accrued
capital expenditures, construction costs and pre-development
costs
|
$ | 854 | $ | 235 | ||||
Dividends
declared but not paid
|
$ | 2,054 | $ | 2,027 | ||||
See
Notes to Condensed Consolidated Financial Statements.
|
||||||||
Basic
earnings per share is calculated by dividing net income by the weighted
average number of shares outstanding during each period (denominator). The
calculation of diluted earnings per share is similar to that of basic
earnings per share, except that the denominator is increased to include
the number of additional shares that would have been outstanding if all
potentially dilutive shares, such as those issuable upon the exercise of
stock options and warrants, were issued during the
period.
|
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||||||
July
31,
|
July
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Basic
weighted average shares outstanding
|
6,802,083 | 6,752,484 | 6,844,304 | 6,755,652 | ||||||||||||
Shares
arising from assumed exercise of stock options
|
94,772 | 166,675 | 96,777 | 169,513 | ||||||||||||
Dilutive
weighted average shares outstanding
|
6,896,855 | 6,919,159 | 6,941,081 | 6,925,165 |
On
September 10, 1998, the Board of Trustees approved FREIT’s Equity
Incentive Plan (the "Plan") which was ratified by FREIT's shareholders on
April 7, 1999, whereby up to 920,000 of FREIT's shares of beneficial
interest were available for issuance to key personnel in the form of stock
options, restricted share awards and other share-based
awards.
|
On
April 4, 2007, FREIT shareholders approved amendments to FREIT’s Equity
Incentive Plan as follows: (a) reserving an additional 300,000 shares for
issuance under the Plan; and (b) extending the term of the Plan until
September 10, 2018.
|
Note
5 - Segment information:
|
FREIT
has determined that it has two reportable segments: commercial properties
and residential properties. These reportable segments offer different
types of space, have different types of tenants, and are managed
separately because each requires different operating strategies and
management expertise. The commercial segment contains ten (10) separate
properties and the residential segment contains nine (9) properties. The
accounting policies of the segments are the same as those described in
Note 1 in FREIT’s Annual Report on Form 10-K for the year ended October
31, 2007.
|
The
chief operating and decision-making group of FREIT's commercial segment,
residential segment and corporate/other is comprised of FREIT’s Board of
Trustees.
|
FREIT
assesses and measures segment operating results based on net operating
income ("NOI"). NOI, a standard used by real estate professionals, is
based on operating revenue and expenses directly associated with the
operations of the real estate properties, but excludes deferred rents
(straight lining), lease amortization, depreciation, and financing costs.
NOI is not a measure of operating results or cash flows from operating
activities as measured by GAAP, and is not necessarily indicative of cash
available to fund cash needs and should not be considered an alternative
to cash flows as a measure of
liquidity.
|
Real
estate rental revenue, operating expenses, NOI and recurring capital
improvements for the reportable segments are summarized below and
reconciled to consolidated net income for the nine and three months ended
July 31, 2008 and 2007. Asset information is not reported since FREIT does
not use this measure to assess
performance.
|
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||||||
July
31,
|
July
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(In
Thousands of Dollars)
|
||||||||||||||||
Real
estate rental revenue:
|
||||||||||||||||
Commercial
|
$ | 16,888 | $ | 16,198 | $ | 5,848 | $ | 5,464 | ||||||||
Residential
|
14,335 | 13,886 | 4,808 | 4,831 | ||||||||||||
Totals
|
31,223 | 30,084 | 10,656 | 10,295 | ||||||||||||
Real
estate operating expenses:
|
||||||||||||||||
Commercial
|
6,440 | 6,425 | 2,027 | 2,123 | ||||||||||||
Residential
|
6,180 | 6,120 | 1,911 | 1,992 | ||||||||||||
Totals
|
12,620 | 12,545 | 3,938 | 4,115 | ||||||||||||
Net
operating income:
|
||||||||||||||||
Commercial
|
10,448 | 9,773 | 3,821 | 3,341 | ||||||||||||
Residential
|
8,155 | 7,766 | 2,897 | 2,839 | ||||||||||||
Totals
|
$ | 18,603 | $ | 17,539 | $ | 6,718 | $ | 6,180 | ||||||||
Recurring
capital improvements-residential
|
$ | 346 | $ | 314 | $ | 88 | $ | 77 | ||||||||
Reconciliation
to consolidated net income:
|
||||||||||||||||
Segment
NOI
|
$ | 18,603 | $ | 17,539 | $ | 6,718 | $ | 6,180 | ||||||||
Deferred
rents - straight lining
|
140 | 186 | 48 | 72 | ||||||||||||
Amortization
of acquired leases
|
72 | 226 | 24 | 75 | ||||||||||||
Net
investment income
|
437 | 382 | 124 | 157 | ||||||||||||
Minority
interest in earnings of subsidiaries
|
(768 | ) | (386 | ) | (373 | ) | (129 | ) | ||||||||
Distribution
to certain minority interests
|
- | (150 | ) | - | - | |||||||||||
General
and administrative expenses
|
(1,145 | ) | (1,277 | ) | (335 | ) | (474 | ) | ||||||||
Depreciation
|
(4,086 | ) | (3,972 | ) | (1,411 | ) | (1,323 | ) | ||||||||
Financing
costs
|
(8,694 | ) | (9,099 | ) | (2,876 | ) | (3,010 | ) | ||||||||
Income
from continuing operations
|
4,559 | 3,449 | 1,919 | 1,548 | ||||||||||||
Income
from discontinued operations
|
- | 3,771 | - | 3,695 | ||||||||||||
Net
income
|
$ | 4,559 | $ | 7,220 | $ | 1,919 | $ | 5,243 |
Cautionary
Statement Identifying Important Factors That Could Cause FREIT’s Actual
Results to Differ From Those Projected
in Forward Looking Statements. |
Readers
of this discussion are advised that the discussion should be read in
conjunction with the unaudited condensed consolidated financial statements
of FREIT (including related notes thereto) appearing elsewhere in this
Form 10-Q, and the consolidated financial statements included in FREIT’s
most recently filed Form 10-K. Certain statements in this discussion may
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
reflect FREIT’s current expectations regarding future results of
operations, economic performance, financial condition and achievements of
FREIT, and do not relate strictly to historical or current facts. FREIT
has tried, wherever possible, to identify these forward-looking statements
by using words such as “believe,” “expect,” “anticipate,”
“intend,” “plan,” “estimate,” or words of similar
meaning.
|
Although
FREIT believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, such statements are
subject to risks and uncertainties, which may cause the actual results to
differ materially from those projected. Such factors include, but are not
limited to the following: general economic and business conditions, which
will, among other things, affect demand for rental space, the availability
of prospective tenants, lease rents, the financial condition of tenants
and the default rate on leases, operating and administrative expenses and
the availability of financing; adverse changes in FREIT’s real estate
markets, including, among other things, competition with other real estate
owners, competition confronted by tenants at FREIT’s commercial
properties, governmental actions and initiatives; environmental/safety
requirements; and risks of real estate development and acquisitions. The
risks with respect to the development of real estate include: increased
construction costs, inability to obtain construction financing, or
unfavorable terms of financing that may be available, unforeseen
construction delays and the failure to complete construction within
budget.
|
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||||||
July
31,
|
July
31,
|
|||||||||||||||||||||||
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
|||||||||||||||||||
(thousands
of dollars)
|
(thousands
of dollars)
|
|||||||||||||||||||||||
Commercial
Properties (except Damascus)
|
$ | 10,411 | $ | 9,896 | $ | 515 | $ | 3,789 | $ | 3,392 | $ | 397 | ||||||||||||
Damascus
Center - undergoing renovation
|
249 | 289 | (40 | ) | 104 | 96 | 8 | |||||||||||||||||
Total
Commercial Properties
|
10,660 | 10,185 | 475 | 3,893 | 3,488 | 405 | ||||||||||||||||||
Residential
Properties
|
8,155 | 7,766 | 389 | 2,897 | 2,839 | 58 | ||||||||||||||||||
Total
income from real estate operations
|
18,815 | 17,951 | 864 | 6,790 | 6,327 | 463 | ||||||||||||||||||
Financing
costs:
|
||||||||||||||||||||||||
Fixed
rate mortgages
|
(7,794 | ) | (7,871 | ) | 77 | (2,615 | ) | (2,599 | ) | (16 | ) | |||||||||||||
Floating
Rate - Rotunda
|
(900 | ) | (1,228 | ) | 328 | (261 | ) | (411 | ) | 150 | ||||||||||||||
Total
financing costs
|
(8,694 | ) | (9,099 | ) | 405 | (2,876 | ) | (3,010 | ) | 134 | ||||||||||||||
Investment
income
|
437 | 382 | 55 | 124 | 157 | (33 | ) | |||||||||||||||||
Corporate
expenses
|
(726 | ) | (678 | ) | (48 | ) | (228 | ) | (216 | ) | (12 | ) | ||||||||||||
Accounting
|
(419 | ) | (599 | ) | 180 | (107 | ) | (258 | ) | 151 | ||||||||||||||
Minority
interest in earnings of subsidiaries
|
(768 | ) | (386 | ) | (382 | ) | (373 | ) | (129 | ) | (244 | ) | ||||||||||||
Distribution
to Westwood Hills minority interests
|
- | (150 | ) | 150 | - | - | - | |||||||||||||||||
Depreciation
|
(4,086 | ) | (3,972 | ) | (114 | ) | (1,411 | ) | (1,323 | ) | (88 | ) | ||||||||||||
Income
from continuing operations
|
4,559 | 3,449 | 1,110 | 1,919 | 1,548 | 371 | ||||||||||||||||||
Income
from discontinued operations
|
- | 3,771 | (3,771 | ) | - | 3,695 | (3,695 | ) | ||||||||||||||||
Net
Income
|
$ | 4,559 | $ | 7,220 | $ | (2,661 | ) | $ | 1,919 | $ | 5,243 | $ | (3,324 | ) |
Nine Months Ended July
31:
|
||||||||||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Combined
|
||||||||||||||||||||||||||||||||||||||
Nine
Months Ended
|
Nine
Months Ended
|
Nine
Months Ended
|
||||||||||||||||||||||||||||||||||||||
July
31,
|
Increase
(Decrease)
|
July
31,
|
Increase
(Decrease)
|
July
31,
|
||||||||||||||||||||||||||||||||||||
2008
|
2007
|
$
|
% |
2008
|
2007
|
$
|
% |
2008
|
2007
|
|||||||||||||||||||||||||||||||
($
in thousands)
|
($
in thousands)
|
($
in thousands)
|
||||||||||||||||||||||||||||||||||||||
Rental
income
|
$ | 12,806 | $ | 12,454 | $ | 352 | 2.8 | % | $ | 14,175 | $ | 13,614 | $ | 561 | 4.1 | % | $ | 26,981 | $ | 26,068 | ||||||||||||||||||||
Reimbursements
|
3,932 | 3,601 | 331 | 9.2 | % | - | - | - | 3,932 | 3,601 | ||||||||||||||||||||||||||||||
Other
|
150 | 143 | 7 | 4.9 | % | 160 | 272 | (112 | ) | -41.2 | % | 310 | 415 | |||||||||||||||||||||||||||
Total
revenue
|
16,888 | 16,198 | 690 | 4.3 | % | 14,335 | 13,886 | 449 | 3.2 | % | 31,223 | 30,084 | ||||||||||||||||||||||||||||
Operating
expenses
|
6,440 | 6,425 | 15 | 0.2 | % | 6,180 | 6,120 | 60 | 1.0 | % | 12,620 | 12,545 | ||||||||||||||||||||||||||||
Net
operating income
|
$ | 10,448 | $ | 9,773 | $ | 675 | 6.9 | % | $ | 8,155 | $ | 7,766 | $ | 389 | 5.0 | % | 18,603 | 17,539 | ||||||||||||||||||||||
Average
|
||||||||||||||||||||||||||||||||||||||||
Occupancy
%
|
89.9 | % | 90.1 | % | -0.2 | % | 94.9 | % | 94.8 | % | 0.1 | % | ||||||||||||||||||||||||||||
Three Months Ended
July 31:
|
||||||||||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Combined
|
||||||||||||||||||||||||||||||||||||||
Three
Months Ended
|
Three
Months Ended
|
Three
Months Ended
|
||||||||||||||||||||||||||||||||||||||
July
31,
|
Increase
(Decrease)
|
July
31,
|
Increase
(Decrease)
|
July
31,
|
||||||||||||||||||||||||||||||||||||
2008
|
2007
|
$
|
% |
2008
|
2007
|
$
|
% |
2008
|
2007
|
|||||||||||||||||||||||||||||||
($
in thousands)
|
($
in thousands)
|
($
in thousands)
|
||||||||||||||||||||||||||||||||||||||
Rental
income
|
$ | 4,320 | $ | 4,192 | $ | 128 | 3.1 | % | $ | 4,737 | $ | 4,642 | $ | 95 | 2.0 | % | $ | 9,057 | $ | 8,834 | ||||||||||||||||||||
Reimbursements
|
1,475 | 1,227 | 248 | 20.2 | % | - | - | - | 1,475 | 1,227 | ||||||||||||||||||||||||||||||
Other
|
53 | 45 | 8 | 17.8 | % | 71 | 189 | (118 | ) | -62.4 | % | 124 | 234 | |||||||||||||||||||||||||||
Total
revenue
|
5,848 | 5,464 | 384 | 7.0 | % | 4,808 | 4,831 | (23 | ) | -0.5 | % | 10,656 | 10,295 | |||||||||||||||||||||||||||
Operating
expenses
|
2,027 | 2,123 | (96 | ) | -4.5 | % | 1,911 | 1,992 | (81 | ) | -4.1 | % | 3,938 | 4,115 | ||||||||||||||||||||||||||
Net
operating income
|
$ | 3,821 | $ | 3,341 | $ | 480 | 14.4 | % | $ | 2,897 | $ | 2,839 | $ | 58 | 2.0 | % | 6,718 | 6,180 | ||||||||||||||||||||||
Average
|
||||||||||||||||||||||||||||||||||||||||
Occupancy
%
|
89.8 | % | 91.0 | % | -1.2 | % | 94.2 | % | 95.9 | % | -1.7 | % | ||||||||||||||||||||||||||||
Annual
Rent of Expiring Leases
|
||||||||||||||||||||
Year
Ending
|
Number
of
|
Expiring
Leases
|
Percent
of
|
|||||||||||||||||
October
31,
|
Expiring
Leases
|
Sq.
Ft.
|
Commercial
Sq. Ft.
|
Total
|
Per
Sq. Ft.
|
|||||||||||||||
Month
to month
|
24 | 59,092 | 5.4 | % |
$
|
1,082,497 | $ | 18.32 | ||||||||||||
2008
|
20 | 67,554 | 6.2 | % | $ | 1,339,565 | $ | 19.83 | ||||||||||||
2009
|
15 | 44,143 | 4.1 | % | $ | 801,213 | $ | 18.15 | ||||||||||||
2010
|
19 | 89,719 | 8.3 | % | $ | 1,283,854 | $ | 14.31 | ||||||||||||
2011
|
15 | 57,081 | 5.2 | % | $ | 1,342,052 | $ | 23.51 | ||||||||||||
2012
|
10 | 191,758 | 17.6 | % | $ | 1,384,803 | $ | 7.22 | ||||||||||||
2013
|
4 | 33,346 | 3.1 | % | $ | 641,326 | $ | 19.23 | ||||||||||||
2014
|
4 | 20,121 | 1.9 | % | $ | 318,276 | $ | 15.82 | ||||||||||||
2015
|
7 | 76,104 | 7.0 | % | $ | 862,806 | $ | 11.34 | ||||||||||||
2016
|
3 | 20,576 | 1.9 | % | $ | 172,432 | $ | 8.38 | ||||||||||||
2017
|
1 | 2,786 | 0.3 | % | $ | 65,471 | $ | 23.50 |
Nine
Months Ended July 31,
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Commercial
|
Same
|
Commercial
|
Same
|
|||||||||||||||||||||
($000)
|
Properties
|
Damascus
|
Properties
|
Properties
|
Damascus
|
Properties
|
||||||||||||||||||
Revenues
|
$ | 16,888 | $ | 554 | $ | 16,334 | $ | 16,198 | $ | 610 | $ | 15,588 | ||||||||||||
Expenses
|
6,440 | 307 | 6,133 | 6,425 | 316 | 6,109 | ||||||||||||||||||
NOI
|
$ | 10,448 | $ | 247 | $ | 10,201 | $ | 9,773 | $ | 294 | $ | 9,479 | ||||||||||||
Three
Months Ended July 31,
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Commercial
|
Same
|
Commercial
|
Same
|
|||||||||||||||||||||
($000)
|
Properties
|
Damascus
|
Properties
|
Properties
|
Damascus
|
Properties
|
||||||||||||||||||
Revenues
|
$ | 5,848 | $ | 201 | $ | 5,647 | $ | 5,464 | $ | 195 | $ | 5,269 | ||||||||||||
Expenses
|
2,027 | 100 | 1,927 | 2,123 | 97 | 2,026 | ||||||||||||||||||
NOI
|
$ | 3,821 | $ | 101 | $ | 3,720 | $ | 3,341 | $ | 98 | $ | 3,243 |
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||||||
July
31,
|
July
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
($
in thousands)
|
($
in thousands)
|
|||||||||||||||
Fixed
rate mortgages:
|
||||||||||||||||
1st
Mortgages
|
||||||||||||||||
Existing
|
$ | 6,459 | $ | 6,027 | $ | 2,094 | $ | 2,211 | ||||||||
New
|
153 | - | 92 | |||||||||||||
2nd
Mortgages
|
||||||||||||||||
Existing
|
893 | 1,472 | 296 | 304 | ||||||||||||
Variable
rate mortgages:
|
||||||||||||||||
Acquisition
loan-Rotunda
|
972 | 1,184 | 294 | 396 | ||||||||||||
Construction
loan-Damascus
|
62 | - | 44 | - | ||||||||||||
Other
|
178 | 217 | 63 | 32 | ||||||||||||
8,717 | 8,900 | 2,883 | 2,943 | |||||||||||||
Amortization
of Mortgage Costs
|
222 | 199 | 81 | 67 | ||||||||||||
Total
Financing Costs
|
8,939 | 9,099 | 2,964 | 3,010 | ||||||||||||
Less
amount capitalized
|
(245 | ) | - | (88 | ) | - | ||||||||||
Financing
costs expensed
|
$ | 8,694 | $ | 9,099 | $ | 2,876 | $ | 3,010 |
Fiscal
Year
|
2009
|
2010
|
2013
|
2014
|
2016
|
2017
|
2018
|
2019
|
2022
|
($
in millions)
|
|||||||||
Mortgage
"Balloon" Payments
|
$22.5
|
$12.2
|
$8.0
|
$25.9
|
$24.5
|
$22.0
|
$5.0
|
$28.1
|
$14.4
|
July
31,
|
October
31,
|
|||||||
($
in Millions)
|
2008
|
2007
|
||||||
Fair
Value
|
$ | 196.8 | $ | 188.7 | ||||
Carrying
Value
|
$ | 192.9 | $ | 189.4 |
Funds From Operations
("FFO")
|
||||||||||||||||
Nine
Months Ended
|
Three
Months Ended
|
|||||||||||||||
July
31,
|
July
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
($
in thousands, except per share amounts)
|
||||||||||||||||
Net
income
|
$ | 4,559 | $ | 7,220 | $ | 1,919 | $ | 5,243 | ||||||||
Depreciation
|
4,086 | 3,972 | 1,411 | 1,323 | ||||||||||||
Amortization
of deferred mortgage costs
|
222 | 199 | 81 | 67 | ||||||||||||
Deferred
rents (Straight lining)
|
(140 | ) | (186 | ) | (48 | ) | (72 | ) | ||||||||
Amortization
of acquired leases
|
(72 | ) | (226 | ) | (24 | ) | (75 | ) | ||||||||
Capital
Improvements - Apartments
|
(346 | ) | (314 | ) | (88 | ) | (77 | ) | ||||||||
Discontinued
operations
|
- | (3,771 | ) | - | (3,695 | ) | ||||||||||
Minority
interests:
|
||||||||||||||||
Equity
in earnings of affiliates
|
768 | 536 | 373 | 129 | ||||||||||||
Distributions
to minority interests
|
(707 | ) | (541 | ) | (112 | ) | (155 | ) | ||||||||
FFO
|
$ | 8,370 | $ | 6,889 | $ | 3,512 | $ | 2,688 | ||||||||
Per
Share - Basic
|
$ | 1.23 | $ | 1.02 | $ | 0.51 | $ | 0.40 | ||||||||
Per
Share - Diluted
|
$ | 1.21 | $ | 1.00 | $ | 0.51 | $ | 0.39 | ||||||||
Weighted
Average Shares Outstanding:
|
||||||||||||||||
Basic
|
6,802 | 6,752 | 6,844 | 6,756 | ||||||||||||
Diluted
|
6,897 | 6,919 | 6,941 | 6,925 |
|
§
|
the
national and regional economic
climate;
|
|
§
|
occupancy
rates at the properties;
|
|
§
|
tenant
turnover rates;
|
|
§
|
rental
rates;
|
|
§
|
operating
expenses;
|
|
§
|
tenant
improvement and leasing costs;
|
|
§
|
cost
of and availability of capital;
|
|
§
|
new
acquisitions and development projects;
and
|
|
§
|
changes
in governmental regulations, real estate tax rates and similar
matters.
|
|
·
|
financing
may not be available in the amounts we seek, or may not be on favorable
terms;
|
|
·
|
long-term
financing may not be available upon completion of the construction;
and
|
|
·
|
failure
to complete construction on schedule or within budget may increase debt
service costs and construction
costs.
|
Period
|
Total
Number of
Shares
Purchased
1
|
Average
Price Paid
Per
Share
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Program
|
Approximate
Dollar
Value
of Shares that
May
Yet Be
Purchased
Under the
Program
|
May
1, 2008 through May 31, 2008
|
-
|
-
|
-
|
$
2,000,000
|
June
1, 2008 through June 30, 2008
|
5,000
|
$
24.00
|
5,000
|
$
1,880,000
|
July
1, 2008 through July 31, 2008
|
-
|
-
|
-
|
$
1,880,000
|
Total
|
5,000
|
$
24.00
|
5,000
|
$
1,880,000
|
1
|
On
April 9, 2008, FREIT’s Board of Trustees authorized up to $2 million for
the repurchase of FREIT’s shares of beneficial interest commencing three
(3) days after the announcement of FREIT’s operating results for the
quarter ended April 30, 2008. Share repurchases under this
program may be made from time to time in the open market or through
privately negotiated transactions, depending on the trading prices of
FREIT’s shares and other market conditions. FREIT’s share
repurchase program may be limited or terminated at any time and without
prior notice.
|
Page
|
|
Exhibit 31.1
- Section 302 Certification of Chief
Executive Officer
|
26
|
Exhibit 31.2
- Section 302 Certification of Chief
Financial Officer
|
27
|
Exhibit 32.1
- Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section 1350
|
28
|
Exhibit 32.2
- Certification of Chief Financial
Officer pursuant to 18 U.S.C. Section 1350
|
29
|
Page
|
|
Exhibit 10.1
– Agency Agreement – Damascus Center,
LLC with Hekemian Development Resources, LLC
|
30
|
FIRST
REAL ESTATE INVESTMENT
|
||
TRUST OF NEW
JERSEY
|
||
(Registrant)
|
||
Date:
September 9, 2008
|
||
/s/
Robert S. Hekemian
|
||
(Signature)
|
||
Robert
S. Hekemian
|
||
Chairman
of the Board and Chief Executive Officer
|
||
(Principal
Executive Officer)
|
||
/s/
Donald W. Barney
|
||
(Signature)
|
||
Donald
W. Barney
|
||
President,
Treasurer and Chief Financial Officer
|
||
(Principal
Financial/Accounting Officer)
|
|
1.
|
I
have reviewed this report on Form 10-Q of First Real Estate Investment
Trust of New Jersey;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: September
9, 2008
|
/s/ Robert S.
Hekemian
|
Robert
S. Hekemian
|
|
Chairman
of the Board and Chief Executive
Officer
|
|
1.
|
I
have reviewed this report on Form 10-Q of First Real Estate Investment
Trust of New Jersey;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: September
9, 2008
|
/s/ Donald W.
Barney
|
Donald
W. Barney
|
|
President,
Treasurer and Chief Financial
Officer
|
(1)
|
the
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934, 15 U.S.C. § 78m(a) or 78o(d),
and,
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date: September
9, 2008
|
/s/ Robert S.
Hekemian
|
Robert
S. Hekemian
|
|
Chairman
of the Board and Chief Executive
Officer
|
(1)
|
the
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934, 15 U.S.C. § 78m(a) or 78o(d),
and,
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date: September
9, 2008
|
/s/ Donald W.
Barney
|
Donald
W. Barney
|
|
President,
Treasurer and Chief Financial
Officer
|
|
1.
|
DEFINITIONS:
|
|
(7)
|
Arbitration
or litigation preparation and arbitration or court appearances on behalf
of Owner.
|
|
(8)
|
Brokerage
Services
|
|
Sq.
Ftg.
|
% of
Total
|
||||||
Building
A
|
21770 | 14.78 | % | |||||
Building
A-I Addition
|
14,226 | 9.66 | % | |||||
Building
B, C, D
|
23,796 | 16.16 | % | |||||
Safeway
|
57,860 | 39.29 | % | |||||
Building
E
|
16,434 | 1.16 | % | |||||
Building
F
|
13,174 | 8 95 | % | |||||
Total
|
147,260 | 100.00 | % |
OWNER
|
AGENT
|
|||
DAMASCUS
CENTER, LLC
|
HEKEMIAN
DEVELOPMENT
|
|||
By:
|
First
Real Estate investment Trust
|
RESOURCES,
LLC
|
||
of
New Jersey, Managing Member
|
||||
By:
|
/s/
Donald Barney
|
By:
|
/s/
Bryan Hekemian
|
|
Donald
Barney, President
|
Bryan Hekemian,
Managing
Member
|