FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY (Form: 10-Q, Received: 06/09/2010 11:29:38)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 30, 2010

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________________ to ____________________

Commission File No. 000-25043

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)

201-488-6400

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 preceding 12 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o

Accelerated Filer x

Non-Accelerated Filer o Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of June 9, 2010, the number of shares of beneficial interest outstanding was 6,942,143

FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

IN D EX

Part I:	Financial Information
				Page

	Item 1:	Unaudited Condensed Consolidated Financial Statements

		a.)	Condensed Consolidated Balance Sheets as at April 30, 2010 and October 31, 2009;	3

		b.)	Condensed Consolidated Statements of Income for the Six and Three Months Ended April 30, 2010 and 2009;	4

		c.)	Condensed Consolidated Statement of Equity for the Period Ended April 30, 2010;	5

		d.)	Condensed Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2010 and 2009;	6

		e.)	Notes to Condensed Consolidated Financial Statements.	7

	Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

	Item 3:	Quantitative and Qualitative Disclosures About Market Risk		21

	Item 4:	Controls and Procedures		21


Part II:	Other Information

	Item 1:	Legal Proceedings		21

	Item 1A:	Risk Factors		21

	Item 6:	Exhibits		21

	Signatures			22

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Part I: Financial Infor m ation

Item 1: Unaudited Conde n sed Consolidated Financial Statements

FI R ST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS



	(Unaudited)
	April 30,			October 31,
	2010			2009
	(In Thousands of Dollars)
ASSETS

Real estate, at cost, net of accumulated depreciation	$	212,780		$	214,283
Construction in progress and pre-development costs		9,745			9,694
Cash and cash equivalents		6,219			6,751
Investments in US Treasury Bills at amortized cost,
which approximates fair value		-			4,549
Tenants' security accounts		2,102			2,147
Sundry receivables		5,012			4,440
Secured loans receivable		3,326			3,326
Prepaid expenses and other assets		2,427			3,198
Acquired over market leases and in-place lease costs		594			670
Deferred charges, net		2,843			2,793
Total Assets	$	245,048		$	251,851


LIABILITIES & EQUITY

Liabilities:
Mortgages payable	$	197,889		$	202,260
Accounts payable and accrued expenses		7,028			7,496
Dividends payable		2,083			2,083
Tenants' security deposits		2,786			2,847
Acquired below market value leases and deferred revenue		3,120			3,049
Total liabilities		212,906			217,735

Commitments and contingencies


Equity:
Common equity:
Shares of beneficial interest without par value:
8,000,000 shares authorized; 6,993,152 shares issued		24,969			24,969
Treasury stock, at cost: 51,009 shares		(1,135	)		(1,135	)
Dividends in excess of net income		(4,975	)		(3,112	)
Total common equity		18,859			20,722
Noncontrolling interests in subsidiaries		13,283			13,394
Total equity		32,142			34,116
Total Liabilities & Equity	$	245,048		$	251,851


See Notes to Condensed Consolidated Financial Statements.

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FIRST REAL ESTA T E INVESTMENT TRUST OF NEW JERSEY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

SIX AND THREE MONTHS ENDED APRIL 30, 2010 AND 2009

(Unaudited)





	Six Months Ended						Three Months Ended
	April 30,						April 30,
	2010			2009			2010			2009
	(In Thousands of Dollars, Except Per Share Amounts)
Revenue:
Rental income	$	19,122		$	18,391		$	9,788		$	9,200
Reimbursements		2,890			2,641			1,456			1,236
Sundry income		197			287			116			134
Totals		22,209			21,319			11,360			10,570

Expenses:
Operating expenses		6,258			5,749			3,335			3,049
Management fees		973			934			504			471
Real estate taxes		3,315			3,184			1,659			1,592
Depreciation		3,065			2,937			1,543			1,463
Totals		13,611			12,804			7,041			6,575

Operating income		8,598			8,515			4,319			3,995

Investment income		66			130			30			51
Interest expense including amortization
of deferred financing costs		(5,781	)		(5,381	)		(2,919	)		(2,666	)
Net income		2,883			3,264			1,430			1,380
Net income attributable to noncontrolling interests in subsidiaries		(581	)		(658	)		(300	)		(295	)
Net income attributable to common equity	$	2,302		$	2,606		$	1,130		$	1,085

Earnings per share (attributable to common equity):
Basic	$	0.33		$	0.38		$	0.16		$	0.16


Weighted average shares outstanding		6,942			6,945			6,942			6,942


See Notes to Condensed Consolidated Financial Statements.

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FIRST REAL ESTATE INVESTME N T TRUST OF NEW JERSEY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)





	Common Equity
	Shares of Beneficial Interest		Treasury Shares at Cost			Dividends in Excess of Net Income			Total Common Equity			Noncontrolling Interests			Total Equity
	(In Thousands of Dollars)

Balance at October 31, 2009	$	24,969	$	(1,135	)	$	(3,112	)	$	20,722		$	13,394		$	34,116

Distributions to noncontrolling interests													(692	)		(692	)

Net income							2,302			2,302			581			2,883

Dividends declared ($0.60 per share)							(4,165	)		(4,165	)					(4,165	)

Balance at April 30, 2010	$	24,969	$	(1,135	)	$	(4,975	)	$	18,859		$	13,283		$	32,142


See Notes to Condensed Consolidated Financial Statements.

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FIRST REAL ESTATE INVES T MENT TRUST OF NEW JERSEY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED APRIL 30, 2010 AND 2009

(Unaudited)


	Six Months Ended
	April 30,
	2010			2009
	(In Thousands of Dollars)
Operating activities:
Net income	$	2,883		$	3,264
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation		3,065			2,937
Amortization		242			232
Net amortization of acquired leases		15			18
Deferred revenue		106			(237	)
Changes in operating assets and liabilities:
Tenants' security accounts		45			111
Sundry receivables, prepaid expenses and other assets		91			276
Accounts payable, accrued expenses and other liabilities		782			615
Tenants' security deposits		(61	)		(67	)
Net cash provided by operating activities		7,168			7,149
Investing activities:
Capital improvements - existing properties		(955	)		(1,048	)
Construction and pre-development costs		(1,813	)		(2,519	)
Decrease in investment in US Treasury Bills		4,549			-
Net cash provided by (used in) investing activities		1,781			(3,567	)
Financing activities:
Repayment of mortgages		(4,450	)		(1,160	)
Proceeds from mortgages and construction loans		-			1,628
Deferred financing costs		(174	)		7
Repurchase of Company stock-Treasury shares		-			(59	)
Dividends paid		(4,165	)		(4,166	)
Distributions to noncontrolling interests		(692	)		(563	)
Net cash used in financing activities		(9,481	)		(4,313	)
Net decrease in cash and cash equivalents		(532	)		(731	)
Cash and cash equivalents, beginning of period		6,751			8,192
Cash and cash equivalents, end of period	$	6,219		$	7,461

Supplemental disclosure of cash flow data:
Interest paid, including capitalized construction period interest
of $87 in fiscal 2009.	$	5,416		$	5,205
Supplemental schedule of non cash activities:
Investing activities:
Accrued capital expenditures, construction costs, pre-development costs and interest	$	1		$	1,477
Financing activities:
Dividends declared but not paid	$	2,083		$	2,083

See Notes to Condensed Consolidated Financial Statements.

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FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND S UBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Basis of presentation:

The accompanying condensed consolidated financial statements have been prepared without audit, in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the rules of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnotes required by GAAP for complete financial statements have been omitted. It is the opinion of management that all adjustments considered necessary for a fair presentation have been included, and that all such adjustments are of a normal recurring nature.

The consolidated results of operations for the six and three-month periods ended April 30, 2010 are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended October 31, 2009 of First Real Estate Investment Trust of New Jersey (“FREIT”).

Note 2 – Significant accounting policies:

Real estate development costs:

It is FREIT's policy to capitalize pre-development costs, which generally include legal and professional fees and other directly related third-party costs. Real estate taxes and interest costs incurred during the development and construction phases are also capitalized. FREIT ceases capitalization of these costs, when the project or portion thereof becomes operational, or when construction has been postponed. Capitalization of these costs will recommence once construction on the project resumes.

Adopted and recently issued accounting standards:

On December 4, 2007, the FASB issued two new accounting standards, “Business Combinations” (ASC 805-10), and “Non-Controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (ASC 810-10). The standards are effective for fiscal years beginning after December 15, 2008 and earlier adoption was prohibited.

The objective of ASC 805 is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, this Statement establishes principles and requirements for how the acquirer:

a.)

Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree;

b.)

Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase;

c.)

Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

The effect of the adoption of ASC 805 will be dependent upon FREIT’s future acquisition activity, if any.

The objective of ASC 810 is to improve the relevance, comparability and transparency of financial information provided to investors by: (i) requiring entities to report non-controlling interests (minority interests) as equity in the consolidated financial statements and separate from the parent’s equity; (ii) requiring that the amount of net income attributable to the parent and non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; and (iii) expanding the disclosure requirements with respect to the parent and its non-controlling interests. FREIT adopted ASC 810 effective November 1, 2009, and as required, has retrospectively applied the presentation and disclosure requirements to prior periods presented in this Form 10-Q.

a.)

Prior to the adoption of ASC 810, FREIT could not record a negative minority interest in its consolidated financial statements if the minority members had no obligation to restore their negative capital accounts. As a result, FREIT was accounting for the minority members’ capital deficit of its Westwood Hills subsidiary as a charge to income and a reduction to undistributed earnings. As of November 1, 2009, the amount of the minority members’ capital deficit that was booked as a reduction to FREIT’s undistributed earnings was approximately $2.3 million.

b.)

In accordance with the provisions of ASC 810, FREIT is required to disclose the pro forma impact on its consolidated net income and earnings per share, had the requirements of ASC 810 not been applied for the current quarter. As such, FREIT’s pro forma consolidated net income attributable to common equity for the six and three-month periods ended April 30, 2010 would have been $2,425,000 ($0.35 per share basic) and $1,182,000 ($0.17 per share basic), respectively.

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In June 2009, the FASB issued “Amendments to FASB Interpretation No. 46(R)” (ASC topic 810), which changes guidance for variable interest entities that are insufficiently capitalized or not controlled through voting or similar rights and requires that a variable interest entity (“VIE”) be consolidated by the company that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The new standard will be effective for fiscal years beginning after November 15, 2009. The adoption of this standard is not expected to have any impact on our financial statements.

Note 3 - Earnings per share:

Basic earnings per share is calculated by dividing net income (numerator) 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.

Since FREIT does not have any dilutive securities, only basic earnings per share is presented for the six and three-month periods ended April 30, 2010 and 2009. Basic earnings per share, based on the weighted average number of shares outstanding during each period, is comprised of ordinary income for the six and three-month periods ended April 30, 2010 and the prior year’s comparable period.

Note 4 - Share repurchase program:

On April 9, 2008, FREIT’s Board of Trustees authorized up to $2 million for the repurchase of FREIT shares. The share repurchase plan provided for the repurchase of FREIT shares on or before March 31, 2009. Share repurchases under this program were made from time to time in the open market or through privately negotiated transactions. As of March 31, 2009, FREIT repurchased 50,920 shares of common stock at a cost of $1,133,545.

On March 31, 2009, FREIT announced the adoption of a new share repurchase plan to replace the repurchase plan that expired on March 31, 2009. The new plan complied with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934 and provided for the repurchase of up to $1,000,000 in value of FREIT’s shares for the period beginning April 14, 2009 through June 30, 2009, subject to certain price limitations and other conditions established under the Plan. Share repurchases under the new plan could have been made, from time to time, through privately negotiated transactions or in the open market. The new plan could have been terminated at any time and without prior notice. Rule 10b5-1 permits the implementation of a written plan for repurchasing shares of company stock through a repurchasing agent at times when the issuer is not in possession of material, nonpublic information and allows issuers adopting such plans to repurchase shares on a regular basis, regardless of any subsequent material, nonpublic information it receives. UBS Financial Services, Inc. was engaged as FREIT’s repurchasing agent, pursuant to the terms and conditions set forth in the share repurchase plan.

The new share repurchase plan expired on June 30, 2009. Through June 30, 2009, FREIT repurchased a total of 51,009 shares of common stock under both repurchase plans at a cost of $1,135,026, which is reflected in the Equity section of FREIT’s condensed consolidated balance sheets.

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 fiscal year ended October 31, 2009.

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.

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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, financing costs and other non-operating activity. 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 condensed consolidated net income for the six and three months ended April 30, 2010 and 2009. Asset information is not reported since FREIT does not use this measure to assess performance.

	Six Months Ended						Three Months Ended
	April 30,						April 30,
	2010			2009			2010			2009
	(In Thousands of Dollars)						(In Thousands of Dollars)
Real estate rental revenue:
Commercial	$	12,605		$	11,491		$	6,510		$	5,675
Residential		9,510			9,742			4,801			4,851
Totals		22,115			21,233			11,311			10,526
Real estate operating expenses:
Commercial		5,003			4,721			2,629			2,414
Residential		4,702			4,266			2,456			2,232
Totals		9,705			8,987			5,085			4,646
Net operating income:
Commercial		7,602			6,770			3,881			3,261
Residential		4,808			5,476			2,345			2,619
Totals	$	12,410		$	12,246		$	6,226		$	5,880
Recurring capital improvements-residential	$	120		$	106		$	35		$	27
		.						.
Reconciliation to consolidated net income:
Segment NOI	$	12,410		$	12,246		$	6,226		$	5,880
Deferred rents - straight lining		109			104			56			53
Amortization of acquired leases		(15	)		(18	)		(7	)		(9	)
Investment income		66			130			30			51
General and administrative expenses		(841	)		(880	)		(413	)		(466	)
Depreciation		(3,065	)		(2,937	)		(1,543	)		(1,463	)
Financing costs		(5,781	)		(5,381	)		(2,919	)		(2,666	)
Net income		2,883			3,264			1,430			1,380
Net income attributable to noncontrolling interests		(581	)		(658	)		(300	)		(295	)
Net income attributable to common equity	$	2,302		$	2,606		$	1,130		$	1,085

Note 6 - Management agreement, fees and transactions with related party:

Hekemian & Co., Inc. (“Hekemian”) currently manages all the properties owned by FREIT, except for The Rotunda, a mixed-use office and retail facility located in Baltimore, Maryland, which is managed by an independent third party management company. The management agreement with Hekemian, effective November 1, 2001, requires the payment of management fees equal to a percentage of rents collected. Such fees were approximately $898,000 and $862,000 for the six-months ended April 30, 2010 and 2009, respectively. For the three-month period ended April 30, 2010 and 2009, such fees were approximately $463,000 and $436,000, respectively. In addition, the management agreement provides for the payment to Hekemian of leasing commissions, as well as the reimbursement of operating expenses incurred on behalf of FREIT. Such fees amounted to approximately $180,000 and $233,000 for the six-months ended April 30, 2010 and 2009, respectively, and $95,000 and $86,000 for the three-months ended April 30, 2010 and 2009, respectively. The management agreement expires on October 31, 2011, and is automatically renewed for periods of two years unless either party gives notice of non-renewal.

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FREIT also uses the resources of the Hekemian insurance department to secure various insurance coverages for its properties and subsidiaries. Hekemian is paid a commission for these services. Such commissions amounted to approximately $64,000 and $69,000 for the six-months ended April 30, 2010 and 2009, respectively, and $34,000 and $39,000 for the three-months ended April 30, 2010 and 2009, respectively.

From time to time, FREIT engages Hekemian to provide certain additional services, such as consulting services related to development and financing activities of FREIT. Separate fee arrangements are negotiated between Hekemian and FREIT with respect to such additional services. Such fees paid to Hekemian for the six months ended April 30, 2010 and 2009, were $1,000,000 and $0, respectively.

Mr. Robert S. Hekemian, Chairman of the Board, Chief Executive Officer and a Trustee of FREIT, is the Chairman of the Board and Chief Executive Officer of Hekemian. Mr. Robert S. Hekemian, Jr, a Trustee of FREIT, is the President of Hekemian.

Note 7 – Litigation:

On August 6, 2009, a complaint was filed against Damascus Centre, LLC, a 70% owned affiliate of FREIT, Hekemian, and others (the “Defendants”) in the Circuit Court of Montgomery County, Maryland (the “Court”). The plaintiffs leased commercial office space at the Damascus Shopping Center located in Damascus, Maryland and owned by Damascus Centre, LLC. The complaint alleged a number of causes of action in connection with alleged interference with plaintiffs’ business allegedly caused by Damascus Centre, LLC’s development activities at the Damascus Center. The complaint sought compensatory damages of $500,000 for the alleged interference with the plaintiffs’ business and $5,000,000 in punitive damages. In addition, the plaintiffs sought to enjoin the demolition of the shopping center. FREIT received notice of the lawsuit on September 2, 2009. On February 19, 2010, a voluntary stipulation of dismissal of the complaint, with prejudice, was filed with the Court. This stipulation with prejudice has the same effect as a final adjudication on the merits of the complaint favorable to the Defendants, and relieves the Defendants of any liability to the plaintiffs based on the relevant facts set forth in the complaint. The stipulation also bars the plaintiffs from pursuing any subsequent action based on any relevant facts in the complaint.

Note 8 – Fair value of long-term debt:

The following table shows the estimated fair value and carrying value of FREIT's long-term debt at April 30, 2010 and October 31, 2009:

	April 30,		October 31,
($ in Millions)	2010		2009
Fair Value	$	191.5	$	198.1

Carrying Value	$	197.9	$	202.3

Fair values are estimated based on market interest rates at April 30, 2010 and October 31, 2009 and on discounted cash flow analysis. Changes in assumptions or estimation methods may significantly affect these fair value estimates.

Note 9 - Subsequent events:

As a result of a reevaluation of the future funding needs of the Damascus Center redevelopment project in Damascus, MD, on May 6, 2010, Damascus Centre, LLC entered into a modification of its construction loan agreement, which reduced the amount of the construction loan facility from $27.3 million to $21.3 million. In addition, the construction completion due date was extended until November 11, 2011. All other terms of the construction loan remain unchanged. As of April 30, 2010, $9.9 million of this loan was drawn down to cover construction costs.

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Item 2 : Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 From 10-Q, and the consolidated financial statements including 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 statement 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 fro 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 intiatives; environmental/safety requirements; and risks of real estate development and acquisitions. The risks with respect to the development of real estate include: increased construction cost, 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.

OVERVIEW

FREIT is an equity real estate investment trust ("REIT") that owns a portfolio of residential apartment and commercial properties. Our revenues consist primarily of fixed rental income from our residential and commercial properties and additional rent in the form of expense reimbursements derived from our income producing commercial properties. Our properties are primarily located in northern New Jersey and Maryland. We acquire existing properties for investment. We also acquire properties, which we feel have redevelopment potential, and make changes and capital improvements to these properties. We develop and construct properties on our vacant land. Our policy is to acquire and develop real property for long-term investment.

The global economic and financial environment: The U. S. economy has been showing signs of recovery from the recession, and continued economic recovery is expected throughout 2010. However, job growth remains sluggish, and sustained high unemployment can hinder economic growth. While bank earnings and liquidity are on the rebound, the potential of significant future credit losses cloud the lending outlook. Credit availability still lags pre-recession levels hampering business expansion and new development activities.

Residential Properties: Occupancy and rental rates in our areas of operation are showing signs of being on the up swing reversing a year-long downward movement. We expect the recovery of rental rates to lag occupancy rates. The speed of recovery at our residential properties will likely mirror job growth and reduced unemployment in our areas of operation.

Commercial Properties: The retail outlook is brightening for 2010 as consumer confidence increases and retail sales are expected to increase modestly although consumers remain frugal with their discretionary spending. Tenant fall-out and rent reductions are expected to abate. However, re-leasing of space vacated during the recession will be challenging and at rates below pre-recession levels.

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Development Projects and Capital Expenditures: We are concentrating only on those capital expenditures that are absolutely necessary. We continue to pursue the completion of the development and construction activities started at the Damascus Center. Because of reduced demand from residential rental tenants and buyers, curtailed business expansion, and the current state of the credit markets, no date has been determined for the commencement of construction at our Rotunda and South Brunswick projects.

Debt Financing Availability: The dislocations in the credit markets have caused significant price volatility and liquidity disruptions. High pricing spreads and very conservative debt service ratio requirements have made certain financing unattractive and, in certain instances, unavailable. Additionally, construction financing for large, mixed use projects is virtually unavailable, or too costly. As a result of this difficult financing environment and reduced end user demand (see above), FREIT has not determined a date for the commencement of construction at its Rotunda Project.

The $22.5 million mortgage loan entered into by Grande Rotunda, LLC, a 60% owned affiliate of FREIT (“Grande Rotunda”), for the acquisition of the Rotunda was scheduled to come due on July 19, 2009, and was extended by the bank until February 1, 2010. The original loan amount of $22.5 million was reduced to $19.5 million and the due date extended until February 1, 2013. Under the restructured terms, the interest rate is now 350 basis points above the BBA LIBOR rate with a floor of 4%, and monthly principal payments of $10,000 are required. An additional principal payment may be required on February 1, 2012 in an amount necessary to reduce the loan to achieve a certain debt service coverage ratio.

Operating Cash Flow and Dividend Distributions: FREIT’s cash position remains strong. We expect that cash provided by operating activities will be adequate to cover mandatory debt service payments, necessary capital improvements and dividends necessary to retain qualification as a REIT. It is FREIT’s intention to maintain its quarterly dividend at $.30 per share until the economic climate indicates a change is appropriate, but not less than the level required to maintain its REIT status for Federal income tax purposes.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Pursuant to the Securities and Exchange Commission ("SEC") disclosure guidance for "Critical Accounting Policies," the SEC defines Critical Accounting Policies as those that require the application of management's most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, the preparation of which takes into account estimates based on judgments and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from these estimates. The accounting policies and estimates used, which are outlined in Note 1 to our Condensed Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended October 31, 2009, have been applied consistently as at April 30, 2010 and October 31, 2009, and for the six and three months ended April 30, 2010 and 2009. We believe that the following accounting policies or estimates require the application of management's most difficult, subjective, or complex judgments:

Revenue Recognition: Base rents, additional rents based on tenants' sales volume and reimbursement of the tenants' share of certain operating expenses are generally recognized when due from tenants. The straight-line basis is used to recognize base rents under leases if they provide for varying rents over the lease terms. Straight-line rents represent unbilled rents receivable to the extent straight-line rents exceed current rents billed in accordance with lease agreements. Before FREIT can recognize revenue, it is required to assess, among other things, its collectibility. If we incorrectly determine the collectibility of revenue, our net income and assets could be overstated.

Valuation of Long-Lived Assets: We periodically assess the carrying value of long-lived assets whenever we determine that events or changes in circumstances indicate that their carrying amount may not be recoverable. When FREIT determines that the carrying value of long-lived assets may be impaired, the measurement of any impairment is based on a projected discounted cash flow method determined by FREIT's management. While we believe that our discounted cash flow methods are reasonable, different assumptions regarding such cash flows may significantly affect the measurement of impairment.

Real Estate Development Costs: It is FREIT's policy to capitalize pre-developent costs, which generally include legal and professional fees and other directly related third-party costs. Real estate taxes and interest costs incurred during the development and construction phases are also capitalized. FREIT ceases capitalization of these costs, when the project or portion thereof becomes operational, or when construction has been postponed. Capitalization of these costs will recommence once construction on the project resumes.

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Adopted and recently issued accounting standards:

On December 4, 2007, the FASB issued two new accounting standards, SFAS No. 141R, “Business Combinations” (ASC 805-10), and SFAS No. 160, “Non-Controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (ASC 810-10). The standards are effective for fiscal years beginning after December 15, 2008 and earlier adoption was prohibited.

a.)

Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree;

b.)

Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase;

c.)

Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

The effect of the adoption of ASC 805 will be dependent upon future acquisition activity, if any, of FREIT.

The objective of ASC 810 is to improve the relevance, comparability and transparency of financial information provided to investors by: (i) requiring entities to report non-controlling interests (minority interests) as equity in the consolidated financial statements and separate from the parent’s equity; (ii) requiring that the amount of net income attributable to the parent and non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; and (iii) expanding the disclosure requirements with respect to the parent and its non-controlling interests. The Company adopted ASC 810 effective November 1, 2009, and as required, has retrospectively applied the presentation and disclosure requirements to prior periods presented in this 10-Q.

In June 2009, The FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (ASC topic 810), which changes guidance for variable interest entities that are insufficiently capitalized or not controlled through voting or similar rights. SFAS No.167 amends FIN 46(R) to require that a variable interest entity (“VIE”) be consolidated by the company that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The new standard will be effective for fiscal years beginning after November 15, 2009, or January 1, 2010 for calendar year companies. The adoption of SFAS 167 is not expected to have a material impact on our financial statements.

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RESULTS OF OPERATIONS

Real Estate revenue for the six months ended April 30, 2010 (“Current Six Months”) increased 4.2% to $22,209,000 compared to $21,319,000 for the six months ended April 30, 2009 (“Prior Six Months”). Real Estate revenue for the three months ended April 30, 2010 (“Current Quarter”) increased 7.5% to $11,360,000 compared to $10,570,000 for the three months ended April 30, 2009 (“Prior Year’s Quarter”). The increase in real estate revenues for the Current Quarter was attributable to FREIT’s commercial operations, primarily related to higher base rental income, a lease termination fee amounting to approximately $250,000, and a percentage rent payment of $123,000 relating to a tenant coming off of a percentage rent holiday.

Net income attributable to common equity (“Net Income”) for the Current Six Months was $2,302,000 ($0.33 per share basic) compared to $2,606,000 ($0.38 per share basic) for the Prior Six Months. Net Income for the Current Quarter was $1,130,000 ($0.16 per share basic) compared to $1,085,000 ($0.16 per share basic) for the Prior Year’s Quarter. The schedule below provides a detailed analysis of the major changes that impacted Net Income for the six and three months ended April 30, 2010 and 2009:

NET INCOME COMPONENTS
	Six Months Ended									Three Months Ended
	April 30,									April 30,
	2010			2009			Change			2010			2009			Change
	(thousands of dollars)									(thousands of dollars)
Income from real estate operations:
Commercial properties	$	7,696		$	6,856		$	840		$	3,930		$	3,305		$	625

Residential properties		4,808			5,476			(668	)		2,345			2,619			(274	)
Total income from real estate operations		12,504			12,332			172			6,275			5,924			351

Financing costs:
Fixed rate mortgages		(5,391	)		(5,155	)		(236	)		(2,726	)		(2,573	)		(153	)
Floating rate - Rotunda		(390	)		(226	)		(164	)		(193	)		(93	)		(100	)
Total financing costs		(5,781	)		(5,381	)		(400	)		(2,919	)		(2,666	)		(253	)

Investment income		66			130			(64	)		30			51			(21	)

General & administrative expenses:
Accounting fees		(340	)		(257	)		(83	)		(173	)		(157	)		(16	)
Legal & professional fees		(44	)		(82	)		38			(27	)		(32	)		5
Trustee fees		(257	)		(264	)		7			(127	)		(140	)		13
Corporate expenses		(200	)		(277	)		77			(86	)		(137	)		51
Total general & administrative expenses		(841	)		(880	)		39			(413	)		(466	)		53

Depreciation:
Same properties (1)		(2,953	)		(2,937	)		(16	)		(1,483	)		(1,463	)		(20	)
Damascus center - Safeway portion of Phase II becoming operational in Sept 2009.		(112	)		-			(112	)		(60	)		-			(60	)
Total depreciation		(3,065	)		(2,937	)		(128	)		(1,543	)		(1,463	)		(80	)

Net income	$	2,883		$	3,264		$	(381	)	$	1,430		$	1,380		$	50
Net income attributable to noncontrolling interests in subsidiaries		(581	)		(658	)		77			(300	)		(295	)		(5	)

Net Income attributable to common equity	$	2,302		$	2,606		$	(304	)	$	1,130		$	1,085		$	45

(1) Properties operated since the beginning of Fiscal 2009.

The consolidated results of operations for the Current Six Months and Current Quarter are not necessarily indicative of the results to be expected for the full year.

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SEGMENT INFORMATION

The following table sets forth comparative net operating income ("NOI") data for FREIT’s real estate segments and reconciles the NOI to consolidated net income for the Current Six Months and Current Quarter, as compared to the prior year’s comparable periods:

	Commercial												Residential												Combined
	Six Months Ended												Six Months Ended												Six Months Ended
	April 30,						Increase (Decrease)						April 30,						Increase (Decrease)						April 30,
	2010			2009			$			%			2010			2009			$			%			2010			2009
	(in thousands)												(in thousands)												(in thousands)
Rental income	$	9,633		$	8,746		$	887			10.1	%	$	9,395		$	9,559		$	(164	)		-1.7	%	$	19,028		$	18,305
Reimbursements		2,890			2,641			249			9.4	%		-			-			-						2,890			2,641
Other		82			104			(22	)		-21.2	%		115			183			(68	)		-37.2	%		197			287
Total revenue		12,605			11,491			1,114			9.7	%		9,510			9,742			(232	)		-2.4	%		22,115			21,233

Operating expenses		5,003			4,721			282			6.0	%		4,702			4,266			436			10.2	%		9,705			8,987
Net operating income	$	7,602		$	6,770		$	832			12.3	%	$	4,808		$	5,476		$	(668	)		-12.2	%		12,410			12,246
Average
Occupancy %		90.1	%		89.7	%					0.4	%		93.8	%		93.3	%					0.5	%

										Reconciliation to consolidated net income:
										Deferred rents - straight lining																109			104
										Amortization of acquired leases																(15	)		(18	)
										Investment income																66			130
										General and administrative expenses																(841	)		(880	)
										Depreciation																(3,065	)		(2,937	)
										Financing costs																(5,781	)		(5,381	)
										Net income																2,883			3,264
										Net income attributable to noncontrolling interests																(581	)		(658	)
										Net income attributable to common equity															$	2,302		$	2,606


	Commercial											Residential												Combined
	Three Months Ended											Three Months Ended												Three Months Ended
	April 30,						Increase (Decrease)					April 30,						Increase (Decrease)						April 30,
	2010			2009			$		%			2010			2009			$			%			2010			2009
	(in thousands)											(in thousands)												(in thousands)
Rental income	$	4,996		$	4,387		$	609		13.9	%	$	4,743		$	4,769		$	(26	)		-0.5	%	$	9,739		$	9,156
Reimbursements		1,456			1,236			220		17.8	%		-			-			-						1,456			1,236
Other		58			52			6		11.5	%		58			82			(24	)		-29.3	%		116			134
Total revenue		6,510			5,675			835		14.7	%		4,801			4,851			(50	)		-1.0	%		11,311			10,526

Operating expenses		2,629			2,414			215		8.9	%		2,456			2,232			224			10.0	%		5,085			4,646
Net operating income	$	3,881		$	3,261		$	620		19.0	%	$	2,345		$	2,619		$	(274	)		-10.5	%		6,226			5,880
Average
Occupancy %		89.5	%		90.4	%				-0.9	%		94.6	%		92.6	%					2.0	%

									Reconciliation to consolidated net income:
									Deferred rents - straight lining																56			53
									Amortization of acquired leases																(7	)		(9	)
									Investment income																30			51
									General and administrative expenses																(413	)		(466	)
									Depreciation																(1,543	)		(1,463	)
									Financing costs																(2,919	)		(2,666	)
									Net income																1,430			1,380
									Net income attributable to noncontrolling interests																(300	)		(295	)
									Net income attributable to common equity															$	1,130		$	1,085

NOI 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, financing costs and other non-operating activity. FREIT assesses and measures segment operating results based on NOI. NOI is not a measure of operating results or cash flow as measured by generally accepted accounting principles, 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.

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COMMERCIAL SEGMENT

The commercial segment contains ten (10) separate properties during the 2010 and 2009 fiscal years. Seven are multi-tenanted retail or office centers, and one is a single tenanted store. In addition, FREIT owns land in Rockaway, NJ and Rochelle Park, NJ from which it receives monthly rental income, from tenants who have built and operate bank branches on the land.

As indicated in the table above under the caption Segment Information, total revenue and NOI from FREIT’s commercial segment for the Current Six Months increased by 9.7% and 12.3%, respectively, over the Prior Six Months. For the Current Quarter, total revenue and NOI increased by 14.7% and 19.0%, respectively, over the Prior Year’s Quarter. The primary reasons for the increase in both revenue and NOI for the Current Six Months, as well as the Current Quarter were higher base rental income, primarily at the Damascus Center, and a lease termination fee, which amounted to approximately $250,000, related to a tenant at the Rotunda shopping center, and a percentage rent payment of $123,000 relating to a tenant coming off of a percentage rent holiday.

The economic recovery in the U.S. has resulted in modest increases in retail sales, although among the retailers results have been mixed. This gives us a modicum of guarded optimism. To date, our tenant fall-out has been minor, as average occupancy (exclusive of the Damascus Center, which is undergoing a major redevelopment project) for the Current Six Months was at 94.6%, a decrease of 0.6% from last year’s comparable period, and decreased 1.4% for the Current Quarter to 93.9% compared to 95.3% for the Prior Year’s Quarter. However, we may experience additional fall-out if the economic recovery is slow.

DEVELOPMENT ACTIVITIES

A modernization and expansion is in progress at our Damascus Center in Damascus, MD (owned by our 70% owned affiliate, Damascus Centre, LLC). Total construction costs are expected to approximate $21.9 million. The building plans incorporate an expansion of retail space from its current configuration of approximately 140,000 sq. ft. to approximately 150,000 sq. ft., which will be anchored by a modern 58,000 sq. ft. Safeway supermarket. Construction on Phase I began in June 2007, and was completed in June 2008. Phase I construction costs were approximately $6.2 million, of which $1.1 million related to tenant improvements. Phase II, which comprises a new 58,000 sq. ft. Safeway supermarket, was started in December 2008. The new Safeway supermarket was completed and the tenant opened for business in September 2009. As of April 30, 2010, construction and other costs for Phase II approximated $9.8 million. The Phase III construction is expected to begin towards the end of this year. Total construction costs will be funded from a $27.3 million construction loan entered into on February 12, 2008. As a result of a reevaluation of the future funding needs for this project, on May 6, 2010, Damascus Centre, LLC reduced the amount of the construction loan facility to $21.3 million. The construction loan is secured by the shopping center owned by Damascus Centre, LLC. This loan will be drawn upon as needed to fund already expended and future construction costs at the Damascus Center. As of April 30, 2010, $9.9 million of this loan was drawn down to cover construction costs. (See “Liquidity and Capital Resources” for additional information regarding this loan.) Because of this expansion, leases for certain tenants have been allowed to expire, which has caused occupancy to decline, on a temporary basis, during the construction phase. However, with the completion of the Phase I and Phase II (Safeway) construction, certain tenant leases have been renewed and occupancy is beginning to increase.

Development plans and studies for the expansion and renovation of our Rotunda property in Baltimore, MD (owned by our 60% owned affiliate, Grande Rotunda, LLC) were completed during the 2008 fiscal year. The Rotunda property, on an 11.5-acre site, currently consists of an office building containing 138,000 sq. ft. of office space and 78,000 sq. ft. of retail space on the lower floor of the main building. The building plans incorporate an expansion of approximately 180,500 sq. ft. of retail space, approximately 302 residential rental apartments, 56 condominium units and 120 hotel rooms, and structured parking. Development costs for this project are expected to approximate $200 million. City Planning Board approval has been received. As of April 30, 2010, we have expended approximately $7.5 million for planning and feasibility studies. Due to the adverse economic and credit conditions, the start date for the construction has not yet been determined.

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RESIDENTIAL SEGMENT

FREIT operates nine (9) multi-family apartment communities totaling 1,075 apartment units. As indicated in the table above under the caption Segment Information, total revenue and NOI from FREIT’s residential segment for the Current Six Months decreased by 2.4% and 12.2%, respectively, as compared to the Prior Six Months. For the Current Quarter, total revenue and NOI decreased by 1.0% and 10.5%, respectively, over the Prior Year’s Quarter. The current year’s poorer operating results reflect the downward movement of occupancy and rents over the past year. The effect of lower revenues was exacerbated by losses approximating $260,000 relative to recent storm damage costs at the Pierre Towers apartment complex, and overall higher operating costs, particularly utility costs caused by the colder winter this year. The revenue declines are attributable to higher than normal unemployment in our areas of operation over the past year. However, it should be noted that over the last several months, occupancy is showing signs of improvement, as evidenced by average occupancy for the Current Six Months and Current Quarter increasing by 0.5% and 2.0%, respectively, over last year’s comparable periods.

Our residential revenue is principally composed of monthly apartment rental income. Total rental income is a factor of occupancy and monthly apartment rents. Monthly average residential rents at the end of the Current Six Months and the Prior Six Months were $1,530 and $1,557, respectively. A 1% decline in annual average occupancy, or a 1% decline in average rents from current levels, results in an annual revenue decline of approximately $197,000 and $187,000, respectively.

Capital expenditures: Since all of our apartment communities, with the exception of The Boulders, were constructed more than 25 years ago, we tend to spend more in any given year on maintenance and capital improvements than may be spent on newer properties. A major renovation program is ongoing at The Pierre Towers apartment complex (“The Pierre”). We have substantially completed modernizing, where required, all apartments and some of the buildings’ mechanical services. This renovation is expected to cost approximately $4 - $6 million, and apartments were renovated as they became temporarily vacant. It is anticipated that this renovation will be completed within the next 12 months. These costs are being financed from operating cash flow and cash reserves. Through April 30, 2010, we expended approximately $4.0 million in capital improvements at The Pierre.

INVESTMENT INCOME

Investment income for the Current Six Months and Current Quarter decreased 49.2% and 41.2% to $66,000 and $30,000, respectively, as compared to the prior year’s comparable periods. Investment income is principally derived from interest earned from cash on deposit in institutional money market funds and interest earned from secured loans receivable (loans made to employees of Hekemian, including certain members of the immediate family of Robert S. Hekemian, FREIT CEO and Chairman of the Board, and Robert S. Hekemian, Jr., a trustee of FREIT, for their equity investment in Grande Rotunda, LLC and Damascus Centre, LLC). The decrease in investment income was primarily attributable to lower interest income on FREIT’s investments in cash and cash equivalents, and lower interest income relative to secured loans made to Hekemian employees in connection with the sale of equity interests in the Rotunda and the Damascus Center, due in part to lower interest rates.

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FINANCING COSTS

	Six Months Ended					Three Months Ended
	April 30,					April 30,
	2010		2009			2010		2009
	($ in thousands)					($ in thousands)
Fixed rate mortgages:
1st Mortgages
Existing	$	4,250	$	4,477		$	2,116	$	2,230
New (1)		607		182			303		91
2nd Mortgages
Existing		169		252			84		126
Variable rate mortgages:
Acquisition loan-Rotunda		390		294			193		119
Construction loan-Damascus		79		73			39		25
Other		180		145			91		73
		5,675		5,423			2,826		2,664
Amortization of Mortgage Costs		106		118			53		59
Total Financing Costs		5,781		5,541			2,879		2,723
Less amount capitalized		-		(160	)		40		(57	)
Financing costs expensed	$	5,781	$	5,381		$	2,919	$	2,666

(1) Mortgages not in place at beginning of Fiscal 2009.

Total financing costs, before capitalized amounts, for the Current Six Months and Current Quarter increased 4.3% and 5.7%, respectively, compared to the prior year’s comparable periods.

Our acquisition loan for The Rotunda property of $22.5 million, which was reduced to $19.5 million on February 1, 2010, bears a floating interest rate. An increase in interest rates over the course of the Current Six Months increased the level of interest expense for The Rotunda by approximately $96,000 and $74,000, to $390,000 and $193,000 for the Current Six Months and Current Quarter, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES (“G & A”)

G&A expense for the Current Six Months and Current Quarter was $841,000 and $413,000, respectively, as compared to $880,000 and $466,000 for the prior year’s comparable periods. The primary components of G&A are accounting fees, legal & professional fees and Trustees’ fees amounting in the aggregate to $641,000 and $327,000, for the Current Six Months and the Current Quarter, respectively, as compared to $603,000 and $329,000 for the prior year’s periods.

DEPRECIATION

Depreciation expense from operations for the Current Six Months and Current Quarter was $3,065,000 and $1,543,000, respectively, as compared to $2,937,000 and $1,463,000 for the prior year’s comparable periods. The increase was primarily attributable to the current construction project at the Damascus Center becoming operational.

LIQUIDITY AND CAPITAL RESOURCES

Our financial condition remains strong. Net cash provided by operating activities was $7.2 million for the Current Six Months compared to $7.1 million for the Prior Six Months. We expect that cash provided by operating activities will be adequate to cover mandatory debt service payments, recurring capital improvements and dividends necessary to retain qualification as a REIT (90% of taxable income).

As at April 30, 2010, FREIT had cash and cash equivalents totaling $6.2 million, compared to $11.3 million at October 31, 2009.

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Credit Line: FREIT has an $18 million line of credit provided by the Provident Bank. The line of credit is for a two year term ending in January 2012, but can be cancelled by the bank, at its will, within 60 days before or after each anniversary date. The credit line will automatically be extended at the termination date of the current term and each subsequent term for an additional period of 24 months, provided there is no default and the credit line has not been cancelled. Draws against the credit line can be used for general corporate purposes, for property acquisitions, construction activities, and letters of credit. Draws against the credit line are secured by mortgages on FREIT’s Franklin Crossing Shopping Center, Franklin Lakes, NJ, retail space in Glen Rock, NJ, Palisades Manor Apartments, Palisades Park, NJ, and Grandview Apartments, Hasbrouck Heights, NJ. Interest rates on draws will be set at the time of each draw for 30, 60, or 90-day periods, based on our choice of the prime rate or at 175 basis points over the 30, 60, or 90-day LIBOR rates at the time of the draws. The interest rate on the line of credit has a floor of 4%.

As of April 30, 2010, approximately $18 million was available under the line of credit.

We are in the process of rebuilding the Damascus Center. The total capital required for this project is estimated at $21.9 million. On February 12, 2008, Damascus Centre, LLC closed on a $27.3 million construction loan that is available to fund already expended and future construction costs. This loan has a term of forty-eight (48) months, with one twelve (12) month extension option. FREIT has guaranteed 30% of the loan, and the minority interests, who have a 30% investment in Damascus Centre, LLC, have agreed to indemnify FREIT for their share of the guarantee. Draws against this loan bear interest at the BBA LIBOR daily floating rate plus 135 basis points. As of April 30, 2010, Damascus Centre, LLC drew down $9.9 million of this loan to cover construction costs. We expect this development project to add to revenues, income, cash flow, and shareholder value. As a result of a reevaluation of the future funding needs for this project, on May 6, 2010, Damascus Centre, LLC reduced the amount of the construction loan facility to $21.3 million.

We are planning a major expansion at The Rotunda in Baltimore, MD that will require capital estimated at $200 million. We expect financing for the Rotunda expansion will be, for the most part, from mortgage financing. During the 2008 fiscal year, we substantially completed the planning and feasibility studies and expended approximately $7.5 million during this phase, which adds to the value of the property. Due to the adverse economic and credit conditions, no date for the commencement of construction has been determined.

At April 30, 2010, FREIT’s aggregate outstanding mortgage debt was $197.9 million and bears a weighted average interest rate of 5.3%, and an average life of approximately 5.2 years. These fixed rate mortgages are subject to amortization schedules that are longer than the term of the mortgages. As such, balloon payments (unpaid principal amounts at mortgage due date) for all mortgage debt will be required as follows:

Fiscal Year	2012	2013	2014	2016	2017	2018	2019	2022
($ in millions)
Mortgage "Balloon" Payments	$9.9	$27.5	$25.9	$24.5	$22.0	$5.0	$45.0	$14.4

The following table shows the estimated fair value and carrying value of our long-term debt at April 30, 2010 and October 31, 2009:

	April 30,		October 31,
($ in Millions)	2010		2009
Fair Value	$	191.5	$	198.1

Carrying Value	$	197.9	$	202.3

FREIT expects to refinance the individual mortgages with new mortgages when their terms expire. To this extent we have exposure to interest rate risk. If interest rates, at the time any individual mortgage note is due, are higher than the current fixed interest rate, higher debt service may be required, and/or refinancing proceeds may be less than the amount of mortgage debt being retired. For example, at April 30, 2010, a 1% interest rate increase would reduce the fair value of our debt by $8.4 million, and a 1% decrease would increase the fair value by $9.0 million.

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The $22.5 million mortgage loan entered into by Grande Rotunda, LLC for the acquisition of the Rotunda was scheduled to come due on July 19, 2009, and was extended by the bank until February 1, 2010. On February 1, 2010, the original loan amount of $22.5 million was reduced to $19.5 million and the due date extended until February 1, 2013. Under the restructured terms, the interest rate is now 350 basis points above the BBA LIBOR rate with a floor of 4%, and monthly principal payments of $10,000 are required. An additional principal payment may be required on February 1, 2012 in an amount necessary to reduce the loan to achieve a certain debt service coverage ratio.

FREIT also has interest rate exposure on its floating rate loans. Currently, FREIT has $29.4 million in floating rate loans outstanding, of which $19.5 million relates to the acquisition loan for The Rotunda and $9.9 million relates to the construction loan for the Damascus Center redevelopment project. A 1% rate fluctuation would impact FREIT’s annual interest cost by approximately $294,000.

We believe that the values of our properties will be adequate to command refinancing proceeds equal to or higher than the mortgage debt to be refinanced. We continually review our debt levels to determine if additional debt can prudently be utilized for property acquisition additions to our real estate portfolio that will increase income and cash flow to our shareholders.

FUNDS FROM OPERATIONS (“FFO”):

Many consider FFO as the standard measurement of a REIT’s performance. We compute FFO as follows:

		Six Months Ended						Three Months Ended
		April 30,						April 30,
		2010			2009			2010			2009
		($ in thousands)						($ in thousands)

Net income		$	2,883		$	3,264		$	1,430		$	1,380
Depreciation			3,065			2,937			1,543			1,463
Amortization of deferred mortgage costs			106			118			53			59
Deferred rents (Straight lining)			(109	)		(104	)		(56	)		(53	)
Amortization of acquired leases			15			18			7			9
Capital Improvements - Apartments			(120	)		(106	)		(35	)		(27	)
Distributions to noncontrolling interests			(692	)		(563	)		(344	)		(443	)
FFO		$	5,148		$	5,564		$	2,598		$	2,388

	Per Share - Basic	$	0.74		$	0.80		$	0.37		$	0.34

Weighted Average Shares Outstanding			6,942			6,945			6,942			6,942

FFO does not represent cash generated from operating activities in accordance with accounting principles generally accepted in the United States of America, and therefore should not be considered a substitute for net income as a measure of results of operations or for cash flow from operations as a measure of liquidity. Additionally, the application and calculation of FFO by certain other REITs may vary materially from that of FREIT’s, and therefore FREIT’s FFO and the FFO of other REITs may not be directly comparable.

INFLATION

Inflation can impact the financial performance of FREIT in various ways. Our commercial tenant leases normally provide that the tenants bear all or a portion of most operating expenses, which can reduce the impact of inflationary increases on FREIT. Apartment leases are normally for a one-year term, which may allow us to seek increased rents as leases renew or when new tenants are obtained, subject to prevailing market conditions.

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Item 3: Quantitative and Q ualitative Disclosures About Market Risk

See “Commercial Segment”, “Residential Segment” and “Liquidity and Capital Resources” under Item 2 above for a detailed discussion of FREIT’s quantitative and qualitative market risk disclosures.

Item 4: Controls and Pro c edures

At the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of FREIT’s disclosure controls and procedures. This evaluation was carried out under the supervision and with participation of FREIT’s management, including FREIT’s Chairman and Chief Executive Officer and Chief Financial Officer, who concluded that FREIT’s disclosure controls and procedures are effective. There has been no change in FREIT’s internal control over financial reporting during the three months ended April 30, 2010 that has materially affected, or is reasonably likely to materially affect, FREIT’s internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in FREIT’s reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in FREIT’s reports filed under the Exchange Act is accumulated and communicated to management, including FREIT’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Part II: Other Informati o n

Item 1: Legal Proceedin g s

On August 6, 2009, a complaint was filed against Damascus Centre, LLC, Hekemian (FREIT’s managing agent), and others (the “Defendants”) in the Circuit Court of Montgomery County, Maryland (the “Court”). The plaintiffs leased commercial office space at the Damascus Center. The complaint alleged a number of causes of action in connection with alleged interference with plaintiffs’ business allegedly caused by Damascus Centre, LLC’s development activities at the Damascus Center. The complaint sought compensatory damages of $500,000 for the alleged interference with the plaintiffs’ business and $5,000,000 in punitive damages. In addition, the plaintiffs sought to enjoin the demolition of the shopping center. FREIT received notice of the lawsuit on September 2, 2009. On February 19, 2010, a voluntary stipulation of dismissal of the complaint, with prejudice, was filed with the Court. This stipulation with prejudice has the same effect as a final adjudication on the merits of the complaint favorable to the Defendants, and relieves the Defendants of any liability to the plaintiffs based on the relevant facts set forth in the complaint. The stipulation also bars the plaintiffs from pursuing any subsequent action based on any relevant facts in the complaint.

Item 1A: Ris k Factors

There were no material changes in any risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended October 31, 2009, that was filed with the Securities and Exchange Commission on January 14, 2010.

Item 6: Exhibi t s

Exhibit Index

Exhibit 10.1 - Agency Agreement dated November 10, 2009 between Grande Rotunda, LLC and Hekemian Resources Development, LLC.

Exhibit 31.1 - Section 302 Certification of Chief Executive Officer

Exhibit 31.2 - Section 302 Certification of Chief Financial Officer

Exhibit 32.1 - Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Exhibit 32.2 - Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

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SIG N ATURES

Pursuant to the requirements 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.

	FIRST REAL ESTATE INVESTMENT
	TRUST OF NEW JERSEY
	(Registrant)

Date: June 9, 2010
	/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)

Page 22

Exhibit 10.1

AGENCY AGREEMENT

This Agency Agreement made as of this 10 th day of November, 2009 by and between GRANDE ROTUNDA, LLC (hereinafter referred to as the “ Owner ” ) and HEKEMIAN DEVELOPMENT RESOURCES, LLC (hereinafter the “ Agent ” ) both having an address at 505 Main Street, Hackensack, New Jersey 07601.

WHEREAS, The Owner is the owner of the office and retail property located at 711 West 40 th Street in Baltimore, Maryland (the “ Property” ); and

WHEREAS, the Owner is about to or has commenced the Project for the redevelopment of the Property in accordance with the plans approved by the Owner; and

WHEREAS, Owner wishes to retain the Agent to advise it in all phases of the Project and to act on behalf of the Owner, as Owner shall so direct, in connection with the Architect, Engineer, and Contractors hereinafter defined; and

WHEREAS, Agent is willing to undertake such responsibilities as are hereinafter set forth in accordance with the terms and conditions contained in this Agreement; and

NOW THEREFORE, for One ($1.00) Dollar and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, to the terms contained herein the Owner and Agent agree as follows:

DEFINITIONS:

(a)

Approved Plans : The plans and specifications prepared by the Design Team as same may be modified from time to time with the prior approval of the Owner with respect to material changes to the site plan and to gross leasable area of any building.

(b) Architect : Design Collective, Inc.

(c)

Architect's Agreement : Dated November 28, 2007, and attached hereto as Exhibit A.

(d) Buildings : The buildings identified on the Approved Plans.

(e) Engineer : STV, Inc.

(f)

Contractor : A Contractor is defined to include the general contractor and all site contractors, building contractors and subcontractors retained by the Owner in connection with the Project.

(g) Design Team : The Architect and Engineer(s).

(h)

Development Costs : “ Development Costs ” shall mean the aggregate amount actually expended by Owner for the construction of the Project, excluding the acquisition costs of the Property and all soft costs expended for architectural and other professional fees, but not to exceed $136,000,000 (the amount reflected in the pro forma construction cost schedule dated February 2007 submitted to the Owner) unless the Owner has approved a change in the Project Scope which increases the scope and size of the Project, in which event the maximum amount of $136,000,000 shall be increased to the extent and in the amount approved by the Owner in connection with any such change in Project Scope, it being confirmed that no such change in Project Scope has been approved by the Owner since February 2007. The term "Development Costs" shall be utilized for the determination of Agent's Fee and not the ultimate costs of the Project.

(i)

Development Scope : Two hundred ninety-seven (297) apartment units, forty-four (44) residential condominium units (to be constructed by a third party), 205,331 square feet of new retail space, including a Giant Supermarket shell building, redevelopment and repositioning of the existing retail within the property, a hotel (to be constructed by a third party), 1504 above and below ground parking and a plaza level deck with amenities and all site work and Buildings as depicted on the (as set forth in the pro forma dated February 2007).

(j) Lender : To be designated by Owner, in its sole discretion.

(k)

Owner's Representative : Donald Barney. If Donald Barney is not available, the Owner's Representative shall be Ronald Artinian or such other party that Owner designates as the Owner's Representative.

(l)

Project : Project is defined as all approvals and redevelopment of the Property including the construction of all improvements, in accordance with the Approved Plans in effect as of the date hereof.

(m)

Project Personnel : Project Personnel shall be deemed to be all architectural and engineering firms (in addition to the Architect and Engineer), surveyors, traffic consultants, environmental consultants, security personnel, marketing and public relations specialists and lobbyists and any other personnel as are determined by the Agent to be reasonably necessary for the timely completion of the Project, so long as retaining such personnel is consistent with this Agreement and any other written agreement approved by the Owner.

(n)

Property : The Property consisting of the Rotunda Center owned by Owner in Baltimore, Maryland.

(o)

Soft Costs : Soft Costs are all fees and expenses paid for architectural, engineering, accountants, attorneys and other professional fees.

(p)

Site Plan : The plan prepared by STV, Inc. approved by the City of Baltimore as the same may be modified from time to time with the prior approval of the Owner with respect to material changes to the building layout.

2.	PROJECT SCOPE : The Agent on behalf of Owner shall undertake the following (the “ Project Scope : ) in accordance with this Agreement and Owner's instructions based on the Approved Plans:

(a)

Research development options through studying various conceptual plans, existing zoning and comprehensive zoning;

(b)

Negotiation of all requisite contracts for the Project subject to the approval of Owner and Owner's designated legal counsel, for all contracts which exceed the dollar amount set forth in Paragraph 3(o) hereof;

(c)

Obtaining of all approvals for the Project;

(d)

Phased demolition of the Project, in accordance with the Project Plan;

(e)

Construction of the Project, in accordance with the Approved Plans and the Site Plan;

(f)

Oversight of existing and new lease negotiations with tenants and any brokers;

(g)

Coordination of existing tenant relocations within the Project;

(h)

Review all bidding of contracts for the Project and recommendations to the Owner for the hiring of Contractors;

(i)

Negotiation of all requisite contracts for the improvements, subject to the approval of Owner and Owner's legal counsel, for all contracts which exceed the dollar amount set forth in Paragraph 3(o);

(j) Liaison between Contractor(s) and Design Team:

(1) Review progress and scheduling;

(2)

Review change orders, subject to approval of the Owner and Design Team;

(3) Coordinate requests for information with the Design Team;

(4) Coordinate requests for clarifications with the Design Team;

(5)

Oversee approvals of submittals and Shop drawings with the Design Team;

(6) Oversee construction scheduling as Owner's representative; and

(7) Oversee Project closeout with the Design Team.

(k) Coordination with Owner's Lender:

(1)

Process draw requests to Lender pursuant to a written draw request, provided that the Architect has previously approved such draw.

(l)

Exclusions: The following are excluded from Agent's scope of services:

(1)

Means and Methods of Construction;

(2)

Defects or deficiencies in the work of the Contractors or delays in any of the work performed;

(3)

Errors and/or omissions of the Design Team;

(4)

Cost overruns;

(5)

Oversight of various trades subcontractors;

(6)

Arbitration or litigation preparation and arbitration or court appearances on behalf of Owner; and

(7)

Brokerage Services.

SCOPE OF SERVICES : So long as Agent's actions are consistent with this Agreement and any other written agreement which the Owner has formally approved in writing, the Agent shall be responsible to perform the following in a timely manner, on behalf of Owner and at Owner's expense and subject to the provision of Paragraph 5 thereof:

(a)

Engage the Design Team, Contractors, consultants, on-site staff and such other personnel as Agent deems commercially reasonable and necessary in order to complete the Project;

(b)

Recommend to Owner the hiring of Project Personnel as the Agent deems appropriate for the Project;

(c)

Recommend to Owner the retaining of marketing and public relations consultants and/or firms, lobbyists and such other consultants of Owner and Agent deem necessary to complete and lease up the Project;

(d)

Undertake the necessary actions to implement the Project Scope;

(e)

Use commercially reasonable efforts to assist in negotiating fair and complete agreements with Contractors and material suppliers and to obtain satisfactory performance from each of the Project Personnel, subject to Owner's approval and the approval of Owner's legal counsel as designated by Owner and further subject to Paragraph 3(o);

(f)

Monitor construction costs and provide the Owner with reports on actual costs for the Project and estimates for the Project completion as the same are adjusted from time to time;

(g)

Administer the contracts of the Project for compliance with the terms and conditions of each contract;

(h)

At the direction of the Design Team, require additional inspections and testing of the work, and reject work which does not conform to the requirements of the Approved Plans and the Site Plan;

(i)

Solicit bids from all prospective contractors and material suppliers and assist the Owner in the determination of the most qualified and cost efficient Contractor or material suppliers;

(j)

Coordinate with the Design Team to obtain final approvals for the Project and verify that interim inspections are performed in order to obtain such certificates of occupancies as may be required by applicable governmental authorities having jurisdiction over the Project;

(k)

Maintain a copy of all plans, specifications, contracts, invoices and financial matters related to the Project and supply a copy thereof to Owner and upon the completion of the Project, Agent shall provide a complete copy of the foregoing to the Owner upon Owner's request;

(l)

Use commercially reasonable efforts to secure lien waivers from Contractors and material suppliers;

(m)

Submit to Owner, for Owner's prior approval, any change order whose cost may reasonably be anticipated to exceed Fifty Thousand ($50,000) Dollars to the Owner;

(n)

When the aggregate cost of all change orders for any phase of the Project exceeds seven (7%) percent of the Development Costs allocated to such phase, Agent shall report all change orders to Owner's Representative and thereafter, provide Owner's Representative with a monthly status report relative to the construction of the Project;

(o)

Submit to Owner, for Owner's prior approval, any individual contract whose cost may reasonably be anticipated to exceed One Hundred Thousand ($100,000) Dollars.

4.	OWNER'S RESPONSIBILITIES : In order for Agent to undertake its duties pursuant to this Agreement, the Owner shall be responsible to perform the following, in a timely manner:

(a) Provide Agent with all plans and intended goals for the Project;

(b) Respond to all inquiries and/or requests by Agent;

(c)

Based upon the reasonable recommendations of the Agent, to purchase and provide written evidence it has obtained the appropriate type and amount of insurance, including, but not limited to builders all risk insurance for the Project pursuant to which the Agent is named as an additional insured;

(d)

Following the approval of work by the Architect, the Design Team and the Lender where applicable of the requisition for such work, Owner shall pay all Project bills and invoices necessary to comply with contract obligations for all Contractors, Project Personnel and Fees due Agent;

(e)

Pay all Project bills, invoices and Fee.

AGENT FEES .

5.1. Subject to the terms of this Paragraph 5, Owner shall pay Agent a fee for Agent's services pursuant to this Agreement (the "Fee") in an amount equal to six and three-eights percent (6 3/8%) of the lesser of (i) actual Development Costs; or (ii) the Guaranteed Maximum Price (“ GMP ”). Owner agrees to pay $3,000,000.00 of the Fee for services rendered by Agent in connection with the Project of which amount $1,000,000.00 has heretofore been paid by Owner to Agent. The remaining $2,000,000.00 shall be paid upon the execution of this Agreement. The payment of $3,000,000.00 is in recognition of the following:

(1)

All services rendered by Agent up to the date of this Agreement;

(2)

Any and all future contacts and meetings with governmental authorities relating to the Project Scope;

(3)

Any and all future dealings with the Architect, Engineer and attorneys engaged in obtaining the necessary government approvals up to and including the obtaining of Project building permits. Thereafter, Agent shall not be entitled to receive any additional portion of the Fee, except as provided in Subparagraphs 5.2, 5.3 and 5.4 hereof.

5.2. In the event the Owner determines in writing to proceed with the entirety of the Project as the sole Owner, the balance of the Fee shall be paid as hereinafter provided. If the Project Scope and / or Scope of Services is increased, the Fee shall be increased by an amount to be agreed upon in writing by Owner and Agent. If the Project Scope and / or Scope of Services is reduced, the Fee shall be reduced in an amount agreed upon in writing by the Owner and Agent. The balance of the Fee shall be paid in the following manner:

(1)

Upon Owner's written direction to Agent to obtain a building permit for any of the apartments, retail space or the garage and the issuance of a building permit therefore, fifty (50%) percent of the Fee as modified if there is a change in project scope, less $3,000,000.00 shall be due and payable. Example: If there has been no change in the Project Scope at time of issuance of the building permit, Agent shall be paid ($136,000,000 X .06375 / 2= $4,335,000 - less $3,000,000) $1,335,000

(2)

Balance of fifty (50%) percent of the Fee shall thereafter be paid in monthly installments, based upon the percentage of completion of the Project as reflected In the general contractor's requisition and approved by the Architect, less a hold back of ten (10%) percent, in accordance with the following formula, wherein:

"C" is Architect's certification of percentage of completion of entire Project

"H" is one-half of the amount of the Fee

"I" is the amount of the monthly installments

"P" is that portion of the second half of the Fee which has been previously paid

(C x H x 90%) - P = I

(3)

The ten percent (10%) hold-back portion of the Fee shall be paid within thirty (30) days after issuance of an unconditional certificate of occupancy for the entire Project (or equivalent jurisdictional approval) (the `CO"). Notwithstanding anything herein to the contrary, the total fee shall not exceed 6 3/8% of the actual Development Cost. If at any time, it is determined that actual Development Cost will be less than $136,000,000, the schedule for payment of the balance of the Fee shall be reduced to insure that the aforementioned ten (10%) percent hold-back shall be held back until issuance of CO.

5.3. In the event that the Owner never determines in writing to proceed with the entire Project as the sole Owner , the amount set forth in Paragraph 5.1 shall constitute full payment to the Agent except under the conditions and circumstances set forth in this Subparagraph 5.3. Nevertheless, the Owner and Agent, acknowledge that the Agent may be called upon to render additional services, but the scope and value of such services is difficult to determine at the present time. Accordingly, at such time as the Owner determines what the future of the Project may be, and what the role of the Owner and Agent respectively may be in the Project, the Owner and Agent shall then endeavor in good faith to enter into an agreement for a future role for the Agent and as to the amount of compensation to be paid to the Agent in such future role, provided however, that unless Owner and Agent agree in writing to the contrary, in no event shall Agent's total compensation, if any, exceed_ the Fee which Agent would receive pursuant to the provisions of Subparagraph 5.2 and Owner should have no obligation to pay an additional fee absent a written agreement providing for such additional fee.

5.4. In the event Owner elects to discontinue the Project, Agent shall cease work on the Project, except for work directed at securing a grandfathering exception for the Project from the Leeds or similar ordinance that the City of Baltimore is currently considering. Any additional work prior to the determination to commence the entire Project is includable within the scope of the $3,000,000.00 in fees paid to date. However, with respect to a redesign of the Project, Agent will make a presentation to the Owner regarding the redesign work, including the proposed costs thereof, as well as a separate proposed fee for Agent's additional work,' but Owner shall have no obligation to pay an additional fee absent a written agreement expressly providing for such additional fee.

INDEMNIFICATION :

(a)

The parties acknowledge that Agent is acting in an agency capacity on behalf of the Owner in accordance with this Agreement and in such capacity Agent shall have the right to undertake such action on behalf of the Owner, but only in strict accordance with this Agreement, subject, however, to modification of such authority by written Agreement between the Owner and the Agent. In connection with such agency, the Owner covenants and agrees that it shall indemnify, defend and hold harmless the Agent as well as the Agent's officers, employees, agents, attorneys and members (hereinafter referr ed to collectively as the “ Agent Indemnified Parties ” and individually as an “ Agent Indemnified Party ” ) from and against any and all losses, damages, expenses or liabilities of any kind or nature and from any suits, claims, or demands, including reasonable counsel fees incurred in investigating or defending such claim, suffered by any of them if caused by, relating to, arising out of, resulting from, or in any way connected with the Agent's actions contemplated herein; provided, however, the Owner shall not be obligated to indemnify, defend and hold harmless an Agent Indemnified Party, if the loss, damage, expense or liability was caused by or resulted from an Agent Indemnified Party's: (I) own gross negligence; (2) willful misconduct; (3) a material breach of the terms of this Agreement; and (4) any act or omission which exceeds the authority granted to the Agent by the terms of this Agreement which results in monetary loss to the Owner. In case any action shall be brought against an Agent Indemnified Party based upon any of the above and in respect to which indemnity may be sought against the Owner, the Agent Indemnified Party against whom such action was brought, shall promptly notify the Owner in writing, and the Owner shall assume the defense thereof, including the retainer of counsel selected by the Owner and reasonably satisfactory to said Agent Indemnified Party and the payment of all costs incurred in connection therewith. Owner shall retain the exclusive right to negotiate and consent to any settlement.

(b)

The Agent covenants and agrees that it shall indemnify, defend and hold harmless the Owner as well as the Owner's officers, employees, agents, attorneys and members (hereinafter referred to collectively as the “ Owner Indemnified Parties ” and individually as an “ Owner Indemnified Party ”) from and against any and all losses, damages, expenses or liabilities of any kind or nature and from any suits, claims, or demands, including reasonable counsel fees incurred investigating or defending such claim, suffered by any of them if caused by, relating to, arising out of, resulting from, or in any way connected with the Agent's material breach of the terms and conditions of this Agreement, its gross negligence or willful misconduct, or any act or omission which exceeds the authority granted to the Agent by the terms of this agreement which results in monetary loss to the Owner, however, the Agent shall not be obligated to indemnify, defend and hold harmless an Owner indemnified Party if the loss, damage, expense or liability was caused by or resulted from an Owner Indemnified Party's (1) own negligence; (2) willful misconduct; (3) material breach f the terms of this Agreement; and (4) any act or omission arising out of the Owner's obligations hereunder. In case any action shall be brought against an Owner Indemnified Party based upon any of the above and in respect to which indemnity may he sought against the Agent, the Owner Indemnified Party against whom such action shall be brought, shall promptly notify the Agent in writing, and the Agent shall assume the defense thereof, including the retainer of counsel selected by the Agent and reasonably satisfactory to the Owner, and the payment of all costs incurred in connection therewith. Agent shall retain the exclusive right to negotiate and consent to any settlement wherein Agent is paying the settlement amount.

TERMINATION BY THE OWNER FOR CAUSE : Should the Agent fail in the performance of its duties hereunder (excepting delays occasioned by strikes, floods, fires, accidents, the negligence of the Owner and other natural disasters which are beyond the control of the Agent), the Owner shall notify the Agent in writing of the Owner's intent to declare the Agent in default under this Agreement. Within twenty (20) days from the date Owner sends this notice to Agent, Agent shall cure the default or, if such default cannot reasonably be cured during such twenty (20) day period, Agent shall commence curing and diligently prosecute curing the default until such default is cured. Failure by the Agent to cure or diligently prosecute curing the default within such twenty (20) day period shall constitute a material breach of this Agreement on the part of the Agent. In such event, the Owner shall have the right to terminate this Agreement. In such case, the Owner shall pay the Agent the unpaid balance of the amount due Agent to be paid under this Agreement as of the date of termination hereof and neither party shall be further obligated to the other and there should be no obligation or Liability going forward.

8.	TERMINATION BY AGENT: The Agent may terminate this Agreement only if the Owner shall fail to pay the Fee in accordance with the terms of this Agreement, or as set forth in Paragraph 9 below.

SUSPENSION OF WORK : Should Owner desire to suspend the Project, then the Owner must notify Agent in writing of its desire to suspend the Project. If Owner suspends construction of the Project for a period of ninety (90) consecutive days, Agent may upon written notice to the Owner state that it is seeking additional compensation for expenses caused by such suspension. Within 15 days of receipt of such notice, Owner may at its option either (a) agree to accept a claim for additional compensation; or (b) permit Agent to terminate this Agreement without additional compensation. For the purposes of this Agreement, the period of suspension shall commence on the date when Owner gives notice to the Agent that suspension has commenced. In the event the Project is suspended for any reason by the Owner, then only the Owner shall be liable for any claims by Contractors and the Design Team for suspension of the Project and the Owner shall indemnify the Agent for all claims made by the foregoing pursuant to Paragraph 6 of this Agreement.

10.

ENTIRE AGREEMENT : This Agreement contains the final and entire agreement between the parties hereto and each shall not be bound by any terms, conditions, statements, warranties or representations, oral or written, not contained herein. All understandings and agreements heretofore made between the parties are merged in this Agreement, which alone fully and completely expresses the agreement of the parties and which may not be changed, modified or terminated except by a written instrument signed by the parties or their respective counsel.

11.	CHOICE OF LAW : This Agreement shall be interpreted in accordance with the laws and enforced in the Courts of the State of New Jersey without regard to principles of conflicts of laws. Any disputes shall be litigated in the Superior Court of New Jersey, Bergen County.

12.

COUNTERPARTS : This Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original and all of which counterparts shall constitute the same Agreement, at such time as each party shall have executed and delivered to the other at least one (1) copy of this Agreement.

13.	BINDING EFFECT : This Agreement shall be binding upon and shall inure to the benefit of Owner and Agent and their respective successors and permitted assigns.

14.

NOTICES : All notices, requests, consents and other communications hereunder shall be in writing and shall be either: (i) mailed in a United States Post Office depository by certified mail, return receipt requested, postage prepaid; or (ii) delivered by an overnight courier delivery service, with a receipt provided therefore and charges prepaid, addressed to the parties at the address set forth above and notices shall be deemed given on the date of receipt or refusal.

15.	PREPARATION OF AGREEMENT . This Agreement shall not be construed more strongly against either party regardless of who is responsible for its preparation.

[signature lines appear on following page]

In witness whereof, the parties have executed this Agreement as of the date set forth above.

OWNER :		AGENT :
GRANDE ROTUNDA, LLC
By: FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, Managing Member		HEKEMIAN DEVELOPMENT RESOURCES, LLC

By: /s/ Donald Barney		By: /s/ Bryan Hekemian
Donald Barney, President		Bryan Hekemian, Managing Member

EXHIBIT 31.1

CERTIFICATION

I, Robert S. Hekemian, certify that:

I have reviewed this report on Form 10-Q of First Real Estate Investment Trust of New Jersey;

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;

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;

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

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: June 9, 2010	/s/ Robert S. Hekemian
	Robert S. Hekemian
	Chairman of the Board and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

I, Donald W. Barney, certify that:

I have reviewed this report on Form 10-Q of First Real Estate Investment Trust of New Jersey;

(a)

(b)

(c)

(d)

(a)

(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: June 9, 2010	/s/ Donald W. Barney
	Donald W. Barney
	President, Treasurer and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Real Estate Investment Trust of New Jersey (the “Company”) on Form 10-Q for the quarter ended April 30, 2010 (the “Report”), I, Robert S. Hekemian, Chairman of the Board and Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(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: June 9, 2010	/s/ Robert S. Hekemian
	Robert S. Hekemian
	Chairman of the Board and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Real Estate Investment Trust of New Jersey (the “Company”) on Form 10-Q for the quarter ended April 30, 2010 (the “Report”), I, Donald W. Barney, President, Treasurer and Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(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: June 9, 2010	/s/ Donald W. Barney
	Donald W. Barney
	President, Treasurer and Chief Financial Officer