FREVS First Real Estate Investment Trust of New Jersey Inc (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

September 13, 2024

FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, INC.

(Exact name of registrant as specified in charter)

Maryland	000-25043	22-1697095
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
505 Main Street, Suite 400, Hackensack, New Jersey			07601
(Address of principal executive offices)			(Zip Code)

 

Registrant’s telephone number, including area code: (201) 488-6400

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	FREVS	OTC Pink Market
Preferred Stock Purchase Rights (1)

 

(1)

Registered pursuant to Section 12 (b) of the Act pursuant to a form 8-A filed by the registrant on August 3, 2023. Until the Distribution Date (as defined in the registrant’s Stockholder Rights Agreement dated July 31, 2023) the Preferred Stock Purchase Rights will be transferred with and only with the shares of the registrant’s Common Stock to which the Preferred Stock Purchase Rights are attached.

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Item 2.02 Results of Operations and Financial Condition

 

OPERATING RESULTS

 

The registrant has released its operating results for the fiscal quarter ended July 31, 2024. The Press Release is included as Exhibit 99.1 to this Form 8-K.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

99.1 Registrant’s press release dated September 13, 2024

 

 

 

 

The statements in this report, which relate to future earnings or performance, are forward-looking. Actual results may differ materially and be adversely affected by such factors as market and economic conditions, longer than anticipated lease-up periods or the inability of certain tenants to pay rents. Additional information about these factors is contained in the Company’s filings with the SEC including the Company’s most recent filed reports on Form 10-K and Form 10-Q.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, INC.
	(Registrant)
	By:	/s/ Robert S. Hekemian, Jr.
		Robert S. Hekemian, Jr.
		President and Chief Executive Officer

Date: September 13, 2024

 

EXHIBIT INDEX

 

 

Exhibit
Number	Description
99.1	Press Release – Operating results for the fiscal quarter and nine months ended July 31, 2024.

 

 

 

 

FREIT Announces Third Quarter 2024 Results

 

HACKENSACK, NJ, September 13, 2024 – First Real Estate Investment Trust of New Jersey, Inc. (“FREIT” or the “Company”) reported its operating results for the fiscal quarter ended July 31, 2024. The results of operations as presented in this earnings release are unaudited and are not necessarily indicative of future results.

 

FINANCIAL HIGHLIGHTS & OPERATING STATISTICS
	For the Fiscal Quarter Ended			For the Nine Months Ended
	July 31,			July 31,
	2024	2023		2024	2023
GAAP Earnings (Loss) Per Share - Basic and Diluted	$1.98	($0.06)		$1.99	$0.01
AFFO Per Share - Basic and Diluted	$0.18	$0.10		$0.42	$0.40
Dividends Per Share	$0.05	$0.30		$0.15	$0.40
Total Average Residential Occupancy	96.8%	96.8%		96.2%	97.1%
Total Average Commercial Occupancy	51.8%	65.1%		50.9%	65.4%

 

 

Results for the Quarter

 

Total real estate revenue decreased 2% to approximately $7,147,000 for the fiscal quarter ended July 31, 2024 as compared to approximately $7,296,000 for the prior year’s comparable period. The decrease in revenue was primarily attributable to a decrease from the commercial segment of approximately $433,000 primarily driven by a decline in revenue of approximately $363,000 at the Westwood Plaza Shopping Center resulting from Kmart vacating its space in October 2023. The decrease in the commercial segment was offset by an increase from the residential segment of approximately $284,000 primarily driven by an increase in base rents across most properties while the average occupancy rate remained at 96.8%.

 

Net income (loss) attributable to common equity (“Net Income (Loss)”) was Net Income of approximately $14,791,000 or $1.98 per share basic and diluted for the fiscal quarter ended July 31, 2024 as compared to Net Loss of approximately ($412,000) or ($0.06) per share basic and diluted for the prior year’s comparable period. The change in Net Income was primarily driven by the litigation settlement, net of fees, of approximately $15,711,000 (FREIT’s share is approximately $14,137,000) received in the fiscal quarter ended July 31, 2024. Also contributing to the change in net income was a decline in general and administrative expenses of approximately $630,000 primarily related to costs incurred in the prior year’s comparable period for the implementation of the Shareholder Rights Plan and a loss on sale of the Maryland properties incurred in the prior year’s comparable period of approximately $557,000 (FREIT’s share is approximately $343,000).

 

(Refer to “Table of Revenue & Net Income (Loss) Components”)

 

Results for Nine Months

 

Total real estate revenue increased 1.1% to approximately $21,421,000 for the nine months ended July 31, 2024 as compared to approximately $21,191,000 for the prior year’s comparable period. The increase in revenue was primarily attributable to an increase in the residential segment of approximately $920,000 driven by an increase in base rents across most properties while the average occupancy rate declined to 96.2% from 97.1% in the prior year’s comparable period. The increase in the residential segment was offset by a decrease from the commercial segment of approximately $690,000 primarily driven by a

 

decline in revenue of approximately $858,000 at the Westwood Plaza Shopping Center resulting from Kmart vacating its space in October 2023 offset by an increase in revenue of approximately $98,000 attributed to the increase in occupancy at the Franklin Crossing Shopping Center to 97.2% from 94.8% in the prior year’s comparable period and an increase in revenue of approximately $99,000 attributed to a lease termination fee received from European Wax at the Wayne Preakness Shopping Center in the current year’s period.

 

Net Income was approximately $14,812,000 or $1.99 per share basic and diluted for the nine months ended July 31, 2024 as compared to Net Income of approximately $104,000 or $0.01 per share basic and diluted for the prior year’s comparable period. The change in Net Income was primarily driven by the litigation settlement, net of fees, of approximately $15,711,000 (FREIT’s share is approximately $14,137,000) received in the fiscal quarter ended July 31, 2024 and a decline in loss on sale of the Maryland properties of approximately $832,000 (FREIT’s share is approximately $459,000).

 

(Refer to “Table of Revenue & Net Income (Loss) Components”)

 

Table of Revenue & Net Income (Loss) Components

 

		For the Fiscal Quarter Ended July 31,												For the Nine Months Ended July 31,
		2024				2023				Change				2024				2023				Change
		(In Thousands Except Per Share Amounts)												(In Thousands Except Per Share Amounts)
Revenue:
Commercial properties		$	1,827			$	2,260			$	(433	)		$	5,833			$	6,522			$	(689	)
Residential properties			5,320				5,036				284				15,588				14,669				919
Total real estate revenues			7,147				7,296				(149	)			21,421				21,191				230
Operating expenses:
Real estate operating expenses			3,320				3,483				(163	)			10,368				10,308				60
General and administrative expenses			929				1,559				(630	)			3,752				3,361				391
Depreciation			735				744				(9	)			2,249				2,198				51
Total operating expenses			4,984				5,786				(802	)			16,369				15,867				502
Financing costs			(1,839	)			(2,031	)			192				(5,463	)			(5,858	)			395
Investment income			396				275				121				1,082				682				400
Litigation settlement, net of fees			15,711				—				15,711				15,711				—				15,711
Loss on investment in tenancy-in-common			(96	)			(43	)			(53	)			(143	)			(231	)			88
Net loss on sale of Maryland properties			—				(557	)			557				(171	)			(1,003	)			832
Net income (loss)			16,335				(846	)			17,181				16,068				(1,086	)			17,154
Net (income) loss attributable to noncontrolling interests in subsidiaries			(1,544	)			434				(1,978	)			(1,256	)			1,190				(2,446	)
Net income (loss) attributable to common equity		$	14,791			$	(412	)		$	15,203			$	14,812			$	104			$	14,708
Earnings (loss) per share:
Basic		$	1.98			$	(0.06	)		$	2.04			$	1.99			$	0.01			$	1.98
Diluted		$	1.98			$	(0.06	)		$	2.04			$	1.99			$	0.01			$	1.98
Weighted average shares outstanding:
Basic			7,458				7,449								7,454				7,438
Diluted			7,462				7,449								7,457				7,444

 

Segment Property Net Operating Income (“NOI”)

 

NOI for the residential properties increased modestly to approximately $3,101,000 and $8,914,000 for the fiscal quarter and nine months ended July 31, 2024, respectively, from approximately $2,847,000 and $8,143,000 for the prior year’s comparable periods, respectively. NOI for the commercial properties decreased to approximately $756,000 and $2,227,000 for the fiscal quarter and nine months ended July 31, 2024, respectively, from approximately $981,000 and $2,831,000 for the prior year’s comparable periods, respectively.

 

Financing Update

 

On December 1, 2023, the mortgage secured by an apartment building located in River Edge, New Jersey came due. Provident Bank extended the initial maturity date of this loan for a 90-day period with a maturity date of March 1, 2024 and further extended this loan for another 60-day period with a new maturity date of June 1, 2024, based on the same terms and conditions of the existing loan agreement. On May 1, 2024, FREIT entered into a loan extension and modification agreement with Provident Bank, effective June 1, 2024, with a then outstanding loan balance of approximately $8.9 million. Under the terms and conditions of this loan extension and modification, the maturity date of this loan is extended for three years to May 31, 2027, requires monthly installments of principal and interest of approximately $58,016 and is based on a fixed interest rate of 6.75%.

 

Dividend

 

The Board of Directors of FREIT declared a third quarter dividend of $0.05 per share on the common stock to holders of record of the shares at the close of business on August 30, 2024. The payment date for the dividend is September 13, 2024. The Board of Directors will continue to evaluate the dividend on a quarterly basis.

 

Adjusted Funds From Operations

 

Funds From Operations (“FFO”) is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”). FREIT does not include distributions from equity/debt/capital gain sources in its computation of FFO. Although many consider FFO as the standard measurement of a REIT’s performance, FREIT modified the NAREIT computation of FFO to include other adjustments to GAAP net income, which are not considered by management to be the primary drivers of its decision making process. These adjustments to GAAP net income are straight-line rents and recurring capital improvements on FREIT’s residential apartments.

 

The modified FFO computation is referred to as Adjusted Funds From Operations (“AFFO”). FREIT believes that AFFO is a superior measure of its operating performance. FREIT computes FFO and AFFO as follows:

 

		For the Fiscal Quarter Ended July 31,								For the Nine Months Ended July 31,
		2024				2023				2024				2023
		(In Thousands Except Per Share Amounts)								(In Thousands Except Per Share Amounts)
Funds From Operations ("FFO") (a)
Net income (loss)		$	16,335			$	(846	)		$	16,068			$	(1,086	)
Depreciation of consolidated properties			735				744				2,249				2,198
Amortization of deferred leasing costs			26				27				90				67
Distributions to non-controlling interests			(240	)			—	(b)			(420	)(c)			—	(b)
Litigation settlement, net of fees			(15,711	)			—				(15,711	)			—
Net loss on sale of Maryland properties			—				557				171				1,003
Adjustment to loss on investment in tenancy-in-common for depreciation			363				359				1,088				1,075
FFO		$	1,508			$	841			$	3,535			$	3,257
Per Share - Basic and Diluted		$	0.20			$	0.11			$	0.47			$	0.44
(a) As prescribed by NAREIT.
(b) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $1.2 million and $3.3 million for the fiscal quarter and nine months ended July 31, 2023, respectively, related to the sale of the Damascus and Rotunda properties.
(c) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $0.6 million for the nine months ended July 31, 2024 related to the sale of the Rotunda property.
Adjusted Funds From Operations ("AFFO")
FFO		$	1,508			$	841			$	3,535			$	3,257
Deferred rents (Straight lining)			30				15				88				91
Capital Improvements - Apartments			(218	)			(117	)			(483	)			(407	)
AFFO		$	1,320			$	739			$	3,140			$	2,941
Per Share - Basic and Diluted		$	0.18			$	0.10			$	0.42			$	0.40
Weighted Average Shares Outstanding:
Basic			7,458				7,449				7,454				7,438
Diluted			7,462				7,449				7,457				7,444

 

FFO and AFFO do 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 and AFFO by certain other REITs may vary materially from that of FREIT, and therefore FREIT’s FFO and AFFO may not be directly comparable to those of other REITs.

 

 

 

 

 

  

The statements in this report, which relate to future earnings or performance, are forward-looking. Actual results may differ materially and be adversely affected by such factors as market and economic conditions, longer than anticipated lease-up periods or the inability of certain tenants to pay rents. Additional information about these factors is contained in the Company’s filings with the SEC including the Company’s most recent filed reports on Form 10-K and Form 10-Q.

 

First Real Estate Investment Trust of New Jersey, Inc. is a publicly traded (over-the-counter – symbol FREVS) REIT organized in 1961. Its portfolio of residential and commercial properties are located in New Jersey and New York, with the largest concentration in northern New Jersey.

 

For additional information, contact Investor Relations at (201) 488-6400

 

Visit us on the web: www.freitnj.com

 

v3.24.2.u1

Cover	Sep. 13, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 13, 2024
Entity File Number	000-25043
Entity Registrant Name	FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, INC.
Entity Central Index Key	0000036840
Entity Tax Identification Number	22-1697095
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	505 Main Street
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Hackensack
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07601
City Area Code	(201)
Local Phone Number	488-6400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	FREVS
Preferred Stock [Member]
Title of 12(b) Security	Preferred Stock Purchase Rights

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