-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GKOz7WFhhT7hs3omjZUVwoVjCXI8MNk7F4/NV1MBSl3b0WL6E1k+1Xvvw+soBECC prHHHeB/tdgbyfxvP1Y0Ow== 0000914317-96-000060.txt : 19960401 0000914317-96-000060.hdr.sgml : 19960401 ACCESSION NUMBER: 0000914317-96-000060 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960329 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY CENTRAL INDEX KEY: 0000036840 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 221697095 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-27018 FILM NUMBER: 96541813 BUSINESS ADDRESS: STREET 1: 505 MAIN ST STREET 2: P O BOX 667 CITY: HACKENSACK STATE: NJ ZIP: 07602 BUSINESS PHONE: 2014886400 MAIL ADDRESS: STREET 1: P O BOX 667 STREET 2: 505 MAIN STREET CITY: HACKENSACK STATE: NJ ZIP: 07602 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20594 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended January 31, 1996 Commission File No. 2-48728 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 (I.R.S. Employer Incorporation or Organization) Identification No.) 505 Main Street, P.O. Box 667, Hackensack, New Jersey 07602 - -------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 201-488-6400 ------------ ----------------------------------------------------------------- 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 [ ] FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY INDEX Part I: Financial Information Item 1: Financial Statements a.) Combined Balance Sheets for January 31, 1996 and October 31, 1995; b.) Combined Statements of Income and Undistributed Earnings For Three Months Ended January 31, 1996 and 1995; c.) Combined Statements of Cash Flows for Three Months Ended January 31, 1996 and 1995; Item 2: Management's Discussion and Analysis of Results of Operations and Financial Condition Part II: Other Information Item 5: Other Information FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED BALANCE SHEETS JANUARY 31, 1996 AND OCTOBER 31, 1995 (Unaudited)
January October ASSETS 31, 1996 31, 1995 ------ -------- -------- (In Thousands of Dollars) Real estate, at cost, net of accumulated depreciation ..................................... $62,132 $62,324 Equipment, at cost, net of accumulated depreciation of $568,000 and $553,000 ............ 229 224 Cash ................................................. 571 533 Tenants' security accounts ........................... 952 947 Sundry receivables ................................... 507 248 Prepaid expenses and other assets .................... 859 911 Deferred charges, net ................................ 235 348 ------- ------- Totals ..................................... $65,485 $65,535 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Liabilities: Mortgages payable ................................ $34,443 $34,598 Note payable - bank ................................ 5,724 5,169 Accounts payable and accrued expenses ............ 387 361 Dividends payable ................................ 546 1,154 Tenants' security deposits ....................... 1,053 1,048 Deferred revenue ................................. 212 257 ------- ------- Total liabilities .......................... 42,365 42,587 ------- ------- Minority interest .................................... 2,988 2,959 ------- ------- Commitments and contingencies Shareholders' equity: Shares of beneficial interest without par value; 1,560,000 shares authorized; 1,559,788 shares issued and outstanding .......... 19,314 19,314 Undistributed earnings ........................... 818 675 ------- ------- Total shareholders' equity ................. 20,132 19,989 ------- ------- Totals .................................... $65,485 $65,535 ======= =======
See Notes to Combined Financial Statements. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS THREE MONTHS ENDED JANUARY 31, 1996 AND 1995 (Unaudited)
INCOME 1996 1995 ------ ------- ------- (In Thousands of Dollars, Except per Share Amounts) Rental revenue: Rental income ................................ $ 2,990 $ 2,905 Real estate taxes reimbursed ................. 392 174 Common area maintenance reimbursed ........... 185 104 Sundry income ................................ 43 41 ------- ------- Totals ................................... 3,610 3,224 ------- ------- Rental expenses: Operating expenses ........................... 798 703 Management fees ................................ 141 136 Real estate taxes ............................ 649 384 Interest ..................................... 758 767 Depreciation ................................. 384 375 ------- ------- Totals ................................... 2,730 2,365 ------- ------- Income from rental operations .................... 880 859 ------- ------- Other income (expense): Interest income .............................. 4 2 Interest expense ............................. (111) (91) General and administrative ................... (55) (60) ------- ------- Totals ................................... (162) (149) ------- ------- Income before minority interest .................. 718 710 Minority interest ................................ (29) (24) ------- ------- Net income ....................................... $ 689 $ 686 ======= ======= Earnings per share ............................... $ .44 $ .44 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS -- Continued THREE MONTHS ENDED JANUARY 31, 1996 AND 1995 (Unaudited)
UNDISTRIBUTED EARNINGS 1996 1995 ---------------------- ------- ------- (In Thousands of Dollars, Except per Share Amounts) Balance, beginning of period ..................... $ 675 $ 1,834 Net income ....................................... 689 686 Less dividends ................................... (546) (1,154) ------- ------- Balance, end of period ........................... $ 818 $ 1,366 ======= ======= Dividends per share .............................. $ .35 $ .74 ======= =======
See Notes to Combined Financial Statements. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 1996 AND 1995 (Unaudited)
1996 1995 ------- ------- (In Thousands of Dollars) Operating activities: Net income ........................................... $ 689 $ 686 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................... 404 397 Minority interest .................................. 29 24 Deferred revenue ................................. (45) 2 Changes in operating assets and liabilities: Tenants' security accounts .................... (5) (15) Sundry receivables, prepaid expenses and other assets ........................................... (207) 119 Deferred charges .............................. 93 (64) Accounts payable and accrued expenses ......... 26 (77) Tenants' security deposits .................... 5 21 ------- ------- Net cash provided by operating activities . 989 1,093 ------- ------- Investing activities - capital expenditures .............. (197) (127) ------- ------- Financing activities: Dividends paid ....................................... (1,154) (1,154) Proceeds from note payable - bank .................... 555 504 Repayment of mortgages ............................... (155) (149) ------- ------- Net cash used in financing activities ..... (754) (799) ------- ------- Net increase in cash ..................................... 38 167 Cash, beginning of period ................................ 533 238 ------- ------- Cash, end of period ...................................... $ 571 $ 405 ======= ======= Supplemental disclosure of cash flow data: Interest paid ........................................ $ 869 $ 858 ======= ======= Supplemental schedule of noncash financing activities: Dividends declared but not paid amounted to $546,000 at January 31, 1996.
See Notes to Combined Financial Statements. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS Note 1 - Organization and significant accounting policies: Organization: First Real Estate Investment Trust of New Jersey (the "Trust") was organized November 1, 1961 as a New Jersey Business Trust. The Trust is engaged in owning residential and commercial income producing properties located primarily in New Jersey. The Trust has elected to be taxed as a Real Estate Investment Trust under the provisions of Sections 856-860 of the Internal Revenue Code, as amended. Accordingly, the Trust does not pay Federal income tax on income whenever income distributed to shareholders is equal to at least 95% of real estate investment trust taxable income. Further, the Trust pays no Federal income tax on capital gains distributed to shareholders. The Trust is subject to Federal income tax on undistributed taxable income and capital gains. The Trust may make an annual election under Section 858 of the Internal Revenue Code to apply part of the regular dividends paid in each respective subsequent year as a distribution for the immediately preceding year. Basis of presentation: The combined financial information included herein as at January 31, 1996 and for the three months ended January 31, 1996 and 1995 is unaudited and, in the opinion of the Trust, reflects all adjustments (which include only normal recurring accruals) necessary for a fair presentation of the combined financial position as of that date and the combined results of operations for those periods. The information in the combined balance sheet as of October 31, 1995 was derived from the Trust's audited annual report for 1995. Principles of combination: The combined financial statements include the accounts of the Trust and Westwood Hills, LLC (the "Affiliate"), which have been combined on the basis of common control. The Affiliate is a limited liability company that is 40%-owned by the Trust and managed by Hekemian & Co., Inc. ("Hekemian"), a company which manages all of the Trust's properties and in which one of the trustees of the Trust is the chairman of the board. Certain other members of the Affiliate are either trustees of the Trust or their families or officers of Hekemian. The combined financial statements include 100% of the Affiliate's assets, liabilities, operations and cash flows with the 60% interest owned by the other members of the Affiliate reflected as "minority interest." All significant intercompany accounts and transactions have been eliminated in combination. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash: The Trust and its Affiliate maintain their cash in bank deposit accounts which, at times, may exceed Federally insured limits. The Trust considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At January 31, 1996 and October 31, 1995, the Trust had no cash equivalents. Depreciation: Real estate and equipment are depreciated on the straight-line method by annual charges to operations calculated to absorb costs of assets over their estimated useful lives. Revenue recognition: Income from leases is recognized on a straight-line basis regardless of when payment is due. Lease agreements between the Trust and commercial tenants generally provide for additional rentals based on such factors as percentage of tenants' sales in excess of specified volumes, increases in real estate taxes, Consumer Price Indices and common area maintenance charges. These additional rentals are generally included in income when reported to the Trust, when billed to tenants or ratably over the appropriate period. Deferred charges: Deferred charges consist of mortgage costs and leasing commissions. Deferred mortgage costs are amortized on the straight-line method by annual charges to operations over the terms of the mortgages. Deferred leasing commissions are amortized on the straight-line method over the terms of the applicable leases. Income taxes: The Affiliate, with the consent of its members, elected to be treated as a limited liability company under the applicable sections of the Internal Revenue Code. Under these sections, income or loss, in general, is allocated to the members for inclusion in their individual income tax returns. Accordingly, there is no provision for income taxes applicable to the operations of the Affiliate in the accompanying combined financial statements. Earnings per share: Earnings per share are computed based on the weighted average number of shares outstanding. The weighted average number of shares outstanding was 1,559,788 for each of the three month periods ended January 31, 1996 and 1995. Note 2 - Real estate: Real estate consists of the following:
Range of Estimated January October Useful Lives 31, 1996 31, 1995 ------------ -------- -------- (In Thousands of Dollars) Land $21,112 $21,112 Unimproved land 2,459 2,452 Apartment buildings 7-40 years 21,479 21,333 Commercial buildings 25-31.5 years 58 58 Shopping centers 15-50 years 26,876 26,859 Construction in progress 714 714 ------- ------- 72,698 72,528 Less accumulated de- preciation 10,566 10,204 ------- ------- Totals $62,132 $62,324 ======= =======
Note 3 - Mortgages payable: Mortgages payable consist of the following:
January October 31, 1996 31, 1995 -------- -------- (In Thousands of Dollars) State Mutual Life Assurance Company of America (A) ................................. $18,288 $18,359 Aetna Life Insurance Company (B) ................. 5,414 5,444 USG Annuity & Life Company (C) ................... 10,454 10,488 United Jersey Bank (D) ........................... 287 307 ------- ------- Totals ....................................... $34,443 $34,598 ======= =======
(A) Payable in monthly installments of $160,925 including interest at 9% through August 1997 at which time the outstanding balance is due. The mortgage is secured by a shopping center in Frederick, Maryland having a net book value of approximately $26,227,000. (B) Payable in monthly installments of $55,287 including interest at 10% through September 2001 at which time the outstanding balance is due. The mortgage is secured by a shopping center in Westwood, New Jersey having a net book value of approximately $12,000,000. (C) Payable in monthly installments of $79,655 including interest at 7.8% through October 2002 at which time the outstanding balance is due. The mortgage is secured by an apartment complex in Westwood, New Jersey having a net book value of approximately $15,066,000. (D) Payable in monthly installments of $8,555 including interest at 7.625% through March 1999 at which time the outstanding balance is due. The mortgage is secured by an apartment building in Spring Lake, New Jersey having a net book value of approximately $660,000. One of the directors of the bank is a trustee of the Trust. Principal amounts (in thousands of dollars) due under the above obligations in each of the five years subsequent to January 31, 1996 are as follows: Year Ending January 31, Amount ----------- ------ 1997 $ 654 1998 18,380 1999 424 2000 371 2001 389 Based on borrowing rates for mortgages with similar terms, the fair value of the mortgage debt is approximately $33,423,000 at January 31, 1996. Note 4 - Note payable - bank: Note payable - bank consists of borrowings under a $20,000,000 revolving line of credit agreement with United Jersey Bank which expires on February 10, 1997. The first $10,000,000 of borrowings under the line of credit bear interest at either the prime rate or the LIBOR rate plus 200 basis points. Any excess borrowings bear interest at either the prime rate plus 1/2% or the LIBOR rate plus 250 basis points. Outstanding borrowings are secured by all of the Trust's properties except the shopping centers located in Frederick, Maryland and Westwood, New Jersey, the apartment complex in Westwood, New Jersey, and any vacant land owned by the Trust. Note 5 - Commitments and contingencies: Leases: Commercial tenants: The Trust leases commercial space having a net book value of approximately $39,270,000 at January 31, 1996 to tenants for periods of up to twenty years. Most of the leases contain clauses for reimbursement of real estate taxes, maintenance, insurance and certain other operating expenses of the properties. Minimum rental income (in thousands of dollars) to be received from noncancelable operating leases in years subsequent to January 31, 1996 are as follows: Year Ending January 31, Amount ----------- ------- 1997 $ 3,953 1998 3,455 1999 3,073 2000 2,591 2001 2,201 Thereafter 9,384 ------- Total $24,657 ======= The above amounts assume that all leases which expire are not renewed and, accordingly, neither minimal rentals nor rentals from replacement tenants are included. In addition, the above amounts do not include any future minimum rentals to be received for the shopping center in Franklin Lakes, New Jersey having a net book value of approximately $1,043,000 at January 31, 1996. Except for two tenants, management closed the shopping center on September 1, 1995. Commencement of a complete refurbishing of the premises is scheduled to begin during the Spring of 1996 and will take approximately nine months. The cost of the refurbishing, which will be put out for bid in the second quarter of fiscal 1996, is currently anticipated to approximate $6,000,000. Rental revenue derived from the shopping center was approximately $37,000 and $69,000 for the three months ended January 31, 1996 and 1995, respectively, and income (loss) from rental operations was approximately $(1,000) and $34,000, respectively. Minimum future rentals do not include contingent rentals which may be received under certain leases on the basis of percentage of reported tenants' sales volume or increases in Consumer Price Indices. Contingent rentals included in income for each of the three months ended January 31, 1996 and 1995 were not material. Residential tenants: Lease terms for residential tenants are usually one year or less. Environmental concerns: A landfill which is considered a superfund site is located next to a vacant parcel of land which is owned by the Trust. The New Jersey Department of Environmental Protection and Energy ("NJDEP") had advised the Trust that it was investigating the property for contamination as a result of the migration of environmentally sensitive materials from the landfill. In August 1994, the Trust was advised that, although the soil had not been environmentally impaired and a clean-up of the property would not be required, the NJDEP did determine that the groundwater in the area of the landfill, including below the Trust's property, is contaminated as a result of the activity at the landfill. Accordingly, the NJDEP is currently in the process of enforcing remediation of the groundwater by the responsible parties. As the Trust is not a responsible party, management anticipates that it will bear no liability for the cost of the groundwater remediation. Note 6 - Management agreement: The properties owned by the Trust and the Affiliate are currently managed by Hekemian. The management agreement requires fees equal to a percentage of rents collected. Such fees were approximately $141,000 and $136,000 for the three months ended January 31, 1996 and 1995, respectively. Note 7 - Earnings per share: Earnings per share, based on the weighted average number of shares outstanding during each period, are comprised of ordinary income. * * * ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion should be read in conjunction with the attached financial statements and notes thereto, and the Registrant's audited financial statements and notes thereto for Fiscal Year Ended October 31, 1994. Results of Operations The earnings per share for the First Quarter 1996 were $0.44 which matched the earnings for the First Quarter of 1995. Management had anticipated that the earnings for the First Quarter of 1996 would be less than the $0.44 per share due to the closing of the Franklin Lakes Shopping Center, Franklin Lakes, New Jersey (the "Center") in anticipation of its demolishment and construction of the new Center. In addition, the weather in the Northeast region of the United States has been colder than normal with record amounts of snowfall. The cold weather will result in elevated heating costs. The record snowfall will result in additional snow removal costs. Management anticipates that a portion of the increased heating and snow removal costs will be reflected in the Second Quarter of 1996. Management continues to anticipate that earnings for Fiscal Year 1996 will be below the results of 1995 because of the factors outlined above. Management had anticipated that the closing of the Center would result in earnings being diminished by approximately $0.11 per share. As the renovations to the Center proceed, Management will continue to monitor its current projections and make any appropriate revisions. Financial Condition The Registrant continues to generate cash sufficient to meet all of its regular operational needs. The Registrant does anticipate, however, that it will borrow against its Line of Credit or secure a mortgage to generate the funds required to renovate the Center. PART II. OTHER INFORMATION Item 5. Other Information. The Registrant has secured all governmental approvals required in connection with the planned demolishment of the Center and the construction of a new Center with approximately 88,000 square feet of leasable space. As previously reported, the Registrant does not plan to begin its work on the Center until leases are in place for one or more anchor stores and suitable financing is arranged. As of the date hereof, neither condition has been met. As a result, construction may not begin until late Spring or early Summer of calendar year 1996. If that delay should be realized, the new Center may not be open for operations until sometime during the first calendar quarter of 1997. In such event, the Registrant's earnings may be diminished by more than the current projection of $0.11 per share as discussed in Item 2. SIGNATURES 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 March 22, 1996 /s/ William R. DeLorenzo, Jr. ----------------------------- (Signature)* William R. DeLorenzo, Jr. Executive Secretary and Treasurer - --------------- *Print name and title of the signing officer under his signature. SALES OF UNREGISTERED SECURITIES (DEBT OR EQUITY) FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY N O N E EX-27 2
5 1,000 3-MOS OCT-31-1996 JAN-31-1996 571 0 0 0 0 0 73,495 11,134 65,485 0 40,167 0 0 19,314 818 65,485 0 3,610 0 2,730 191 0 0 689 0 0 0 0 0 689 .44 .44
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