-----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, EzQZzdHjaGuwzR4gfeYhQuT7YaHxySKLOTG7CoZ7Ku1Mfcp3XwsvNkL9OeHGayd8 NzsINznWa+soMYegCZuXHA== 0000914317-97-000314.txt : 19970704 0000914317-97-000314.hdr.sgml : 19970704 ACCESSION NUMBER: 0000914317-97-000314 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970703 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 002-27018 FILM NUMBER: 97636169 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/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended January 31, 1997 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 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.) Balance Sheets for January 31, 1997 and October 31, 1996; b.) Statements of Income and Undistributed Earnings for Three Months Ended January 31, 1997 and 1996; c.) Statements of Cash Flows for Three Months Ended January 31, 1997 and 1996; Item 2: Management's Discussion and Analysis of Results of Operations and Financial Condition Part II: Other Information Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY BALANCE SHEETS JANUARY 31, 1997 AND OCTOBER 31, 1996 (Unaudited) January October ASSETS 31, 1997 31, 1996 -------- -------- (In Thousands of Dollars) Real estate, at cost, net of accumulated depreciation ................................... $46,842 $46,836 Equipment, at cost, net of accumulated depreciation of $616,000 and $608,000 .......... 183 186 Investment in affiliate ............................ 1,955 1,924 Cash ............................................... 184 189 Tenants' security accounts ......................... 747 754 Sundry receivables ................................. 576 537 Prepaid expenses and other assets .................. 825 1,090 Deferred charges, net .............................. 182 158 ------- ------- Totals ................................... $51,494 $51,674 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages payable .............................. $23,478 $23,609 Note payable - bank ............................ 6,091 5,662 Accounts payable and accrued expenses .......... 259 278 Dividends payable .............................. 546 1,029 Tenants' security deposits ..................... 846 853 Deferred revenue ............................... 126 259 ------- ------- Total liabilities ........................ 31,346 31,690 ------- ------- 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 ......................... 834 670 ------- ------- Total shareholders' equity ............... 20,148 19,984 ------- ------- Totals .................................. $51,494 $51,674 ======= ======= See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS THREE MONTHS ENDED JANUARY 31, 1997 AND 1996 (Unaudited) INCOME 1997 1996 ------- ------- (In Thousands of Dollars, Except per Share Amounts) Rental revenue: Rental income .............................. $ 2,486 $ 2,418 Real estate taxes reimbursed ............... 262 392 Common area maintenance reimbursed ......... 66 185 Sundry income .............................. 40 39 ------- ------- Totals ................................. 2,854 3,034 ------- ------- Rental expenses: Operating expenses ......................... 600 642 Management fees ............................ 121 118 Real estate taxes .......................... 430 579 Interest ................................... 542 554 Depreciation ............................... 317 309 ------- ------- Totals ................................. 2,010 2,202 ------- ------- Income from rental operations .................. 844 832 ------- ------- Other income (expense): Equity in income of affiliate .............. 31 19 Interest income ............................ 1 4 Interest expense ........................... (118) (111) General and administrative ................. (45) (55) ------- ------- Totals ................................. (131) (143) ------- ------- Income before state income taxes ............... 713 689 Provision for state income taxes ............... 3 ------- ------- Net income ..................................... $ 710 $ 689 ======= ======= Earnings per share ............................. $ .46 $ .44 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS THREE MONTHS ENDED JANUARY 31, 1997 AND 1996 (Unaudited) UNDISTRIBUTED EARNINGS 1997 1996 ------- ------- (In Thousands of Dollars, Except per Share Amounts) Balance, beginning of period ................... $ 670 $ 675 Net income ..................................... 710 689 Less dividends ................................. (546) (546) ------- ------- Balance, end of period ......................... $ 834 $ 818 ======= ======= Dividends per share ............................ $ .35 $ .35 ======= ======= See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 1997 AND 1996 (Unaudited) 1997 1996 ------- ------- (In Thousands of Dollars) Operating activities: Net income .......................................... $ 710 $ 689 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................... 326 310 Deferred revenue ................................ (133) (45) Equity in income of affiliate ................... (31) (19) Changes in operating assets and liabilities: Tenants' security accounts ................... 7 (4) Sundry receivables, prepaid expenses and other assets ..................................... 226 (177) Deferred charges ............................. (33) 111 Accounts payable and accrued expenses ........ (19) (5) Tenants' security deposits ................... (7) 4 ------- ------- Net cash provided by operating activities 1,046 864 ------- ------- Investing activities - capital expenditures ............. (320) (169) ------- ------- Financing activities: Dividends paid ...................................... (1,029) (1,154) Proceeds from note payable - bank ................... 429 555 Repayment of mortgages .............................. (131) (121) ------- ------- Net cash used in financing activities .... (731) (720) ------- ------- Net increase (decrease) in cash ......................... (5) (25) Cash, beginning of period ............................... 189 465 ------- ------- Cash, end of period ..................................... $ 184 $ 440 ======= ======= Supplemental disclosure of cash flow data: Interest paid ....................................... $ 660 $ 665 ======= ======= Supplemental schedule of noncash financing activities: Dividends declared but not paid amounted to $546,000 at January 31, 1997 and 1996. See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO 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 financial information included herein as at January 31, 1997 and for the three months ended January 31, 1997 and 1996 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 financial position as of that date and the results of operations for those periods. The information in the balance sheet as of October 31, 1996 was derived from the Trust's audited annual report for 1996. 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. Investment in affiliate: The Trust's 40% investment in Westwood Hills, LLC (the "Affiliate") is accounted for using the equity method. Cash: The Trust maintains its 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, 1997 and October 31, 1996, the Trust had no cash equivalents. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and significant accounting policies (continued): 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. Advertising: The Trust expenses the cost of advertising and promotions as incurred. Advertising costs charged to operations amounted to approximately $5,000 and $12,000 for the three months ended January 31, 1997 and 1996, respectively. 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, 1997 and 1996. Change in accounting policy: The Trust has changed its method of accounting for its investment in Affiliate. Previously, the accounts of the Affiliate were combined with those of the Trust on the basis of common control. However, in as much as the Trust does not maintain unilateral control over the Affiliate, the equity method of accounting for the investment is deemed to be more appropriate. Accordingly, the accompanying financial statements have been restated. The effect of the restatement was to reduce both total assets and total liabilities by $13,560,000 and $13,548,000 at January 31, 1997 and October 31, 1996, respectively, and FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and significant accounting policies (concluded): reduce income from rental operations by $78,000 and $48,000 for the three months ended January 31, 1997 and 1996, respectively. The restatement had no effect on shareholders' equity, net income or earnings per share. Note 2 - Investment in affiliate: During May 1994, the Trust became a 40% member of the Affiliate, a newly formed limited liability company that is 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. On June 2, 1994, the Affiliate consummated the purchase of Westwood Properties, a residential apartment complex located in Westwood, New Jersey. Summarized financial information of the Affiliate as of January 31, 1997 and October 31, 1996 and for the three months ended January 31, 1997 and 1996 is as follows:
January October 31, 1997 31, 1996 (In Thousands of Dollars) Balance sheet data: Assets: Real estate and equipment, net ............ $14,864 $14,928 Other ..................................... 651 544 ------- ------- Total assets ........................ $15,515 $15,472 ======= ======= Liabilities and equity: Liabilities: Mortgage payable ........................ $10,308 $10,346 Other ................................... 318 314 ------- ------- Totals .............................. 10,626 10,660 ------- ------- Members' equity: Trust ................................... 1,955 1,924 Others .................................. 2,934 2,888 ------- ------- Totals .............................. 4,889 4,812 ------- ------- Total liabilities and equity ........ $15,515 $15,472 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 2 - Investment in affiliate:(concluded): Three Months Ended January 31, 1997 1996 ---- ---- (In Thousands of Dollars) Income statement data: Rental revenue ........................... $619 $575 Rental expenses .......................... 541 527 ---- ---- Net income ............................... $ 78 $ 48 ==== ====
Note 3 - Real estate: Real estate consists of the following:
Range of Estimated January October Useful Lives 31, 1997 31, 1996 ------------ -------- -------- (In Thousands of Dollars) Land ........................... $17,782 $17,263 Unimproved land ................ 2,240 2,472 Apartment buildings ............ 7-40 years 10,414 10,170 Commercial buildings ........... 25-31.5 years 58 58 Shopping centers ............... 15-50 years 26,323 26,947 Construction in progress ..................... 1,042 969 ------- ------- 57,859 57,879 Less accumulated de- preciation ................... 11,017 11,043 ------- ------- Totals ..................... $46,842 $46,836 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgages payable: Mortgages payable consist of the following:
January October 31, 1997 31, 1996 (In Thousands of Dollars) State Mutual Life Insurance Co. (A) ............ $17,991 $18,068 Travelers Insurance (B) ........................ 5,286 5,319 Summit Bank (C) ................................ 201 222 ------- ------- Totals ..................................... $23,478 $23,609 ======= =======
(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 $25,601,000. (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 $11,832,000. (C) 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 $618,000. 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, 1997 are as follows: Year Ending January 31, Amount ----------- ------ 1998 $18,222 1999 252 2000 182 2001 189 2002 4,633 Based on borrowing rates currently available to the Trust, the carrying amount of mortgages payable approximates fair value at January 31, 1997. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 5 - Note payable - bank: Note payable - bank consists of borrowings under a $20,000,000 revolving line of credit agreement with Summit Bank which expires on June 30, 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 and any vacant land owned by the Trust. Note 6 - Commitments and contingencies: Leases: Commercial tenants: The Trust leases commercial space having a net book value of approximately $39,023,000 at January 31, 1997 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, 1997 are as follows: Year Ending January 31, Amount ----------- ------ 1998 $ 3,696 1999 3,438 2000 3,015 2001 2,588 2002 2,340 Thereafter 9,624 ------- Total $24,701 ======= 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 $1,590,000 FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 6 - Commitments and contingencies (concluded): Leases (concluded): Commercial tenants (concluded): at January 31, 1997. Management closed the shopping center on September 1, 1995 except for one tenant who vacated the premises on November 1, 1996. Commencement of a complete refurbishing of the premises is currently in progress and it is expected to be open for operations in the Fall of 1997. The cost of refurbishing is currently anticipated to approximate $10,000,000. 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, 1997 and 1996 were not material. Residential tenants: Lease terms for residential tenants are usually one year or less. Acquisition: The Trust has entered into a contract to purchase a 64,000 square foot shopping center to be constructed in Patchogue, New York for approximately $11,400,000 including commissions and estimated professional fees. The contract to purchase the Patchogue center is contingent upon the construction being completed during the Spring of 1997. Standby letters of credit: At January 31, 1997, the Trust is obligated under irrevocable standby letters of credit of approximately $1,550,000 in connection with certain required land improvements at the Franklin Lakes shopping center. Note 7 - Management agreement: The properties owned by the Trust are currently managed by Hekemian. The management agreement requires fees equal to a percentage of rents collected. Such fees were approximately $121,000 and $118,000 for the three months ended January 31, 1997 and 1996, respectively. Note 8 - 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, 1996. Results of Operations The earnings per share were $0.46 for the First Quarter 1997 as compared to $0.44 per share for the First Quarter, 1996. The increase in earnings was realized despite the fact that the Franklin Lakes Shopping Center, as discussed in Part II, Item 5 hereinafter, was closed for operations in the Fall of 1996. Rental income increased from $2,418,000 for the First Quarter of 1996 to $2,486,000 for the First Quarter of 1997. Income from rental operations was $844,000 for the First Quarter 1997 as compared to $832,000 for the same period in 1996. The increase in rental operations was primarily due to a decrease in operating expenses and real estate taxes. The decrease in operating expenses was due, in large part, to a mild winter in 1996-1997 as compared with the prior fiscal year resulting in decreased heating and snow removal costs. As discussed in Note 1 of the Financial Statements attached, the Registrant has changed its method of accounting for its investment in the Westwood Hills, L.L.C. Prior to the date of this 10Q/A, the Registrant prepared its Financial Statements on a consolidated basis. Since the Registrant does not, however, maintain unilateral control over the Westwood Hills, L.L.C., it has been determined that the equity method of accounting would be more appropriate. The equity method was adopted retroactively. As a result, the 1996 financial statements have been restated to reflect the foregoing accounting change. In addition, the Registrant will use the equity method of accounting with respect to Westwood Hills, L.L.C. as of fiscal year 1997. Financial Condition The Registrant continues to generate cash sufficient to meet all of its operational needs. Registrant does not anticipate that it will be required to borrow funds to sustain the current dividend payment schedule of $0.35 per share for each of the first three quarters of Fiscal Year 1997. PART II. Item 5. OTHER INFORMATION A) Franklin Lakes, New Jersey Shopping Center (the "Franklin Lakes Center" or the "Center") The Registrant closed the Franklin Lakes Center in December 1996. Demolition of the Center was completed during January, 1997. The Registrant is in the process of negotiating contracts with third party contractors for the construction of the Center containing approximately 88,000 square feet of leasable space. The Registrant anticipates that construction will begin prior to March 1, 1997 and that the Center will be operational before January 1, 1998. The Registrant authorized the payment of the following fees to Hekemian & Co., Inc., its managing agents: a) $125,000 in consideration for all work completed in securing governmental approvals in connection with the Center. b) $150,000 in consideration for the planning, coordination and oversight in connection with the construction of the Center. In addition, Registrant has agreed to negotiate an agreement pursuant to which Hekemian & Co., Inc. will be paid a fee for negotiating all leases for the Center. B) Patchogue, New York Shopping Center (the "Patchogue Center") The Registrant anticipates that the Patchogue Center will be completed by May, 1997. As a result, it expects to close title for the center on or about June 1, 1997. The Registrant authorized the payment of a fee in the amount of $390,000 to Hekemian & Co., Inc. for all work which it performed in the acquisition and the monitoring of construction of the Patchogue Center. C) Line of Credit with Summit Bank The Line of Credit with Summit Bank was extended for six month interim period. The Registrant expects that the Line of Credit will be extended for a period of one or two years based at the end of the interim period. ITEM 6. Exhibits and Reports on Form 8-K The Registrant did not file any 8-K Reports during the First Quarter 1997. SIGNATURES Pursuant to the requirements of 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) DATED: July 3, 1997 /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 EX-27 2
5 3-MOS OCT-31-1997 JAN-31-1997 184,000 0 0 0 0 0 58,658,000 (11,633,000) 51,494,000 0 23,478,000 0 0 19,314,000 834,000 51,494,000 0 2,886,000 0 (2,010,000) (163,000) 0 0 713,000 (3,000) 0 0 0 0 710,000 .46 .46
-----END PRIVACY-ENHANCED MESSAGE-----