-----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, KP2qHcKCkf3RSQxsNMiTr5pwtYyj67obau+mZpblpSkrUmbKANmqGLn0kvsXmKfV d/Lru0KMQH6IZEjjU1GlBQ== 0000914317-98-000230.txt : 19980403 0000914317-98-000230.hdr.sgml : 19980403 ACCESSION NUMBER: 0000914317-98-000230 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980402 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: SEC FILE NUMBER: 002-27018 FILM NUMBER: 98586507 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. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended January 31, 1998 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, 1998 and October 31, 1997; b.) Combined Statements of Income and Undistributed Earnings For Three Months Ended January 31, 1998 and 1997; c.) Combined Statements of Cash Flows for Three Months Ended January 31, 1998 and 1997; Item 2: Management's Discussion and Analysis of Results of Operations and Financial Condition Part II: Other Information Item 6. Exhibits and Reports on Form 8-K 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, 1997. Results of Operations The earnings per share were $0.51 for the First Quarter 1998 as compared to $0.46 per share for the First Quarter of 1997. The increase in earnings per share was primarily due to the purchase of the shopping center located in Patchogue, New York and the rental income received from the Franklin Lakes, New Jersey shopping center which is in the process of being leased to third parties. Rental income increased from $2,486,000 for the First Quarter of 1997 to $2,915,000 for the First Quarter of 1998. 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 1998. The dividend of $0.40 per share was paid on March 16, 1998 to Shareholders of Record as of March 2, 1998. The dividend payment of $0.40 per share represents a $0.05 per share increase over the dividend payment for the first three quarters of fiscal year 1997. Item 6. Exhibits and Reports on Form 8-K The Registrant did not file any 8-K Reports during the First Quarter 1998. 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 April 2, 1998 /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
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY BALANCE SHEETS JANUARY 31, 1998 AND OCTOBER 31, 1997 (Unaudited) January October 31, 1998 31, 1997 ------- ------- ASSETS (In Thousands of Dollars) Real estate, at cost, net of accumulated depreciation ............... $65,220 $53,737 Equipment, at cost, net of accumulated depreciation of $665,000 and $657,000 .................................................... 179 184 Investment in affiliate ............................................. 1,861 1,905 Cash and cash equivalents ........................................... 433 228 Tenants' security accounts .......................................... 746 719 Sundry receivables .................................................. 372 280 Prepaid expenses and other assets ................................... 697 1,470 Deferred charges, net ............................................... 1,175 710 ------- ------- Totals ................................................... $70,683 $59,233 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages payable ............................................... $48,356 $24,429 Note payable - bank ............................................. 11,429 Accounts payable and accrued expenses ........................... 363 409 Construction liabilities ........................................ 123 496 Dividends payable ............................................... 624 1,326 Tenants' security deposits ...................................... 938 905 Deferred revenue ................................................ 123 255 ------- ------- Total liabilities ........................................ 50,527 39,249 ------- ------- 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 .......................................... 842 670 ------- ------- Total shareholders' equity ............................... 20,156 19,984 ------- ------- Totals ................................................... $70,683 $59,233 ======= =======
See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS THREE MONTHS ENDED JANUARY 31, 1998 AND 1997 (Unaudited) 1998 1997 ------- ------- INCOME (In Thousands of Dollars, Except per Share Amounts) Revenue: Rental income ............................ $ 2,918 $ 2,486 Reimbursements ........................... 383 328 Equity in income of affiliate ............ 36 31 Sundry income ............................ 37 41 ------- ------- Totals ............................... 3,374 2,886 ------- ------- Expenses: Operating expenses ....................... 724 645 Management fees .......................... 128 121 Real estate taxes ........................ 442 430 Interest ................................. 906 660 Depreciation ............................. 375 317 ------- ------- Totals ............................... 2,575 2,173 ------- ------- Income before state income taxes ............. 799 713 Provision for state income taxes ............. 3 3 ------- ------- Net income ................................... $ 796 $ 710 ======= ======= Earnings per share ........................... $ .51 $ .46 ======= ======= UNDISTRIBUTED EARNINGS Balance, beginning of period ................. $ 670 $ 670 Net income ................................... 796 710 Less dividends ............................... (624) (546) ------- ------- Balance, end of period ....................... $ 842 $ 834 ======= ======= Dividends per share .......................... $ .40 $ .35 ======= =======
See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 1998 AND 1997 (Unaudited) 1998 1997 -------- -------- (In Thousands of Dollars) Operating activities: Net income ................................................... $ 796 $ 710 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............................ 400 326 Deferred revenue ......................................... (132) (133) Equity in income of affiliate ............................ (36) (31) Changes in operating assets and liabilities: Tenants' security accounts ............................ (27) 7 Sundry receivables, prepaid expenses and other assets . 681 339 Deferred charges ...................................... (33) Accounts payable and accrued expenses ................. (46) (19) Tenants' security deposits ............................ 33 (7) -------- -------- Net cash provided by operating activities ......... 1,669 1,159 -------- -------- Investing activities: Capital expenditures ......................................... (4,726) (320) Distributions from affiliate ................................. 80 -------- -------- Net cash used in investing activities ............. (4,646) (320) -------- -------- Financing activities: Dividends paid ............................................... (1,326) (1,029) Proceeds (repayments) of note payable - bank ................. (11,429) 429 Net proceeds from mortgage refinancing ....................... 5,443 Proceeds from mortgage borrowings ............................ 11,100 Repayment of mortgages ....................................... (116) (131) Deferred mortgage costs ...................................... (490) -------- -------- Net cash provided by (used in) financing activities 3,182 (731) -------- -------- Net increase in cash and cash equivalents ........................ 205 108 Cash and cash equivalents, beginning of period ................... 228 189 -------- -------- Cash and cash equivalents, end of period ......................... $ 433 $ 297 ======== ======== Supplemental disclosure of cash flow data: Interest paid ................................................ $ 906 $ 660 ======== ========
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 1998 AND 1997 (Unaudited) Supplemental schedule of noncash financing activities: Dividends declared but not paid amounted to $624,000 and $546,000 at January 31, 1998 and 1997, respectively. During the three months ended January 31, 1998, the Trust completed its acquisition of a 64,000 square foot commercial property in Patchogue, New York for approximately $11,000,000, in part, with the proceeds of a $7,500,000 mortgage. 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 on November 1, 1961 as a New Jersey Business Trust. The Trust is engaged in owning residential and commercial income producing properties located in New Jersey, Maryland and New York. 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, 1998 and for the three months ended January 31, 1998 and 1997 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, 1997 was derived from the Trust's audited annual report for 1997. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assump-tions 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 and cash equivalents: 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 October 31, 1997, 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 (concluded): 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 $14,000 and $5,000 for the three months ended January 31, 1998 and 1997, 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, 1998 and 1997. Reclassifications: Certain amounts in the 1997 financial statements have been reclassified to conform with the current presentation. Note 2 - Investment in affiliate: The Trust is a 40% member of the Affiliate, a 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. The Affiliate owns a residential apartment complex located in Westwood, New Jersey. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 2 - Investment in affiliate (concluded): Summarized financial information of the Affiliate as of January 31, 1998 and October 31, 1997 and for the three months ended January 31, 1998 and 1997 is as follows:
January October 31, 1998 31, 1997 ------- ------- (In Thousands of Dollars) Balance sheet data: Assets: Real estate and equipment, net ... $14,625 $14,696 Other ............................ 486 551 ------- ------- Total assets ................. $15,111 $15,247 ======= ======= Liabilities and equity: Liabilities: Mortgage payable ............... $10,151 $10,192 Other .......................... 311 295 ------- ------- Totals ..................... 10,462 10,487 ------- ------- Members' equity: Trust .......................... 1,861 1,905 Others ......................... 2,788 2,855 ------- ------- Totals ..................... 4,649 4,760 ------- ------- Total liabilities and equity $15,111 $15,247 ======= ======= Three Months Ended January 31, ------------- 1998 1997 ---- ---- (In Thousands of Dollars) Income statement data: Rental revenue ... $645 $619 Rental expenses .. 556 541 ---- ---- Net income ....... $ 89 $ 78 ==== ====
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 3 - Real estate: Real estate consists of the following:
Range of Estimated January October Useful Lives 31, 1998 31, 1997 ------------ -------- -------- (In Thousands of Dollars) Land $22,365 $20,244 Unimproved land 2,303 2,310 Apartment buildings 7-40 years 10,824 10,711 Commercial buildings and shopping centers 15-50 years 39,136 30,328 Construction in progress 2,940 2,126 ------- ------- 77,568 65,719 Less accumulated depreciation 12,348 11,982 ------- ------- Totals $65,220 $53,737 ======= =======
Note 4 - Mortgages payable: Mortgages payable consist of the following:
January October 31, 1998 31, 1997 -------- -------- (In Thousands of Dollars) Northern Life Insurance Cos. (A) $19,063 $19,123 Travelers Insurance (B) 5,181 National Realty Funding L.C. (B) 10,600 Summit Bank (C) 102 125 Summit Bank (D) 7,491 Federal Home Loan Mortgage Corporation (E) 11,100 ------- ------- Totals $48,356 $24,429 ======= =======
(A) The mortgage is payable in monthly installments of $152,153 including interest at 8.31% through June 2007 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 $24,977,000. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgages payable (concluded): (B) On January 9, 1998, the Trust repaid the existing mortgage on the Westwood, New Jersey shopping center utilizing proceeds from a new mortgage in the amount of $10,600,000 with National Realty Funding L.C. The new mortgage is payable in monthly installments of $73,248 including interest at 7.38% through February 2013 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 $11,650,000. (C) Payable in monthly installments of $8,555 including interest at 7.625% through March 1999. The mortgage is secured by an apartment building in Spring Lake, New Jersey having a net book value of approximately $563,000. One of the directors of the bank is a trustee of the Trust. (D) Payable in monthly installments of $54,816 including interest at 7.375% through January 2005 at which time the outstanding balance is due. The mortgage is secured by a commercial building in Patchogue, New York having a net book value of approximately $10,897,000. (E) Payable in monthly installments of $76,023 including interest at 7.29% through July 2010 at which time the outstanding balance is due. The mortgage is secured by an apartment building in Wayne, New Jersey having a net book value of approximately $1,620,000. Principal amounts (in thousands of dollars) due under the above obligations in each of the five years subsequent to January 31, 1998 are as follows: Year Ending January 31, Amount ----------- ------ 1999 $666 2000 616 2001 663 2002 716 2003 774 Based on borrowing rates currently available to the Trust, the carrying amount of mortgages payable approximates fair value at January 31, 1998. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 5 - Note payable - bank: At October 31, 1997, note payable - bank consisted of borrowings under a revolving line of credit agreement with Summit Bank which expires on April 30, 1998. Maximum borrowings under the agreement were $12,300,000 and $20,000,000 at January 31, 1998 and October 31, 1997, respectively. 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 .5% 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, commercial property in Patchogue, New York, an apartment building in Wayne, New Jersey, and any vacant land owned by the Trust. There were no outstanding borrowings under the agreement at January 31, 1998. Note 6 - Commitments and contingencies: Leases: Commercial tenants: The Trust leases commercial space having a net book value of approximately $57,381,000 at January 31, 1998 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, 1998 are as follows: Year Ending January 31, Amount ----------- -------- 1999 $ 5,851 2000 5,536 2001 5,202 2002 4,957 2003 4,625 Thereafter 51,514 -------- Total $ 77,685 ======== The above amounts assume that all leases which expire are not renewed and, accordingly, neither minimal rentals nor rentals from replacement tenants are included. 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, 1998 and 1997 were not material. Residential tenants: Lease terms for residential tenants are usually one year or less. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 6 - Commitments and contingencies (concluded): Standby letters of credit: At January 31, 1998, the Trust was 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. In February 1998, such amount was reduced to $100,000. Environmental concerns: In accordance with applicable regulations, the Trust reported to the New Jersey Department of Environmental Protection that a discharge of hazardous material was recently discovered at the newly renovated Franklin Crossing Shopping Center (the "Center"). At present, the discharge material appears to be isolated and management believes there will be no significant effect on the operations of the Center. In connection therewith, the Trust is required to investigate and monitor such discharge, the cost of which will not be material. Note 7 - Management agreement and related party transactions: 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 $128,000 and $121,000 for the three months ended January 31, 1998 and 1997, 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. * * * EX-27 2
5 3-MOS OCT-31-1998 JAN-31-1998 433,000 0 372,000 0 0 0 78,412,000 (13,013,000) 70,683,000 0 48,356,000 0 0 19,314,000 842,000 70,683,000 0 3,374,000 0 0 1,669,000 0 906,000 799,000 3,000 796,000 0 0 0 796,000 .51 .51
-----END PRIVACY-ENHANCED MESSAGE-----