EX-1 2 ex1.htm EXHIBIT 1 ex1.htm
Exhibit 1

HACKENSACK, NJ,    December 18, 2007 – First Real Estate Investment Trust (“FREIT”) announced its operating results for the year and three months ended October 31, 2007. The results of operations for the year and three months are not necessarily indicative of future operating results.

Results of Operations:

Condensed Consolidated Statement of Net Income Data
              
                         
   
Year Ended
    
Three Months Ended
  
   
October 31,
    
October 31,
  
   
2007
    
2006
    
2007
    
2006
  
   
(in thousands, except per share)
  
Commercial revenues:
                        
Same properties (1)
   $
22,088
     $
21,926
      
5,478
      
5,464
  
New properties
    
24
      
-
      
24
      
-
  
     
22,112
      
21,926
      
5,502
      
5,464
  
Residential revenues:
                                
Same properties (1)
    
16,274
      
15,583
      
4,091
      
3,952
  
New properties
    
2,352
      
384
      
649
      
338
  
     
18,626
      
15,967
      
4,740
      
4,290
  
Total Real Estate Revenues
    
40,738
      
37,893
      
10,242
      
9,754
  
                                 
Real estate operating expenses
    
16,673
      
15,658
      
4,128
      
4,182
  
Real estate operating Income
    
24,065
      
22,235
      
6,114
      
5,572
  
                                 
Investment income
    
634
      
232
      
252
      
82
  
                                 
General and administrative
     (1,543 )     (1,212 )     (266 )     (433 )
Depreciation
     (5,311 )     (4,726 )     (1,339 )     (1,270 )
Financing costs
     (11,897 )     (11,127 )     (2,798 )     (2,836 )
Minority interest in earnings of subsidiaries
     (626 )     (257 )     (240 )    
109
  
Distribution to certain minority interests
     (150 )     (150 )    
-
       (60 )
Income from continuing operations
    
5,172
      
4,995
      
1,723
      
1,164
  
                                 
Income from discontinued operations
    
3,771
      
163
      
-
      
42
  
                                 
Net Income
   $
8,943
     $
5,158
     $
1,723
     $
1,206
  
                                 
Basic earnings per share:
                          
 
  
Continuing operations
   $
0.76
     $
0.76
     $
0.26
     $
0.17
  
Discontinued operations
   $
0.56
     $
0.02
     $
-
     $
0.01
  
Net income
   $
1.32
     $
0.78
     $
0.26
     $
0.18
  
                                 
Diluted earnings per share:
                                
Continuing operations
   $
0.74
     $
0.73
     $
0.25
     $
0.16
  
Discontinued operations
   $
0.55
     $
0.03
     $
-
     $
0.01
  
Net income
   $
1.29
     $
0.76
     $
0.25
     $
0.17
  
                                 
Weighted average shares outstanding:
                          
Basic
    
6,753
      
6,574
      
6,756
      
6,651
  
Diluted
    
6,916
      
6,816
      
6,919
      
6,987
  
                                 
(1) Properties operated since the beginning of fiscal 2006.
                  


For the three months ended October 31, 2007 (“Current Quarter”) real estate revenues increased 5% to $10,242,000 from $9,754,000 for the three months ended October 31, 2006 (“Prior Year’s Quarter”). Real estate operating income increased 9.7% to $6,114,000 for the Current Quarter from $5,572,000 for the Prior Year’s Quarter. Income from continuing operations increased $559,000, or 48%, to $1,723,000 ($.25 per share diluted) for the Current Quarter compared to  the Prior Year’s Quarter  of $1,164,000 ($.16 per share diluted).
 
For the year ended October 31, 2007 (“Current Year”) real estate revenues increased $2,845,000, or 7.5% to $40,738,000 from $37,893,000 for the year ended October 31, 2006 (“Prior Year”). Real estate operating income increased $1,830,000, or 8.2%, to $24,065,000 for the Current Year from $22,235,000 for the Prior Year. Net income from continuing operations increased 3.5% to $5,172,000 ($.74 per share diluted) for the Current Year compared to $4,995,000 ($.73 per share diluted) for the Prior Year.
 
With the exception of operations at our Damascus Center property, in Damascus, MD, which is undergoing renovations, and expansion, the increase in real estate revenues and real estate operating income for the Current Year and Current Quarter is attributable to improved operations at all of FREIT’s commercial and residential properties. In particular, the

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revenue and real estate operating income contribution from FREIT’s residential Boulders property, in Rockaway, NJ. The Boulders came on line during the fourth quarter of 2006, and steadily increased occupancy, revenues and real estate operating income during fiscal 2007.
 
During the third quarter of fiscal 2007 FREIT sold its Lakewood Apartments in Lakewood, New Jersey for $4 million. The gain on the sale of approximately $3.7 million, as well as the current and prior year’s earnings of the Lakewood operation are classified as “Income from discontinued operations”, which is included within “Net Income” after “Income from continuing operations”. Net income for the Current Year was $8,943,000 ($1.29 per share diluted) compared to $5,158,000 ($0.76 per share diluted) for the Prior Year.
 
Funds From Operations (“FFO”) for fiscal 2007 increased 11.4% to $1.37 per share diluted, from $1.23 per share diluted for fiscal 2006. For the Current Quarter FFO was $.37 per share diluted compared to $.23 per share diluted for the Prior Year’s Quarter.

Funds From Operations ("FFO")
                        
   
Year Ended
    
Three Months Ended
  
   
October 31,
    
October 31,
  
   
2007
    
2006
    
2007
    
2006
  
   
(in thousands, except per share)   
  
                         
Net income
   $
8,943
     $
5,158
     $
1,723
     $
1,206
  
Depreciation
    
5,311
      
4,726
      
1,339
      
1,270
  
Amortization of deferred mortgage costs
    
277
      
246
      
78
      
54
  
Deferred rents (Straight lining)
     (298 )     (342 )     (112 )     (92 )
Amortization of acquired leases
     (301 )     (490 )     (75 )     (219 )
Capital improvements - Apartments
     (460 )     (368 )     (146 )     (134 )
Discontinued operations
     (3,771 )     (163 )    
-
       (42 )
Minority interests:
                                
Equity in earnings of subsidiaries
    
776
      
407
      
240
       (49 )
Distributions to minority interests
     (998 )     (780 )     (457 )     (360 )
FFO
    
9,479
      
8,394
      
2,590
      
1,634
  
                                 
Per share - Basic
   $
1.40
     $
1.28
     $
0.38
     $
0.25
  
Per share- Diluted
   $
1.37
     $
1.23
     $
0.37
     $
0.23
  
                                 
Weighted average shares outstanding:
                          
Basic
    
6,753
      
6,574
      
6,756
      
6,651
  
Diluted
    
6,916
      
6,816
      
6,919
      
6,987
  


Acquisition
 
FREIT structured the sale of its Lakewood property in a manner that would allow it to reinvest the sale proceeds in like kind property that would defer, for income tax purposes, the realization of the gain on the sale pursuant to Section 1031 of the Internal Revenue Code. During the fourth quarter of fiscal 2007, FREIT acquired land in Rochelle Park, NJ that has been leased to a bank that plans to construct a retail-banking branch on the site. Of the acquisition price of approximately $2.5 million, FREIT was able to invest approximately $1.6 million of the proceeds from the Lakewood sale. The rental income from this net leased property was insignificant during fiscal 2007.
 
Dividends
 
FREIT declared a fourth quarter dividend for the fiscal year ending October 31, 2007 of $.40 per share that is payable on December 18, 2007 to shareholders of record on December 4, 2007. The composition of this dividend is $.30 capital gain income and $.10 ordinary income. This fourth quarter dividend raised total dividends for fiscal 2007 to $1.30 per share, a 4% increase over dividends of $1.25 per share for fiscal 2006.
 
The statements in this report that relate to future earnings or performance are forward-looking. Actual results
might differ materially and be adversely affected by such factors as longer than anticipated lease-up periods, or
the inability of tenants to pay increased rents. Additional information about these factors is contained in the
Trust’s filings with the SEC including the Trust’s most recent filed report on Forms 10-K and 10-Q.
 
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 FREIT is a publicly traded (over-the-counter – symbol FREVS) REIT organized in 1961. It has approximately $243 million (historical cost basis) of assets. Its portfolio of residential and retail properties extends from Eastern, L.I. to Maryland, with the largest concentration in Northern New Jersey.
 
For additional information contact Shareholder Relations at (201) 488-6400. 
 
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