EX-99.1 2 ex99-1.htm EXHIBIT 991 ex99-1.htm
 

 
Exhibit 99.1

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HACKENSACK, NJ,    June 2, 2010 – First Real Estate Investment Trust (“FREIT”) announced its operating results for the six and three-months ended April 30, 2010. The results of operations as presented in this earnings release are unaudited, and are not necessarily indicative of future operating results.
 
FINANCIAL HIGHLIGHTS
  
Six Months Ended
April 30, 2010
Three Months Ended
April 30, 2010
*  Net Income Per Share-Basic:
  
$0.33
$0.16
*  Dividends Per Share:
  
$0.60
$0.30
*  FFO Per Share-Basic:
  
$0.74
$0.37
*  FFO Payout:
    
81.1%
81.1%
*  Average Residential Occupancy:
93.8%
94.6%
*  Average Commercial Occupancy:
90.1%
89.5%
 
RESULTS OF OPERATIONS
 
Real Estate revenue for the six months ended April 30, 2010 (“Current Six Months”) increased 4.2% to $22,209,000 compared to $21,319,000 for the six months ended April 30, 2009 (“Prior Six Months”). Real Estate revenue for the three months ended April 30, 2010 (“Current Quarter”) increased 7.5% to $11,360,000 compared to $10,570,000 for the three months ended April 30, 2009 (“Prior Year’s Quarter”).
 
Net income attributable to common equity (“Net Income”) for the Current Six Months decreased 11.7% to $2,302,000 ($0.33 per share basic) compared to $2,606,000 ($0.38 per share basic) for the Prior Six Months. Net Income for the Current Quarter increased 4.1% to  $1,130,000 ($0.16 per share basic) compared to $1,085,000 ($0.16 per share basic) for the Prior Year’s Quarter. Refer to the schedule below for a detailed analysis of the major changes that impacted revenue and net income for the six and three-months ended April 30, 2010 and 2009:
 
   
Six Months Ended April 30,
    
Three Months Ended April 30,
  
   
2010
    
2009
    
Change
    
2010
    
2009
    
Change
  
   
(in thousands, except per share)
    
(in thousands, except per share)
  
Real estate revenues:
                                    
  Commercial properties
   $ 12,699     $ 11,577     $ 1,122     $ 6,559     $ 5,719     $ 840  
  Residential properties
     9,510       9,742       (232 )     4,801       4,851       (50 )
      Total real estate revenues
     22,209       21,319       890       11,360       10,570       790  
                                                 
Operating expenses:
                                                
  Real estate operations
     9,705       8,987       718       5,085       4,646       439  
  General and administrative
     841       880       (39 )     413       466       (53 )
  Depreciation
     3,065       2,937       128       1,543       1,463       80  
      Total operating expenses
     13,611       12,804       807       7,041       6,575       466  
                                                 
      Operating income
     8,598       8,515       83       4,319       3,995       324  
                                                 
Investment income
     66       130       (64 )     30       51       (21 )
                                                 
  Financing costs
     (5,781 )     (5,381 )     (400 )     (2,919 )     (2,666 )     (253 )
      Net income
     2,883       3,264       (381 )     1,430       1,380       50  
Net income attributable to noncontrolling interests (formerly referred to as minority interests)
     (581 )     (658 )     77       (300 )     (295 )     (5 )
    Net income attributable to common equity
   $ 2,302     $ 2,606     $ (304 )   $ 1,130     $ 1,085     $ 45  
                                                 
Earnings per share-basic (attributable to common equity)
   $ 0.33     $ 0.38     $ (0.05 )   $ 0.16     $ 0.16     $ -  
                                                 
Weighted average shares outstanding
     6,942       6,945               6,942       6,942          


 
 
 



SEGMENT INFORMATION
 
The following table sets forth comparative net operating income ("NOI") data for FREIT’s real estate segments and reconciles the NOI to consolidated net income for the Current Six Months and Current Quarter, as compared to the prior year’s comparable periods:

   
Commercial
  
Residential
  
Combined
  
   
Six Months Ended
              
Six Months Ended
              
Six Months Ended
  
   
April 30,
  
Increase (Decrease)
  
April 30,
  
Increase (Decrease)
  
April 30,
  
   
2010
  
2009
  
$
  
%
  
2010
  
2009
  
$
  
%
  
2010
    
2009
  
   
(in thousands)
        
(in thousands)
        
(in thousands)
  
Rental income
   $ 9,633     $ 8,746     $ 887       10.1 %   $ 9,395     $ 9,559     $ (164 )     -1.7 %   $ 19,028     $ 18,305  
Reimbursements
     2,890       2,641       249       9.4 %     -       -       -               2,890       2,641  
Other
      82       104       (22 )     -21.2 %     115       183       (68 )     -37.2 %     197       287  
Total revenue
     12,605       11,491       1,114       9.7 %     9,510       9,742       (232 )     -2.4 %     22,115       21,233  
                                                                                 
Operating expenses
     5,003       4,721       282       6.0 %     4,702       4,266       436       10.2 %     9,705       8,987  
Net operating income
   $ 7,602     $ 6,770     $ 832       12.3 %   $ 4,808     $ 5,476     $ (668 )     -12.2 %     12,410       12,246  
Average
                                                                                
Occupancy %
     90.1 %     89.7 %             0.4 %     93.8 %     93.3 %             0.5 %                
                                                                                 
                           
Reconciliation to consolidated net income:
                          
                           
Deferred rents - straight lining
                       109       104  
                           
Amortization of acquired leases
                       (15 )     (18 )
                           
Investment income
                               66       130  
                           
General and administrative expenses
               (841 )     (880 )
                           
Depreciation
                         (3,065 )     (2,937 )
                           
Financing costs
                               (5,781 )     (5,381 )
                           
Net income
                             2,883       3,264  
                           
Net income attributable to noncontrolling interests
       (581 )     (658 )
                           
Net income attributable to common equity
             $ 2,302     $ 2,606  
 
   
Commercial
  
Residential
  
Combined
  
   
Three Months Ended
              
Three Months Ended
              
Three Months Ended
  
   
April 30,
  
Increase (Decrease)
  
April 30,
  
Increase (Decrease)
  
April 30,
  
   
2010
  
2009
  
$
  
%
  
2010
  
2009
  
$
  
%
  
2010
    
2009
  
   
(in thousands)
        
(in thousands)
        
(in thousands)
  
Rental income
   $ 4,996     $ 4,387     $ 609       13.9 %   $ 4,743     $ 4,769     $ (26 )     -0.5 %   $ 9,739     $ 9,156  
Reimbursements
     1,456       1,236       220       17.8 %     -       -       -               1,456       1,236  
Other
      58       52         6        11.5 %     58       82       (24 )     -29.3 %     116       134  
Total revenue
     6,510       5,675       835       14.7 %     4,801       4,851       (50 )     -1.0 %     11,311       10,526  
                                                                                 
Operating expenses
     2,629       2,414       215       8.9 %     2,456       2,232       224       10.0 %     5,085       4,646  
Net operating income
   $ 3,881     $ 3,261     $ 620       19.0 %   $ 2,345     $ 2,619     $ (274 )     -10.5 %     6,226       5,880  
Average
                                                                                
Occupancy %
     89.5 %     90.4 %             -0.9 %     94.6 %     92.6 %             2.0 %                
                                                                                 
                           
Reconciliation to consolidated net income:
                          
                           
Deferred rents - straight lining
                       56       53  
                           
Amortization of acquired leases
                       (7 )     (9 )
                           
Investment income
                               30       51  
                           
General and administrative expenses
               (413 )     (466 )
                           
Depreciation
                               (1,543 )     (1,463 )
                           
Financing costs
                               (2,919 )     (2,666 )
                           
Net income
                               1,430       1,380  
                           
Net income attributable to noncontrolling interests
       (300 )     (295 )
                           
Net income attributable to common equity
             $ 1,130     $ 1,085  

NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), lease amortization, depreciation, financing costs and other non-operating activity. FREIT assesses and measures segment operating results based on NOI. NOI is not a measure of operating results or cash flow as measured by generally accepted accounting principles, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.





 
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COMMERCIAL SEGMENT
Total revenue and NOI from FREIT’s commercial segment for the Current Six Months increased by 9.7% and 12.3%, respectively, over the Prior Six Months. For the Current Quarter total revenue and NOI increased by 14.7% and 19.0%, respectively, as compared to the comparable prior year’s period. The primary reasons for the increase in revenue as compared to the prior year were: higher base rental income; an increase in reimbursable expenses, due to higher expenses resulting from this year’s unusually colder winter; a tenant lease termination fee of approximately $250,000; and a percentage rent payment of $123,000 relating to a tenant coming off of a percentage rent holiday.
 
The economic recovery in the U.S. has resulted in modest increases in retail sales, although among the retailers results have been mixed. This gives us a modicum of guarded optimism. To date, our tenant fall-out has been minor, as average occupancy (exclusive of the Damascus Center, which is undergoing a major redevelopment project) for the Current Six Months was 94.6%, a decrease of 0.6% from last year’s comparable period, and decreased 1.4% for the Current Quarter to 93.9% as compared to 95.3% for the Prior Year’s Quarter. However, we may experience additional fall-out if the economic recovery is slow.

RESIDENTIAL SEGMENT
Total revenue and NOI from FREIT’s residential segment for the Current Six Months decreased by 2.4% and 12.2%, respectively, as compared to the Prior Six Months. For the Current Quarter total revenue and NOI decreased by 1.0% and 10.5%, respectively, as compared to last year’s comparable period. The current year’s poorer operating results reflect the downward movement of occupancy and rents over the past year. The effect of lower revenues was exacerbated by recent storm damage costs at the Pierre Towers approximating $260,000, and overall higher operating costs, particularly utility costs caused by the colder winter this year. The revenue declines are attributable to higher than normal unemployment in our areas of operation over the past year. However, it should be noted that over the last several months, occupancy is showing signs of improvement, as evidenced by average occupancy for the Current Six Months and Current Quarter increasing by 0.5% and 2.0%, respectively, over last year’s comparable periods. Additionally, total revenue and the occupancy percentage for the Current Quarter increased over the current year’s first quarter ended January 31, 2010.

FUNDS FROM OPERATIONS (“FFO”):
Many consider FFO as the standard measurement of a REIT’s performance. We compute FFO as follows:
 
     
Six Months Ended
    
Three Months Ended
  
     
April 30,
    
April 30,
  
     
2010
    
2009
    
2010
    
2009
  
     
($ in thousands)
    
($ in thousands)
  
                           
Net income
     $ 2,883     $ 3,264     $ 1,430     $ 1,380  
Depreciation
       3,065       2,937       1,543       1,463  
Amortization of deferred mortgage costs
     106       118       53       59  
Deferred rents (Straight lining)
       (109 )     (104 )     (56 )     (53 )
Amortization of acquired leases
       15       18       7       9  
Capital Improvements - Apartments
     (120 )     (106 )     (35 )     (27 )
Distributions to noncontrolling interests
     (692 )     (563 )     (344 )     (443 )
 
FFO
   $ 5,148     $ 5,564     $ 2,598     $ 2,388  
                                   
 
 FFO Per Share-Basic
   $ 0.74     $ 0.80     $ 0.37     $ 0.34  
                                   
 Weighted Average Shares Outstanding
     6,942       6,945       6,942       6,942  

FFO does 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 by certain other REITs may vary materially from that of FREIT’s, and therefore FREIT’s FFO and the FFO of other REITs may not be directly comparable.




 
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DIVIDENDS
The 2nd quarter dividend of $0.30 per share is payable on June 15, 2010 to shareholders of record on June 1, 2010.
 
 

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 Form 10-K and Form 10-Q.
 

 
First Real Estate Investment Trust is a publicly traded (over-the-counter – symbol FREVS) REIT organized in 1961. It has approximately $245 million (historical cost basis) of assets. Its portfolio of residential and commercial 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
 
Visit us on the web:  www.freitnj.com



 
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