Segment information

12 Months Ended

Oct. 31, 2013

Segment Information

Segment information

Note 14- Segment information:

ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, established standards for reporting financial information about operating segments in interim and annual financial reports and provides for a “management approach” in identifying the reportable segments.

FREIT has determined that it has two reportable segments: commercial properties and residential properties. These reportable segments offer different types of space, have different types of tenants, and are managed separately because each requires different operating strategies and management expertise.

The commercial and residential segments are comprised of ten (10) and six (6) properties, respectively, during the three fiscal years ended October 31, 2013, 2012 and 2011, exclusive of the residential properties sold in Fiscal 2013 and Fiscal 2012 which have been classified as discontinued operations.

The accounting policies of the segments are the same as those described in Note 1.

The chief operating decision-making group of FREIT’s commercial segment, residential segment and corporate/other is comprised of FREIT’s Board.

FREIT assesses and measures segment operating results based on net operating income (“NOI”). NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes: deferred rents (straight lining), depreciation, financing costs, amortization of acquired lease values and other items. NOI is not a measure of operating results or cash flows from operating activities as measured by accounting principles generally accepted in the United States of America, 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.

Continuing real estate rental revenue, operating expenses, NOI and recurring capital improvements for the reportable segments are summarized below and reconciled to consolidated net income attributable to common equity for each of the years in the three-year period ended October 31, 2013. Asset information is not reported since FREIT does not use this measure to assess performance.

	October 31,
	2013			2012			2011
	(In Thousands of Dollars)
Real estate rental revenue:
Commercial	$	22,876		$	23,383		$	24,117
Residential		18,497			18,680			18,267
Totals		41,373			42,063			42,384
Real estate operating expenses:
Commercial		9,235			9,526			9,561
Residential		8,892			8,442			7,863
Totals		18,127			17,968			17,424
Net operating income:
Commercial		13,641			13,857			14,556
Residential		9,605			10,238			10,404
Totals	$	23,246		$	24,095		$	24,960
Recurring capital improvements-
residential	$	(681	)	$	(697	)	$	(413	)
Reconciliation to consolidated net
income-common equity:
Segment NOI	$	23,246		$	24,095		$	24,960
Deferred rents - straight lining		(12	)		17			242
Amortization of acquired above and below
market value leases		(24	)		(2	)		(25	)
Net investment income		191			173			101
General and administrative expenses		(1,623	)		(1,624	)		(1,543	)
Depreciation		(6,233	)		(6,171	)		(6,054	)
Deferred project cost write-off, net of
income relating to early lease termination		—			(776	)		—
Financing costs		(11,945	)		(11,704	)		(11,452	)
Income from continuing operations		3,600			4,008			6,229
Income from discontinued operation		797			460			484
Gain on sale of discontinued operation		3,545			7,528	(a)		—
Net income		7,942			11,996			6,713
Net income attributable to
noncontrolling interests in subsidiaries		(493	)		(645	)		(1,335	)
Net income attributable to common equity	$	7,449		$	11,351		$	5,378

(a) Represents gain of $9,493 net of federal and state tax of $1,965.