-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, dS9QTHGjhw90PD+AmLpxhbqFDCpRs+BX+JnkIa5wS6hDhMy5l5lCpBsbvEgEX9q0 M2VJbPV16Gxg0trxDjoQVQ== 0000914317-95-000002.txt : 19950615 0000914317-95-000002.hdr.sgml : 19950615 ACCESSION NUMBER: 0000914317-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950131 FILED AS OF DATE: 19950320 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: 1934 Act SEC FILE NUMBER: 002-27018 FILM NUMBER: 95521861 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 FREIT OF NJ 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20594 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended January 31, 1995 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 XX 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, 1995 and October 31, 1994; b.) Combined Statements of Income and Undistributed Earnings For Three Months Ended January 31, 1995 and 1994; c.) Combined Statements of Cash Flows for Three Months Ended January 31, 1995 and 1994; Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Part II: Other Information Item 5. Other Information FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED BALANCE SHEETS JANUARY 31, 1995 AND OCTOBER 31, 1994 (Unaudited)
January October 31, 1995 31, 1994 -------- -------- (In Thousands of Dollars) ASSETS Real estate, at cost, net of accumulated depreciation (Notes 3, 4 and 5) ...................... $ 62,930 $ 63,176 Equipment, at cost, net of accumulated depreciation of $506,000 and $491,000 ................ 212 214 Cash ..................................................... 405 238 Tenants' security accounts ............................... 882 867 Sundry receivables ....................................... 299 325 Prepaid expenses and other assets ........................ 508 601 Deferred charges, net .................................... 234 192 -------- -------- Totals ......................................... $ 65,470 $ 65,613 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages payable (Note 4) ........................... $ 33,870 $ 34,019 Note payable - bank (Note 5) ........................... 5,932 5,428 Accounts payable and accrued expenses ................ 267 344 Tenants' security deposits ........................... 985 964 Other liabilities ...................................... 94 77 Deferred revenue ..................................... 122 137 -------- -------- Total liabilities .............................. 41,270 40,969 -------- -------- Minority interest ........................................ 3,520 3,496 -------- -------- Commitments and contingencies (Note 6) 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 ............................... 1,366 1,834 -------- -------- Total shareholders' equity ..................... 20,680 21,148 -------- -------- Totals ........................................ $ 65,470 $ 65,613 ======== ======== See Notes to Combined Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS THREE MONTHS ENDED JANUARY 31, 1995 AND 1994 (Unaudited)
1995 1994 ------ ----- (In Thousands of Dollars, Except per Share Amounts) INCOME Rental revenue: Rental income (Note 6) ....................... $ 2,905 $ 2,234 Real estate taxes reimbursed ................. 174 168 Common area maintenance reimbursed ........... 104 79 Sundry income ................................ 41 70 ------- ------- Totals ................................... 3,224 2,551 ------- ------- Rental expenses: Operating expenses ........................... 703 593 Management fees (Note 7) ....................... 136 109 Real estate taxes ............................ 384 301 Interest ..................................... 767 574 Depreciation ................................. 375 294 ------- ------- Totals ................................... 2,365 1,871 ------- ------- Income from rental operations .................... 859 680 ------- ------- Other income (expense): Interest income .............................. 2 2 Interest expense ............................. (91) (62) General and administrative ................... (60) (46) ------- ------- Totals ................................... (149) (106) ------- ------- Income before minority interest .................. 710 574 Minority interest ................................ (24) -- ------- ------- Net income ....................................... $ 686 $ 574 ======= ======= Earnings per share (Note 8) ...................... $ .44 $ .37 ======= ======= UNDISTRIBUTED EARNINGS Balance, beginning of period ..................... $ 1,834 $ 1,978 Net income ...................................... 686 574 Less dividends paid .............................. (1,154) (1,029) ------- ------- Balance, end of period ........................... $ 1,366 $ 1,523 ======= ======= Dividends paid per share ......................... $ .74 $ .66 ======= ======= See Notes to Combined Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE COMBINED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 1995 AND 1994 (Unaudited)
1995 1994 ------- ------- (In Thousands of Dollars) Operating activities: Net income ........................................................ $ 686 $ 574 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................................. 397 298 Deferred revenue .............................................. (15) (48) Minority interest 24 Changes in operating assets and liabilities: Tenants' security accounts ................................. (15) (24) Sundry receivables, prepaid expenses and other assets ........................................................ 119 35 Deferred charges .............................................. (64) Accounts payable and accrued expenses ...................... (77) (89) Tenants' security deposits ................................. 21 29 Other liabilities .......................................... 17 ------- ------- Net cash provided by operating activities .............. 1,093 775 ------- ------- Investing activities - capital expenditures ........................... (127) (60) ------- ------- Financing activities: Dividends paid .................................................... (1,154) (1,029) Proceeds from note payable - bank ................................. 504 Repayment of mortgages ............................................ (149) (84) ------- ------- Net cash used in financing activities .................... (799) (1,113) ------- ------- Net increase (decrease) in cash ....................................... 167 (398) Cash, beginning of period ............................................. 238 928 ------- ------- Cash, end of period ................................................... $ 405 $ 530 ======= ======= Supplemental disclosure of cash flow data: Interest paid ..................................................... $ 858 $ 636 ======= ======= See Notes to Combined Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE NOTES TO COMBINED 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 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 combined financial information included herein as at January 31, 1995 and for the three months ended January 31, 1995 and 1994 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 combined financial position as of that date and the combined results of operations for those periods. The information in the combined balance sheet as of October 31, 1994 was derived from the Trust's audited annual report for 1994. Principles of combination: The combined financial statements include the accounts of the Trust and Westwood Hills, LLC (the "Affiliate"), which have been combined on the basis of common control. The Af-filiate is a limited liability company that is 40%-owned by the Trust and 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 combined financial statements include 100% of the Affiliate's assets, liabilities, operations and cash flows with the 60% interest owned by the other members of the Affiliate reflected as "minority interest." All significant intercompany accounts and transactions have been eliminated in combination. Cash: The Trust and its Affiliate maintain their 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, 1995 and October 31, 1994, the Trust had no cash equivalents. 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. Income taxes: The Affiliate, with the consent of its members, elected to be treated as a limited liability company under the applicable sections of the Internal Revenue Code. Under these sections, income or loss, in general, is allocated to the members for inclusion in their individual income tax returns. Accordingly, there is no provision for income taxes applicable to the operations of the Affiliate in the accompanying combined financial statements. 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, 1995 and 1994. Note 2 - Acquisition: During May 1994, the Trust became a 40% member of the Affiliate, a newly formed limited liability company. On June 2, 1994, the Affiliate consummated the purchase of Westwood Properties, a residential apartment complex located in Westwood, New Jersey (the "Apartment Complex"). The cost of the Apartment Complex was approximately $15,419,000 of which $5,899,000 was paid in cash and $9,520,000 was financed by the proceeds of a mortgage. The following unaudited proforma information (in thousands of dollars, except per share amounts) shows the results of operations for the three months ended January 31, 1994 as though the Apartment Complex had been acquired at the beginning of fiscal 1994: Rental revenue .............. $ 3,084 Rental expenses ............. 2,342 ------- Income from rental operations 742 Other expenses, net ......... (106) Minority interest ........... (38) ------- Net income .................. $ 598 ======= Earnings per share .......... $ .38 ======= In addition to combining the historical results of operations, the unaudited proforma results include adjustments for depreciation based on the purchase price and increased interest expense related to obligations incurred to complete the transaction. The unaudited proforma results of operations set forth above are based on information furnished by the Trust's management. Such proforma information is not necessarily indicative of the results that would have occurred had the acquisition been made at the beginning of fiscal 1994 or of future results of operations of the combined properties. Note 3 - Real estate: Real estate consists of the following:
Range of Estimated January October Useful Lives 31, 1995 31, 1994 ------------ -------- -------- (In Thousands of Dollars) Land .............................. $ 21,112 $ 21,112 Unimproved land ................... 2,459 2,459 Apartment buildings ............... 7-40 years 20,820 20,749 Commercial buildings .............. 25-31.5 years 58 58 Shopping centers .................. 15-50 years 26,777 26,769 Construction in progress ........................ 773 737 -------- -------- 71,999 71,884 Less accumulated depreciation ..... 9,069 8,708 -------- -------- Totals ........................ $ 62,930 $ 63,176 ======== ========
Note 4 - Mortgages payable: Mortgages payable consist of the following:
January October 31, 1995 31, 1994 -------- -------- (In Thousands of Dollars) State Mutual Life Assurance Company of America (A) .................. $ 18,560 $ 18,624 Aetna Life Insurance Company (B) .. 5,530 5,557 United Jersey Bank (C) ............ 9,416 9,455 United Jersey Bank (D) ............ 364 383 -------- -------- Totals ........................ $ 33,870 $ 34,019 ======== ======== (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 $26,784,000. (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 $12,177,000. (C) Payable in monthly principal installments of $12,989 plus interest at a variable rate through June 2000 at which time the outstanding balance is due. The mortgage is secured by the Apartment Complex in Westwood, New Jersey having a net book value of approximately $15,244,000. One of the directors of the bank is a trustee of the Trust. (D) 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 $646,000.
Principal amounts (in thousands of dollars) due under the above obligations in each of the five years subsequent to January 31, 1995 are as follows: Year Ending January 31, Amount ----------- ------- 1996 $ 621 1997 665 1998 18,379 1999 409 2000 343 Note 5 - Note payable - bank: Note payable - bank consists of borrowings under a $20,000,000 revolving line of credit agreement with United Jersey Bank which expires on February 10, 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 $40,071,000 at January 31, 1995 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, 1995 are as follows: Year Ending January 31, Amount ----------- ------- 1996 $ 4,502 1997 3,880 1998 3,670 1999 2,987 2000 2,504 Thereafter 12,850 ------- Total $30,393 ======= 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 month periods ended January 31, 1995 and 1994 were not material. Residential tenants: Lease terms for residential tenants are usually one year or less. Environmental concerns: A landfill which is considered a superfund site is located next to a vacant parcel of land which is owned by the Trust. The New Jersey Department of Environmental Protection and Energy ("NJDEPE") had advised the Trust that it was investigating the property for contamination as a result of the migration of environmentally sensitive materials from the landfill. In August 1994, the Trust was advised that, although the soil had not been environmentally impaired and a clean-up of the property would not be required, the NJDEPE did determine that the groundwater in the area of the landfill, including below the Trust's property, is contaminated as a result of the activity at the landfill. Accordingly, the NJDEPE is currently in the process of enforcing remediation of the groundwater by the responsible parties. As the Trust is not a responsible party, management anticipates that it will bear no liability for the cost of the groundwater remediation. Note 7 - Management agreement: The properties owned by the Trust and the Affiliate are currently managed by Hekemian. The management agreement requires fees equal to a percentage of rents collected. Such fees were approximately $136,000 and $109,000 for the three months ended January 31, 1995 and 1994, 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, 1994. Results of Operations The earnings per share were $0.44 for the First Quarter 1995 as compared to $0.37 per share for the First Quarter of 1994, which increase was due, primarily, to the following three factors: 1) The acquisition of a forty (40%) percent interest in the Westwood Hills, L.L.C., the owners of an apartment complex in Westwood, New Jersey, has contributed to the earnings of the Registrant since its purchase in June 1994; and 2) Last winter was severe in the northeast portion of the United States with significant snow falls resulting in higher than normal heating and snow removal costs for the first half of Fiscal Year 1994. The winter during the First Quarter 1995, in contrast, has been mild resulting in the diminished heating and snow removal costs when compared to the First Quarter of 1994; and 3) The Registrant's shopping center located in Frederick, Maryland, consisting of approximately 250,000 square feet of leasable space, is fully leased for the first time since its acquisition in 1992, which has made a substantial contribution to the rental income. 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 anticipated dividend payment which has been increased from $0.32 per share to $0.35 per share for the first three quarters of Fiscal Year 1995. PART II. OTHER INFORMATION Item 5. Other Information A) Franklin Lakes, New Jersey Shopping Center ("Greentree Shopping Plaza" or "Greentree" The Registrant intends to close the Greentree Shopping Center in September or October of 1995. Thereafter, the Registrant intends to demolish all of the existing structures consisting of approximately 33,320 square feet of leasable space and replace the existing center. The new shopping center will have approximately 88,000 square feet of leasable space. The Registrant anticipates that construction will take approximately nine (9) months. During the period of construction Registrant will receive no rental income. Registrant expects to finance the construction of the new shopping center by securing construction and permanent mortgage financing in the amount of approximately $10.0 million. As reported in the 10-K/A and 8-K filed by the Registrant dated February 17, 1995, Grand Union, a current tenant at the existing shopping center, leases approximately 15,960 square feet of space. That lease expires by its terms on August 31, 1995. Grand Union has filed for Chapter 11 protection pursuant to the Federal Bankruptcy Laws. Grand Union has expressed an interest in renting approximately 40,000 square feet in the proposed Greentree Shopping Center. The Registrant anticipates that it will not commence construction of the new shopping center until: (1) a suitable lease is secured with one or more anchor tenants; (2) suitable financing is secured; and (3) all governmental approvals are secured. Registrant has received both local and county governmental approvals as of the date hereof to construct the Greentree Shopping Center. Registrant must secure certain approvals and permits to allow construction from the State of New Jersey, Department of Environmental Protection, including approval for the construction of a private treatment works, stream encroachment permits and approval to construct the proposed center in an area adjacent to certain designated wetlands. The Registrant expects to secure all necessary State of New Jersey approvals and permits to allow construction of the proposed center within the next ninety (90) days. B) Westwood, New Jersey As reported in the 8-K filed February 17, 1995, Grand Union occupies 28,000 square feet of space at the Registrant's Westwood, New Jersey shopping center (the "Westwood Shopping Center") which has a total of 173,854 square feet of leasable space. The Grand Union lease for the Westwood Shopping Center expires on September 30, 2002. Pursuant to the terms of the Lease, however, Grand Union has several options which it may exercise to extend the term of the Lease beyond September 30, 2002. The Registrant has received all lease payments due from Grand Union through March 1995. The Registrant does not know at this time the full implications of the Chapter 11 filing by Grand Union on the lease for Westwood. The Registrant does not anticipate, however, any interruption in its rental income from the Westwood Shopping Center although Grand Union could seek to terminate its lease at the Center. The Grand Union base rental represents slightly less than 10% of the total income from the Center. In the event the lease was terminated by the Bankruptcy Court, Registrant estimates that its income for Fiscal 1995 would be reduced by approximately $.08 per share given the fact all rentals due under the lease have been received through March 1995. In addition, Registrant has received a request from an adjacent property owner to gain access to a portion of the Westwood Shopping Center in order to verify that no petroleum materials have migrated from its underground storage tanks onto Registrant's Center. No tests have been performed at the Center through the date hereof. There is no obvious evidence, however, of any contamination at the Center as of the date hereof. Further, it is the opinion of the Registrant that if any hazardous substances have migrated onto its shopping center that: (a) any remediation would be performed at the sole cost of the adjacent property owner; and (b) any remediation activity required would not materially interfere with the operation of the Center. 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 March 7, 1995 ------------- /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 FREIT OF NJ 10-Q FDS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 3-MOS OCT-31-1995 JAN-31-1995 405,000 0 299,000 0 0 0 72,717,000 9,575,000 0 1,468,000 39,802,000 19,314,000 0 0 1,366,000 O 0 3,224,000 0 2,514,000 0 0 0 686,000 0 686,000 0 0 0 686,000 .44 .44
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