-----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, BJsNCufMKTYM4FzVe8nvvCKN3pM5pZDhQqjk+LYBCKpd5JE+DPZZ3otyN+9o8EF0 poWJPTlw21jyqVO0zRhLjw== 0000914317-97-000304.txt : 19970625 0000914317-97-000304.hdr.sgml : 19970625 ACCESSION NUMBER: 0000914317-97-000304 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19970624 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-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 002-27018 FILM NUMBER: 97629072 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-K/A 1 1996 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended October 31, 1996 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the transition period from ____________ to __________ Commission File No. 2-27018. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY (exact name of registrant as specified in its charter) New Jersey I.R.S. No. 22-1697095 - ------------------------------- ---------------------- (State of 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 no., including area code: 201-488-6400 Securities Registered Pursuant to Section 12(b) of the Act: None Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check made 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 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 [ ] Indicate by check mark, if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in this Form 10-K or any amendment to this Form 10-K. [ X ] Aggregate market value of the voting stock held by nonaffiliates of the Registrant as of December 31, 1996 - $20,413,000 Number of Shares of Common Stock outstanding as of December 31, 1996 - 1,559,788 DOCUMENTS INCORPORATED BY REFERENCE (To the Extent Indicated Herein) 10K/A TABLE OF CONTENTS PART II ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K 1. Financial Statements (the attached Financial Statements reflect a change in the accounting method for Westwood Hills, L.L.C. to the equity method rather than the consolidated method) (A) Financial Statements of Registrant: (i) Report of Independent Public Accountant for Registrant, J.H. Cohn, LLP (ii) Balance Sheets as of October 31, 1996 and 1995 (iii) Statements of Income and Undistributed Earnings Years ended October 31, 1996, 1995 and 1994 (iv) Statements of Cash Flows Years ended October 31, 1996, 1995 and 1994 (v) Notes to Financial Statements (B) Financial Statements of Affiliate: (i) Report of Independent Public Accountant for Affiliate, J.H, Cohn, LLP (ii) Balance Sheets as of October 31, 1996 and 1995 (iii) Statements of Income and Members' Equity Years ended October 31, 1996, 1995 and 1994 (iv) Statements of Cash Flows Years ended October 31, 1996, 1995 and 1994 (v) Notes to Financial Statements 2. Financial Statement Schedules. (i) Short-Term Borrowings. (ii) Supplementing Income Statement Information. (iii) Real Estate and Accumulated Depreciation. Item 6. SELECTED FINANCIAL DATA
As of or for the Year Ended October 31, 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- (In Thousands of Dollars, Except Per Share Amounts) Operating data: Rental revenue .......... $ 11,318 $ 11,038 $ 10,279 $ 9,948 $ 8,465 Rental expenses ......... 8,091 7,585 7,479 7,268 5,899 -------- -------- -------- -------- -------- Income from rental opera- tions ............... 3,227 3,453 2,800 2,680 2,566 Other income ............ 99 86 56 4 136 -------- -------- -------- -------- -------- 3,326 3,539 2,856 2,684 2,702 Other expenses .......... (664) (753) (473) (389) (264) -------- -------- -------- -------- -------- Net income .............. $ 2,662 $ 2,786 $ 2,383 $ 2,295 $ 2,438 ======== ======== ======== ======== ======== Balance sheet data: Total assets ............ $ 51,674 $ 51,838 $ 52,398 $ 51,356 $ 50,064 ======== ======== ======== ======== ======== Long-term obligations ... $ 23,609 $ 24,110 $ 24,564 $ 24,963 $ 25,341 ======== ======== ======== ======== ======== Per share data: Earnings per share ...... $ 1.71 $ 1.79 $ 1.53 $ 1.47 $ 1.56 ======== ======== ======== ======== ======== Dividends per share ..... $ 1.71 $ 2.53 $ 1.62 $ 1.56 $ 1.765 ======== ======== ======== ======== ========
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (A) Liquidity and Capital Resources. (a) Overview. The following discussion should be read in conjunction with the Registrant's Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. Such financial statements and information have been prepared to reflect the historical operations and financial condition of the Registrant. Rental revenues for the fiscal year ended October 31, 1996, were $11,318,000.00 as compared to $11,038,000.00 for the same period in 1995. The rental expenses increased to $8,091,000.00 for 1996 as compared to $7,585,000.00 for 1995. The Registrant's net income for the fiscal year 1996 was $2,662,000.00 or $1.71 per share as compared to a net income of $2,786,000.00 for fiscal year 1995 or $1.79 per share. As discussed in Note 1 of the Financial Statements which appear at Item 14 hereof the Registrant has changed its method of accounting for its investment in the Westwood Hills, L.L.C. Prior to the date of this 10K/A, the Registrant prepared its Financial Statements on a consolidated basis. Since the Registrant does not, however, maintain unilateral control over the Westwood Hills, L.L.C. it has been determined that the equity method of accounting would be more appropriate. The equity method was adopted retroactivity. As a result, the 1996 financial statements have been restated to reflect the foregoing accounting change. In addition, the Registrant will use the equity method of accounting with respect to Westwood Hills, L.L.C. as of fiscal year 1997. (b) Results of Operations. 1. Fiscal Year 1996. The rental income for fiscal year ended October 31, 1996 was $9,589,000.00 as compared with $9,503,000.00 for fiscal year 1995. The rental income on a year to year basis was relatively flat reflecting the fact that since 1995 the Registrant's properties have been almost fully rented with the exception of the Franklin Lakes Shopping Center which is being allowed to move to total vacancy pending the construction of a new center at the Registrant's Franklin Lakes, New Jersey property. The rental income increase of approximately 2.8%, on a year to year comparison basis, was due to the Registrant's policy to raise rents whenever possible consistent with market conditions while maintaining its vacancy factor at an acceptable level. While operating expenses were $2,381,000.00 for fiscal year 1996 when compared to $2,132,000.00 for fiscal year 1995, the increases were principally due to increased snow removal costs of approximately $163,000.00 and utility costs of approximately $41,000.00. These costs reflect the severe winter of 1995-1996 in the Northeast which was an unusual event. In addition to the foregoing, the Registrant has been in the process of closing the existing Franklin Lakes Shopping Center. As a result, during the past several quarters, leases were not renewed and leasable space was left vacant. The existing center has been closed as of November 1, 1996. The income for the center was $29,635 for fiscal year 1996 as compared to $91,300 for fiscal year 1995. During the demolition and construction of the new Franklin Lakes Shopping Center the costs of construction, including all interest on any construction loan and real property taxes, will be incurred by the Registrant. In accordance with generally accepted accounting principles, the costs will be capitalized. As a result, Registrant's expenses during fiscal year 1997 will, except for the period of time after October 31, 1996 (the last day of fiscal year 1996) to the first day of construction (sometime during January or February, 1997 weather permitting) will not be reflected in its expenses for fiscal year 1997. The effect of the foregoing is that while expenses are being incurred from a cash point of view, the items which would ordinarily be expenses will be capitalized for fiscal year 1997. Real Estate Taxes increased $232,000.00 or 15.4% in 1996. Approximately 91.4% of the increase in real estate taxes is due from commercial properties which taxes are reimbursed by commercial tenants. While real estate taxes are beginning to level off after the assessment increases of 1994, the Registrant is vigorously appealing the increased assessments that resulted in the higher taxes. Registrant also took various write-offs in fiscal year 1996 for accrued rent together with other matters. The Registrant believes that while expenses have increased at a faster rate than rental revenue for the years 1994 through 1996 such increases do not represent an irreversible trend. As Registrant's commercial property becomes vacant, Registrant expects to be in a position to re-lease the space for higher rentals than presently being realized. In addition, both the new center being constructed in Franklin Lakes, New Jersey and the Patchogue Shopping Center are expected to make positive contributions to the Registrant's net income once they are open for business. 2. Fiscal Year 1995. The Registrant's net income for fiscal year 1995 was $2,786,000.00 or $1.79 per share as compared to $2,383,000.00 for fiscal year 1994 or $1.53 per share. Rental income for the fiscal year ended October 31, 1995 increased $491,000.00 or 5.4%, to $9,503,000.00 from $9,012,000.00 for the prior fiscal year ended October 31, 1994. Adjusting out Franklin Lakes, commercial Rental Income increased 8.7%, reflecting the leasing in the prior fiscal year, of vacant commercial space. Rental income from residential properties increased approximately 5%, reflecting higher rental rates than in the previous fiscal year. Real estate tax reimbursements increased $272,000.00 or 42%, representing higher real estate tax expense charges at commercial properties. Operating expenses for the fiscal year ended October 31, 1995 declined $139,000.00 or 6.1%, reflecting lower snow removal costs and utility cost. (c) Liquidity and Capital Resources. Cash flows from operations, debt financing and the sale of Registrant's Shares have been the principal sources of capital used to fund the Registrant's property acquisitions and expansion. The Registrant has a $20 million line of credit from Summit Bank that may be used to finance the acquisition or development of additional properties and for general business purposes. Borrowings under the Line of Credit bear interest: (i) at a variable fluctuating rate equal to Summit Bank's Base Lending Rate or at the LIBOR Based, plus 200 basis points (2.0%) on all borrowings up to $10,000,000; and (ii) at Summit's Base Lending Rate, plus one half of one percent (1/2%) or at the LIBOR Base, plus 250 basis points (2.5%) on all borrowings in excess of $10,000,000. At October 31, 1996, the sum of $5,662,000.00 was outstanding under the Line of Credit. The Registrant may seek, under certain circumstances, to obtain funds through additional equity offerings and/or debt financing (other than the Line of Credit), such as purchase money financing from the sellers of real estate or mortgage loans from institutions. Such funds may be used in connection with the acquisition of additional properties, the renovation or expansion of existing properties or, as necessary, to meet the distribution requirements for REITs under the Code. The availability and terms of any such equity offering will depend upon market and other conditions. There can be no assurance that such additional equity capital will be available on terms acceptable to the Registrant. Economic conditions and prevailing banking standards have generally restricted the availability of debt financing, particularly in connection with mortgage loans for real estate acquisitions. The Registrant is unable to project in a definitive manner what impact such economic conditions and prevailing banking standards will have on the Registrant's ability to finance new acquisitions. The Registrant continues to make capital improvements to, primarily, its apartment properties as it determines to be appropriate, including new roofs, windows and kitchens. The short term impact of such capital outlays will be to depress the Registrant's then current cash flow. The Registrant is now experiencing the benefits of these expenditures by preserving the physical integrity of its properties and securing increased rentals. Other than the apartment rehabilitation program described above, the Registrant has made no commitments, and has no understandings for additional capital expenditures except with respect to the redevelopment of the Franklin Lakes Shopping Center and the purchase of the Patchogue Shopping Center described in detail at Item 1(C)(d)(i) and (ii) at Pages 7 and 8 hereof. i. Short Term Liquidity. The cash flow from operations has been sufficient to meet all current operational needs of the Registrant. Nevertheless, the commitment made by the Registrant to demolish and erect the new Franklin Lakes Shopping Center and to purchase the Patchogue Shopping Center will require the Registrant to secure a permanent mortgage for each of the properties representing approximately seventy-five (75%) of the costs to purchase the Patchogue Shopping Center and to construct the new Franklin Lakes Shopping Center. The balance of the funds required will be secured from the Line of Credit. The cash flow from operations will not be sufficient to fund the purchase of the Patchogue Shopping Center or to meet the cash requirements for the construction of the new Franklin Lakes Shopping Center. ii. Long Term Liquidity. The Registrant anticipates that the cash flow from operations after the purchase of the Patchogue Shopping Center and construction of the new Franklin Lakes Shopping Center will be more than sufficient to meet the new mortgagee obligations for each project. Registrant also expects that the cash flow from operations will permit the Registrant to pay down the Line of Credit over a period of time. iii. Under the terms of the Leases relating to the shopping center/retail properties, the tenants are responsible for various operating expenses and real estate taxes. As a result of these arrangements, the Registrant does not believe it will be responsible for any major expenses in connection with such properties during the lease term of any tenant. The Registrant anticipates entering into similar leases with respect to the properties. After the lease term or in the event a tenant is unable to meet its obligations, the Registrant anticipates that any expenditures it might become responsible for in maintaining the properties will be funded by cash from operations and, in the case of major expenditures, possibly by borrowings. To the extent that expenditures or significant borrowings are required, the Registrant's cash available for distribution and liquidity may be adversely affected. iv. Registrant may also seek purchase money financing or institutional financing, other than the Line of Credit, to finance any new acquisitions in addition to the Patchogue Shopping Center and the renovation of the Franklin Lakes Shopping Center as described in Item 1(c)(d)(i)(ii) at pages 7 and 8 hereof. As of December 31, 1996, institutional money is available at relatively reasonable rates. The Registrant may, as a result, seek to raise additional monies for investment purposes, subject to the restrictions of the Line of Credit, by securing mortgage financing on one or more of its properties. In addition, Registrant may seek to refinance one or more of its properties where mortgage financing is currently in place. (d) Capital Strategy Since its inception in 1961, the Registrant has elected to be treated as a REIT for Federal income tax purposes. The Registrant anticipates making distributions to its stockholders from operating cash flows, which are expected to increase from future growth in rental revenues and other sources. Although cash used to make distributions reduces amounts available for capital investment, the Registrant generally intends to distribute not less than 95% of net income. Although the Registrant receives most of its rental payments on a monthly basis, it intends to make regular quarterly dividend payment distributions. The funds accumulated for dividend distributions may be invested by the Registrant in short-term marketable instruments. (e) Economic Conditions The Registrant anticipates that the U.S. Mid-Atlantic states will continue to experience moderate growth with limited inflation. Continued economic strength in the employment market should allow the Registrant to realize its current occupancy rates for its apartments with a sound support base for its shopping center operations. Any sustained inflation may, however, negatively impact Registrant in at least two areas: (a) its Line of Credit is based upon a floating rate of interest which would, if increased over the 7.875% interest rate as of December 31, 1996, result in increased costs of operations; and (b) Registrant will be seeking two permanent mortgages to finance the purchase of the Patchogue Shopping Center and to replace the present mortgage for its Frederick, Maryland Shopping Center which is due as of August 1, 1997. In addition, Registrant will also seek a construction and then a permanent mortgage for the new Franklin Lakes Shopping Center. Any increase in mortgage interest rates would necessarily increase the costs of operations during fiscal 1997. ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (A) List of all documents to be filed as a part of this 10-K Report: 1. Financial Statements. (A) Financial Statements of Registrant: (i) Report of Independent Public Accountant for Registrant, J.H. Cohn, LLP (ii) Balance Sheets as of October 31, 1996 and 1995 (iii) Statements of Income and Undistributed Earnings Years ended October 31, 1996, 1995 and 1994 (iv) Statements for Cash Flows Years ended October 31, 1996, 1995 and 1994 (v) Notes to Financial Statements (B) Financial Statements of Affiliate: (i) Report of Independent Public Accountant for Affiliate, J.H. Cohn, LLP (ii) Balance Sheets as of October 31, 1996 and 1995 (iii) Statements of Income and Members' Equity Years ended October 31, 1996, 1995 and 1994 (iv) Statements of Cash Flows Years ended October 31, 1996, 1995 and 1994 (v) Notes to Financial Statements 2. Financial Statement Schedules. (i) Short-Term Borrowings. (ii) Supplementing Income Statement Information. (iii) Real Estate and Accumulated Depreciation. (B) Reports on Form 8-K: No report on Form 8-K was filed by the Registrant during the last quarter of the fiscal year ending October 31, 1996. (C) Exhibits required pursuant to Item 601 of Regulation S-K: Exhibit 3 - Amended and Restated Declaration of Trust, dated November 7, 1983 which was submitted as part of the Registrant's 10-K for 1991, as amended which Exhibit is incorporated by reference; amendment dated May 31, 1994 to paragraphs 3.5 and 7.5, which was submitted as part of Registrant's 10-K for 1994 is incorporated by reference. Exhibit 10 - Material Contracts: (i) December 20, 1961 Management Agreement between the Registrant and Hekemian & Co. (formerly known as S. Hekemian & Co., Inc.), a copy of which was filed as Exhibit 10 with Registration Statement - 2-19609, which Exhibit is incorporated by reference. Exhibit 24 - Report of J.H. Cohn, LLP as the Independent Public Accountants of the Registrant is included in the Financial Statements, attached hereto. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 and the Power of Attorney contained in the Registrant's 10-K filed on January 30, 1997, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED: June 24, 1997 First Real Estate Investment Trust of New Jersey By: /s/Robert S. Hekemian ------------------------------------ Robert S. Hekemian, Chairman of the Board and Chief Executive Officer FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (ITEMS 8 AND 14(a)) (A) FINANCIAL STATEMENTS OF REGISTRANT: REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS BALANCE SHEETS OCTOBER 31, 1996 AND 1995 STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 STATEMENTS OF CASH FLOWS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 NOTES TO FINANCIAL STATEMENTS (B) FINANCIAL STATEMENTS OF AFFILIATE: REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS BALANCE SHEETS OCTOBER 31, 1996 AND 1995 STATEMENTS OF INCOME AND MEMBERS' EQUITY YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 STATEMENTS OF CASH FLOWS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 NOTES TO FINANCIAL STATEMENTS (C) FINANCIAL STATEMENT SCHEDULES: IX - SHORT-TERM BORROWINGS X - SUPPLEMENTARY INCOME STATEMENT INFORMATION XI - REAL ESTATE AND ACCUMULATED DEPRECIATION Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. * * * REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Trustees and Shareholders First Real Estate Investment Trust of New Jersey We have audited the accompanying balance sheets of FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY as of October 31, 1996 and 1995, and the related statements of income and undistributed earnings and cash flows for each of the three years in the period ended October 31, 1996. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Real Estate Investment Trust of New Jersey as of October 31, 1996 and 1995, and its results of operations and cash flows for each of the three years in the period ended October 31, 1996, in conformity with generally accepted accounting principles. As discussed in Note 1 to the financial statements, the accompanying financial statements have been restated to reflect a change in the method of accounting for the Trust's investment in affiliate. Our audits referred to above included the information in Schedules IX, X and XI which present fairly, when read in conjunction with the financial statements, the information required to be set forth therein. /s/J. H. Cohn LLP ----------------- J. H. COHN LLP Roseland, New Jersey December 3, 1996
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY BALANCE SHEETS OCTOBER 31, 1996 AND 1995 ASSETS 1996 1995 ------- ------- (In Thousands of Dollars) Real estate, at cost, net of accumulated depreciation ................................... $46,836 $47,255 Equipment, at cost, net of accumulated depreciation of $608,000 and $551,000 .......... 186 181 Investment in affiliate ............................ 1,924 1,972 Cash ............................................... 189 465 Tenants' security accounts ......................... 754 726 Sundry receivables ................................. 537 247 Prepaid expenses and other assets .................. 1,090 786 Deferred charges, net .............................. 158 206 ------- ------- Totals ................................... $51,674 $51,838 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages payable .............................. $23,609 $24,110 Note payable - bank ............................ 5,662 5,169 Accounts payable and accrued expenses .......... 278 332 Dividends payable .............................. 1,029 1,154 Tenants' security deposits ..................... 853 827 Deferred revenue ............................... 259 257 ------- ------- Total liabilities ........................ 31,690 31,849 ------- ------- 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 ......................... 670 675 ------- ------- Total shareholders' equity ............... 19,984 19,989 ------- ------- Totals .................................. $51,674 $51,838 ======= ======= See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 INCOME 1996 1995 1994 -------- -------- -------- (In Thousands of Dollars, Except per Share Amounts) Rental revenue: Rental income .................... $ 9,589 $ 9,503 $ 9,012 Real estate taxes reimbursed ..... 1,126 914 642 Common area maintenance reimbursed 442 466 472 Sundry income .................... 161 155 153 -------- -------- -------- Totals ....................... 11,318 11,038 10,279 -------- -------- -------- Rental expenses: Operating expenses ............... 2,381 2,132 2,271 Management fees .................. 476 470 451 Real estate taxes ................ 1,739 1,507 1,284 Interest ......................... 2,200 2,242 2,281 Depreciation ..................... 1,295 1,234 1,192 -------- -------- -------- Totals ....................... 8,091 7,585 7,479 -------- -------- -------- Income from rental operations ........ 3,227 3,453 2,800 -------- -------- -------- Other income (expense): Equity in income of affiliate .... 92 81 51 Interest income .................. 7 5 5 Interest expense ................. (465) (502) (279) General and administrative ....... (187) (245) (185) -------- -------- -------- Totals ....................... (553) (661) (408) -------- -------- -------- Income before state income taxes ..... 2,674 2,792 2,392 Provision for state income taxes ..... 12 6 9 -------- -------- -------- Net income ........................... $ 2,662 $ 2,786 $ 2,383 ======== ======== ======== Earnings per share ................... $ 1.71 $ 1.79 $ 1.53 ======== ======== ========
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 (continued) 1996 1995 1994 -------- -------- -------- (In Thousands of Dollars, Except per Share Amounts) UNDISTRIBUTED EARNINGS Balance, beginning of year ........... $ 675 $ 1,834 $ 1,978 Net income ........................... 2,662 2,786 2,383 Less dividends ....................... (2,667) (3,945) (2,527) -------- -------- -------- Balance, end of year ................. $ 670 $ 675 $ 1,834 ======== ======== ======== Dividends paid per share ............. $ 1.71 $ 2.53 $ 1.62 ======== ======== ======== See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 1996 1995 1994 ------- ------- ------- (In Thousands of Dollars) Operating activities: Net income ..................................... $ 2,662 $ 2,786 $ 2,383 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .............. 1,333 1,306 1,237 Equity in income of affiliate .............. (92) (81) (51) Deferred revenue ........................... 2 43 85 Changes in operating assets and liabilities: Tenants' security accounts .............. (28) (47) (5) Sundry receivables, prepaid expenses and other assets ...................... (585) (215) (206) Accounts payable and accrued expenses ... (54) 65 24 Tenants' security deposits .............. 26 51 9 Other liabilities ....................... (42) ------- ------- ------- Net cash provided by operating activities ........................ 3,264 3,908 3,434 ------- ------- ------- Investing activities: Capital expenditures ........................... (880) (590) (416) Investment in affiliate ........................ (2,440) Distributions from affiliate ................... 140 440 160 ------- ------- ------- Net cash used in investing activities (740) (150) (2,696) ------- ------- -------
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 (continued) 1996 1995 1994 ------- ------- ------- (In Thousands of Dollars) Financing activities: Dividends paid ................................. (2,792) (2,791) (2,527) Deferred charges ............................... (37) Proceeds from note payable - bank .............. 3,339 2,791 7,884 Repayment of note payable - bank ............... (2,846) (3,050) (6,376) Repayment of mortgages ......................... (501) (454) (399) ------- ------- ------- Net cash used in financing activities (2,800) (3,504) (1,455) ------- ------- ------- Net increase (decrease) in cash .................... (276) 254 (717) Cash, beginning of year ............................ 465 211 928 ------- ------- ------- Cash, end of year .................................. $ 189 $ 465 $ 211 ======= ======= ======= Supplemental disclosure of cash flow data: Interest paid .................................. $ 2,883 $ 2,528 $ 2,571 ======= ======= ======= Income taxes paid .............................. $ 8 $ 7 $ 7 ======= ======= ======= Supplemental schedule of noncash investing and financing activities: Dividends declared but not paid amounted to $1,029,000 and $1,154,000 at October 31, 1996 and 1995, respectively. 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 November 1, 1961 as a New Jersey Business Trust. The Trust is engaged in owning residential and commercial income producing properties located primarily in New Jersey. 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. For fiscal 1996, 1995 and 1994, the Trust made such an election. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions 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: 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, 1996 and 1995, 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. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and significant accounting policies (concluded): 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 $49,000, $27,000 and $21,000 in 1996, 1995 and 1994, 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 years in the period ended October 31, 1996. Change in accounting policy: The Trust has changed its method of accounting for its investment in Affiliate. Previously, the accounts of the Affiliate were combined with those of the Trust on the basis of common control. However, in as much as the Trust does not maintain unilateral control over the Affiliate, the equity method of accounting for the investment is deemed to be more appropriate. Accordingly, the accompanying financial statements have been restated. The effect of the restatement was to reduce both total assets and total liabilities by $13,548,000 and $13,697,000 at October 31, 1996 and 1995, respectively, and reduce income from rental operations by $233,000, $205,000 and $127,000 for the years ended October 31, 1996, 1995 and 1994, respectively. The restatement had no effect on shareholders' equity, net income or earnings per share. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 2 - Investment in affiliate: During May 1994, the Trust became a 40% member of the Affiliate, a newly formed 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. On June 2, 1994, the Affiliate consummated the purchase of Westwood Properties, a residential apartment complex located in Westwood, New Jersey. Summarized financial information of the Affiliate as of October 31, 1996 and 1995 and for each of the three years in the period ended October 31, 1996 is as follows:
1996 1995 ------- ------- (In Thousands of Dollars) Balance sheet data: Assets: Real estate and equipment, net ............ $14,928 $15,112 Other ..................................... 544 557 ------- ------- Total assets ........................ $15,472 $15,669 ======= ======= Liabilities and equity: Liabilities: Mortgage payable ........................ $10,346 $10,488 Other ................................... 314 250 ------- ------- Totals .............................. 10,660 10,738 ------- ------- Members' equity: Trust ................................... 1,924 1,972 Others .................................. 2,888 2,959 ------- ------- Totals .............................. 4,812 4,931 ------- ------- Total liabilities and equity ........ $15,472 $15,669 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS
1996 1995 1994 ------ ------ ------ (In Thousands of Dollars) Income statement data: Rental revenue ...................... $2,360 $2,212 $ 883 Rental expenses ..................... 2,127 2,007 756 ------ ------ ------ Income from rental operations ....... 233 205 127 Other expenses ...................... 3 1 ------ ------ ------ Net income .......................... $ 230 $ 204 $ 127 ====== ====== ======
Note 3 - Real estate: Real estate consists of the following:
Range of Estimated Useful Lives 1996 1995 ------------ ---- ---- (In Thousands of Dollars) Land $17,263 $17,263 Unimproved land 2,472 2,452 Apartment buildings 7-40 years 10,170 9,689 Commercial buildings 25-31.5 years 58 58 Shopping centers 15-50 years 26,947 26,859 Construction in progress 969 714 ------- ------- 57,879 57,035 Less accumulated depreciation 11,043 9,780 ------- ------- Totals $46,836 $47,255 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgages payable: Mortgages payable consist of the following:
1996 1995 ------- ------- (In Thousands of Dollars) State Mutual Life Insurance Co. (A) $18,068 $18,359 Travelers Insurance (B) 5,319 5,444 Summit Bank (C) 222 307 ------- ------- Totals $23,609 $24,110 ======= =======
(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 $25,755,000. (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 $11,890,000. (C) 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 $627,000. One of the directors of the bank is a trustee of the Trust. Principal amounts (in thousands of dollars) due under the above obligations in each of the five years subsequent to October 31, 1996 are as follows: Year Ending October 31, Amount ----------- ------ 1997 $18,295 1998 248 1999 208 2000 185 2001 4,673 FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgages payable (concluded): Based on borrowing rates currently available to the Trust, the carrying amount of mortgages payable approximates fair value at October 31, 1996. Note 5 - Note payable - bank: Note payable - bank consists of borrowings under a $20,000,000 revolving line of credit agreement with Summit 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 $38,956,000 at October 31, 1996 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 October 31, 1996 are as follows: Year Ending October 31, Amount ----------- ------ 1997 $ 3,598 1998 3,274 1999 2,961 2000 2,448 2001 2,269 Thereafter 10,892 ------- Total $25,442 ======= FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 6 - Commitments and contingencies (concluded): Leases (concluded): Commercial tenants (concluded): The above amounts assume that all leases which expire are not renewed and, accordingly, neither minimal rentals nor rentals from replacement tenants are included. In addition, the above amounts do not include any future minimum rentals to be received for the shopping center in Franklin Lakes, New Jersey having a net book value of approximately $1,286,000 at October 31, 1996. Management closed the shopping center on September 1, 1995 except for one tenant who vacated the premises on November 1, 1996. Commencement of a complete refurbishing of the premises is scheduled to begin during January or February 1997 and it is expected to be open for operations in the Fall of 1997. The cost of the refurbishing, which has been put out for bid, is currently anticipated to approximate $10,000,000. Rental revenue derived from the shopping center was approximately $140,000, $207,000 and $310,000 in fiscal 1996, 1995 and 1994, respectively, and income from rental operations was approximately $30,000, $91,000 and $166,000, respectively. 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 years in the period ended October 31, 1996 were not material. Residential tenants: Lease terms for residential tenants are usually one year or less. Acquisition: The Trust has entered into a contract to purchase a 64,000 square foot shopping center to be constructed in Patchogue, New York for approximately $11,000,000 including commissions and estimated professional fees. The contract to purchase the Patchogue center is contingent upon the construction being completed during January 1997. Note 7 - Management agreement: 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 $476,000, $470,000 and $451,000 in 1996, 1995 and 1994, respectively. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS 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. * * *
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY SCHEDULE IX - SHORT-TERM BORROWINGS (In Thousands of Dollars) Column A Column B Column C Column D Column E Column F -------- -------- -------- -------- -------- -------- Maximum Average Amount Amount Weighted Out- Out- Average Category of Balance Weighted standing standing Interest Aggregate at Average During During Rate Short-Term End of Interest the the During the Borrowings (A) Period Rate Period Period Period (B) - -------------- ------ ---- ------ ------ ---------- 1996: Note payable - bank $5,662 7.98% $6,362 $5,683 8.2% ====== ==== ====== ====== === 1995: Note payable - bank $5,169 8.09% $6,582 $5,585 7.9% ====== ==== ====== ====== === 1994: Note payable - bank $5,428 5.97% $5,728 $4,505 6.2% ====== ==== ====== ====== === (A) See Note 5 of notes to financial statements. (B) Calculated using average monthly loan balances and actual interest expense.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION (In Thousands of Dollars) Column A Column B -------- -------- Charged to Costs Item (A) and Expenses ------------------------------------ 1996 1995 1994 ---- ---- ---- Maintenance and repairs ........... $ 252 $ 219 $ 331 ====== ====== ====== Real estate taxes ................. $1,739 $1,507 $1,283 ====== ====== ====== (A) Amounts for other items were less than 1% of revenue in all years.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION OCTOBER 31, 1996 (In Thousands of Dollars) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Initial Cost Subsequent Gross Amount at Which to Company to Acquisition Carried at Close of Period Buildings Buildings Encum- and Carrying and Description brances Land Improvements Improvements Costs Land Improvements Total(1) ----------- ------- ---- ------------ ------------ ----- ---- ------------ -------- Garden apartments: Sheridan Apts., Camden, NJ ......................... $ 117 $ 360 $ 849 $ 117 $ 1,209 $ 1,326 Grandview Apts., Hasbrouck Heights, NJ .............. 22 180 175 22 355 377 Lakewood Apts., Lakewood, NJ ....................... 11 396 155 11 551 562 Hammel Gardens, Maywood, NJ ........................ 313 728 622 313 1,350 1,663 Palisades Manor, Palisades Park, NJ ................. 12 81 80 12 161 173 Steuben Arms, River Edge, NJ ..................... 364 1,773 329 364 2,102 2,466 Heights Manor, Spring Lake Heights, NJ ................... $ 222 109 974 301 109 1,275 1,384 Berdan Court, Wayne, NJ................ 250 2,206 961 250 3,167 3,417 Commercial property: Glen Rock, NJ .......................... 12 36 22 12 58 70 Shopping centers: Franklin Lakes Shopping Center, Franklin Lakes, NJ ................. 29 380 1,214 29 1,594 1,623 Westridge Shopping Center, Frederick, MD ................ 18,068 9,135 19,159 336 9,135 19,495 28,630 Westwood Shopping Center, Westwood, NJ ............... 5,319 6,889 6,416 411 6,889 6,827 13,716 Vacant land: Franklin Lakes, NJ ....................... 224 $ 8 232 232 Rockaway, NJ ........................... 1,683 384 2,067 2,067 South Brunswick, NJ .................... 80 93 173 173 ------- ------- ------- ------- ------- ------- ------- ------- Totals .......................... $23,609 $19,250 $32,689 $ 5,455 $ 485 $19,735 $38,144 $57,879 ======= ======= ======= ======= ======= ======= ======= ======= FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND AFFILIATE SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION OCTOBER 31, 1996 (In Thousands of Dollars) (continued) Column F Column G Column H Column I -------- -------- -------- -------- Which Accumulated Date of Date Depreciation Description Depreciation Construction Acquired is Computed ----------- ------------ ------------ -------- ----------- Garden apartments: Sheridan Apts., Camden, NJ .............. $ 629 1950 1964 7-40 years Grandview Apts., Hasbrouck Heights, NJ ... 218 1925 1964 7-40 years Lakewood Apts., Lakewood, NJ ............ 405 1960 1962 7-40 years Hammel Gardens, May- Maywood, NJ ............. 676 1949 1972 7-40 years Palisades Manor, Palisades Park, NJ ...... 104 1935/70 1962 7-40 years Steuben Arms, River Edge, NJ .......... 1,065 1966 1975 7-40 years Heights Manor, Spring Lake Heights, NJ ........ 791 1967 1971 7-40 years Berdan Court, Wayne, NJ ..... 2,072 1964 1965 7-40 years Commercial property: Glen Rock, NJ ............... 45 1940 1962 10-31.5 years Shopping centers: Franklin Lakes Shopping Center, Franklin Lakes, NJ ...... 337 1963/75 1966 10-50 years Westridge Shopping Center, Frederick, MD.... 2,875 1986 1992 15-31.5 years Westwood Shopping Center, Westwood, NJ .... 1,826 1981 1988 15-31.5 years Vacant land: Franklin Lakes, NJ .......... 1966/93 Rockaway, NJ ................ 1964/92/93 South Brunswick, NJ ......... 1964 ------- Totals ............... $11,043 ======= (1) Aggregate cost is the same for Federal income tax purposes.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION (In Thousands of Dollars) Reconciliation of real estate and accumulated depreciation: 1996 1995 1994 -------- -------- -------- Real estate: Balance, beginning of year .............. $ 57,035 $ 56,465 $ 56,080 Additions: Building and improvements ........... 824 577 357 Carrying costs ...................... 20 (7) 28 -------- -------- -------- Balance, end of year .................... $ 57,879 $ 57,035 $ 56,465 ======== ======== ======== Accumulated depreciation: Balance, beginning of year .............. $ 9,780 $ 8,584 $ 7,433 Additions - charged to operating expenses 1,263 1,196 1,151 -------- -------- -------- Balance, end of year .................... $ 11,043 $ 9,780 $ 8,584 ======== ======== ========
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Members Westwood Hills, LLC We have audited the accompanying balance sheets of WESTWOOD HILLS, LLC as of October 31, 1996 and 1995, and the related statements of income and members' equity and cash flows for each of the three years in the period ended October 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westwood Hills, LLC as of October 31, 1996 and 1995, and its results of operations and cash flows for each of the three years in the period ended October 31, 1996, in conformity with generally accepted accounting principles. /s/J. H. Cohn LLP ---------------- J. H. COHN LLP Roseland, New Jersey December 3, 1996
WESTWOOD HILLS, LLC (A New Jersey Limited Liability Company) BALANCE SHEETS OCTOBER 31, 1996 AND 1995 ASSETS 1996 1995 ------- ------- (In Thousands of Dollars) Real estate, at cost, net of accumulated depreciation of $731,000 and $424,000 ........ $14,857 $15,069 Equipment, at cost, net of accumulated depreciation of $10,000 and $2,000 ........... 71 43 Cash ............................................. 54 68 Tenants' security accounts ....................... 245 221 Sundry receivables ............................... 18 1 Prepaid expenses and other assets ................ 119 125 Deferred charges, net ............................ 108 142 ------- ------- Totals ................................. $15,472 $15,669 ======= ======= LIABILITIES AND MEMBERS' EQUITY Liabilities: Mortgage payable ............................. $10,346 $10,488 Accounts payable and accrued expenses ........ 69 29 Tenants' security deposits ................... 245 221 ------- ------- Total liabilities ...................... 10,660 10,738 Members' equity .................................. 4,812 4,931 ------- ------- Totals ................................ $15,472 $15,669 ======= ======= See Notes to Financial Statements.
WESTWOOD HILLS, LLC (A New Jersey Limited Liability Company) STATEMENTS OF INCOME AND MEMBERS' EQUITY YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 INCOME 1996 1995 1994 ------- ------- ------- (In Thousands of Dollars) Rental revenue: Rental income .................... $ 2,343 $ 2,197 $ 878 Sundry income .................... 17 15 5 ------- ------- ------- Totals ....................... 2,360 2,212 883 ------- ------- ------- Rental expenses: Operating expenses ............... 544 504 211 Management fees .................. 105 86 28 Real estate taxes ................ 350 283 91 Interest ......................... 813 832 301 Depreciation ..................... 315 302 125 ------- ------- ------- Totals ....................... 2,127 2,007 756 ------- ------- ------- Income from rental operations ........ 233 205 127 Other expenses ....................... 3 1 ------- ------- ------- Net income ........................... 230 204 127 MEMBERS' EQUITY Balance, beginning of year ........... 4,931 5,827 -- Contributions ........................ 6,100 Less distributions ................... (349) (1,100) (400) ------- ------- ------- Balance, end of year ................. $ 4,812 $ 4,931 $ 5,827 ======= ======= ======= See Notes to Financial Statements.
WESTWOOD HILLS, LLC (A New Jersey Limited Liability Company) STATEMENTS OF CASH FLOWS YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994 1996 1995 1994 ------- ------- ------- (In Thousands of Dollars) Operating activities: Net income ..................................... $ 230 $ 204 $ 127 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .............. 349 302 125 Changes in operating assets and liabilities: Tenants' security accounts .............. (24) (33) (188) Sundry receivables and prepaid expenses . (11) (246) (23) Accounts payable and accrued expenses ... 40 (48) 77 Tenants' security deposits .............. 24 33 188 ------- ------- ------- Net cash provided by operating activities ........................ 608 212 306 ------- ------- ------- Investing activities - capital expenditures ........ (131) (104) (5,914) ------- ------- ------- Financing activities: Members' contributions ........................... 6,100 Distributions paid ............................. (349) (1,100) (400) Mortgage proceeds .............................. 1,175 Repayment of mortgage .......................... (142) (142) (65) ------- ------- ------- Net cash provided by (used in) financing activities .............. (491) (67) 5,635 ------- ------- ------- Net increase (decrease) in cash .................... (14) 41 27 Cash, beginning of year ............................ 68 27 -- ------- ------- ------- Cash, end of year .................................. $ 54 $ 68 $ 27 ======= ======= ======= Supplemental disclosure of cash flow data: Interest paid .................................. $ 813 $ 832 $ 301 ======= ======= ======= Supplemental schedule of noncash investing and financing activities: During fiscal 1994, the Company financed the purchase of real estate with mortgage proceeds of $9,520,000 (see Note 2). During fiscal 1995, the outstanding mortgage balance of approximately $9,325,000 was repaid using proceeds of a new mortgage. See Notes to Financial Statements.
WESTWOOD HILLS, LLC (A New Jersey Limited Liability Company) NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and significant accounting policies: Organization: Westwood Hills, LLC (the "Company") was formed in May 1994 as a New Jersey limited liability company for the purpose of acquiring a residential apartment complex in Westwood, New Jersey. The Company is 40%-owned by First Real Estate Investment Trust of New Jersey (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 Company are either trustees of the Trust or their families or officers of Hekemian. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash: The Company maintains its cash in bank deposit accounts which, at times, may exceed Federally insured limits. The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At October 31, 1996 and 1995, the Company 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 ranging from 7 to 40 years. Deferred charges: Deferred charges consist of mortgage costs which are amortized on the straight-line method by annual charges to operations over the term of the mortgage. Advertising: The Company expenses the cost of advertising and promotions as incurred. Advertising costs charged to operations were not material. Income taxes: The Company, 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 in the accompanying financial statements. WESTWOOD HILLS, LLC (A New Jersey Limited Liability Company) NOTES TO FINANCIAL STATEMENTS Note 2 - Acquisition: On June 2, 1994, the Company 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 $15,389,000 of which $5,869,000 was paid in cash and $9,520,000 was financed by the proceeds of a mortgage. Of the total cost of the acquisition (including related acquisition expenses), $3,849,000 was allocated to land and $11,540,000 to buildings and improvements. In connection with the acquisition, the Company paid Hekemian a $500,000 real estate commission, which amount is included in the cost of the Apartment Complex. Note 3 - Real estate: Real estate consists of the following:
1996 1995 ------- ------- (In Thousands of Dollars) Land ....................................... $ 3,849 $ 3,849 Apartment buildings ........................ 11,739 11,644 ------- ------- 15,588 15,493 Less accumulated depreciation .............. 731 424 ------- ------- Totals ................................... $14,857 $15,069 ======= =======
Note 4 - Mortgage payable: The mortgage is payable in monthly installments of $79,655 including interest at 7.8% through October 2002 at which time the outstanding balance is due. The mortgage is secured by the Apartment Complex. Principal amounts (in thousands of dollars) due under the above obligation in each of the five years subsequent to October 31, 1996 are as follows: Year Ending October 31, Amount ----------- ------ 1997 $153 1998 166 1999 179 2000 194 2001 209 WESTWOOD HILLS, LLC (A New Jersey Limited Liability Company) NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgage payable (concluded): Based on borrowing rates currently available to the Company, the carrying amount of the mortgage approximates fair value at October 31, 1996. Note 5 - Management agreement: The Apartment Complex is currently managed by Hekemian. The management agreement requires fees equal to a percentage of rents collected. Such fees were approximately $105,000, $86,000 and $28,000 in 1996, 1995 and 1994, respectively. * * * EX-27 2
5 YEAR OCT-31-1996 OCT-31-1996 189,000 0 0 0 0 0 58,673,000 (11,651,000) 51,674,000 0 23,609,000 0 0 19,314,000 670,000 51,634 0 11,417,000 0 (8,091,000) (652,000) 0 0 2,674,000 (12,000) 2,662,000 0 0 0 2,662,000 1.71 1.71
-----END PRIVACY-ENHANCED MESSAGE-----