-----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, NOWWquFzDMegsGVRRsV4onh1WNIsRxQ38yLCKRHlDN5QuaXRYT1Ol9xbYhEAQqrw U4O5FnBe9yijO4cIIaWjbA== 0000914317-98-000566.txt : 19980916 0000914317-98-000566.hdr.sgml : 19980916 ACCESSION NUMBER: 0000914317-98-000566 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980915 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: SEC FILE NUMBER: 002-27018 FILM NUMBER: 98709749 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 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended July 31, 1998 Commission File No. 2-27018 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 [ X ] No [ ] FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY INDEX Part I: Financial Information Item 1: Financial Statements a.) Balance Sheets for July 31, 1998 and October 31, 1997; b.) Statements of Income and Undistributed Earnings For Nine and Three Months Ended July 31, 1998 and 1997; c.) Statements of Cash Flows for Nine Months Ended July 31, 1998 and 1997; Item 2: Management's Discussion and Analysis of Results of Operations and Financial Condition Part II: Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Disclosure Concerning Forward-Looking Statements Certain statements in the "Management's Discussion and Analysis of the Results of Operation and Financial Condition", and certain of the Notes to the Registrant's Financial Statements, in particular Note 6, contain or may contain information that is forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Registrant cautions readers that forward-looking statements, including, without limitation, those relating to the Registant's liquidity and capital resources, are subject to certain risks and uncertainties. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risk and factors, including without limitation, the Registrant's future financial performance; the availability of capital; general market conditions; national and local economic conditions, particularly long-term interest rates; the terms of federal, state and local governmental regulations that affect the Registrant; and the competitive environment in which the Registrant operates, including, the availability of commercial office space and residential units in the areas where the Registrant's properties are located. In addition, the Registrant's continued qualification as a real estate investment trust involves the application of highly technical and complex programs of the Internal Revenue Code. The forward-looking statements are made as of the date of this Form 10-Q and the Registrant assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those projeced in such forward-looking statements. Part 1. 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, 1997. Liquidity and Capital Resources Liquidity Cash from operations has enabled the Registrant to meet all current obligations. Registrant expects that cash from operations will allow it to meet all future requirements as they become due. Results of Operations The Registrant's net income for the second quarter ended April 30, 1998, increased 24.5% to $973,000 ($.62 per share) from $776,000 ($.49 per share) for the comparable prior year quarter. Net income for the nine months ended July 31, 1998, increased 24.5% to $2,688,000 ($1.72 per share) from $2,159,000 ($1.38 per share) for the nine months ended July 31, 1997. Earnings from operating properties (before interest costs) increased the first nine months of Fiscal Year 1997. While earnings at comparable properties in both years increased as a result of higher base rents and lower operating costs, the principle reason for increase in earnings is Registrant's new commercial properties in Patchogue, New York, and Franklin Lakes, New Jersey. An increase of 21% in net income from the Registrant's affiliate also contributed in the increase in net income realized during the first nine months of fiscal 1998. Funds from operations, consisting of net income, excluding deferred rents and gains and losses from property sales, plus real estate related depreciation and amortization, ("FFO") was $1,357,000 for the third quarter of fiscal 1998 as compared to $1,137,000 for the same period in 1997. FFO for the nine months 1998 was $3,924,000 as compared to $3,237,000 for the same period in 1997. Part II. Item 4. Submission of Matters to a Vote of Security Holders. On May 27, 1998 at the Annual Meeting of the Shareholders, the Shareholders re-elected Donald W. Barney, Ronald A. Artinian and Alan L. Aufzien as Trustees for additional three year terms. A total of 1,316,848 votes were cast in favor of each Trustee; there were 1,559,788 shares of the Registrant eligible to vote. There were no negative votes. Item. 5. Other Information The Board of Trustees declared a $0.40 third quarter dividend payable on September 14, 1998, to shareholders of record as of September 1, 1998. This will raise dividends paid thus far this fiscal year to $1.20 per share compared to $1.05 per share paid during the same period in 1997. Item 6. Exhibits and Reports on Form 8-K No Form 8-K was filed during the third quarter of fiscal year 1998 which ended July 31, 1998. 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 September 15, 1998 /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. SALES OF UNREGISTERED SECURITIES (DEBT OR EQUITY) FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY N O N E
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY BALANCE SHEETS JULY 31, 1998 AND OCTOBER 31, 1997 July October ASSETS 31, 1998 31, 1997 ------- ------- (Unaudited) (See Note 1) (In Thousands of Dollars) Real estate, at cost, net of accumulated depreciation ............... $64,683 $53,737 Equipment, at cost, net of accumulated depreciation of $693,000 and $657,000 .......................................................... 188 184 Investment in affiliate ............................................. 1,854 1,905 Cash ................................................................ 649 228 Tenants' security accounts .......................................... 781 719 Sundry receivables .................................................. 1,021 280 Prepaid expenses and other assets ................................... 904 1,470 Deferred charges, net ............................................... 1,171 710 ------- ------- Totals .................................................... $71,251 $59,233 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages payable ............................................... $48,020 $24,429 Note payable - bank ............................................. 11,429 Accounts payable and accrued expenses ........................... 441 409 Construction liabilities ........................................ 496 Dividends payable ............................................... 624 1,326 Tenants' security deposits ...................................... 991 905 Deferred revenue ................................................ 375 255 ------- ------- Total liabilities ......................................... 50,451 39,249 ------- ------- 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 .......................................... 1,486 670 ------- ------- Total shareholders' equity ................................ 20,800 19,984 ------- ------- Totals .................................................... $71,251 $59,233 ======= =======
See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS NINE AND THREE MONTHS ENDED JULY 31, 1998 AND 1997 (Unaudited) Nine Months Three Months Ended July 31, Ended July 31, INCOME 1998 1997 1998 1997 -------- -------- -------- -------- (In Thousands of Dollars, Except Per Share Amounts) Revenue: Rental income ....................... $ 9,233 $ 7,419 $ 3,207 $ 2,508 Reimbursements ...................... 1,202 1,060 378 375 Equity in income of affiliate ....... 149 123 71 46 Sundry income ....................... 149 110 47 28 -------- -------- -------- -------- Totals .......................... 10,733 8,712 3,703 2,957 -------- -------- -------- -------- Expenses: Operating expenses .................. 2,251 1,979 760 658 Management fees ..................... 428 369 155 121 Real estate taxes ................... 1,325 1,258 437 419 Interest ............................ 2,813 1,960 948 648 Depreciation ........................ 1,220 978 428 332 -------- -------- -------- -------- Totals .......................... 8,037 6,544 2,728 2,178 -------- -------- -------- -------- Income before state income taxes ........ 2,696 2,168 975 779 Provision for state income taxes ........ 8 9 2 3 -------- -------- -------- -------- Net income .............................. $ 2,688 $ 2,159 $ 973 $ 776 ======== ======== ======== ======== Earnings per share ...................... $ 1.72 $ 1.38 $ .62 $ .49 ======== ======== ======== ======== UNDISTRIBUTED EARNINGS Balance, beginning of period ............ $ 670 $ 670 $ 1,137 $ 961 Net income .............................. 2,688 2,159 973 776 Less dividends .......................... (1,872) (1,637) (624) (545) -------- -------- -------- -------- Balance, end of period .................. $ 1,486 $ 1,192 $ 1,486 $ 1,192 ======== ======== ======== ======== Dividends per share ..................... $ 1.20 $ 1.05 $ .40 $ .35 ======== ======== ======== ========
See Notes to Financial Statements.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JULY 31, 1998 AND 1997 (Unaudited) 1998 1997 -------- -------- (In Thousands of Dollars) Operating activities: Net income ......................................................... $ 2,688 $ 2,159 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................................. 1,313 1,005 Deferred revenue ............................................... 120 (259) Equity in income of affiliate ...................................... (149) (123) Changes in operating assets and liabilities: Tenants' security accounts .................................. (62) 7 Sundry receivables, prepaid expenses and other assets ....... (175) 103 Accounts payable and accrued expenses ....................... 32 (61) Tenants' security deposits .................................. 86 22 -------- -------- Net cash provided by operating activities ............... 3,853 2,853 -------- -------- Investing activities: Capital expenditures ............................................... (5,195) (4,447) Distributions from affiliate ....................................... 200 117 -------- -------- Net cash used in investing activities ................... (4,995) (4,330) -------- -------- Financing activities: Dividends paid ..................................................... (2,574) (2,120) Proceeds (repayments) of note payable - bank ....................... (11,429) 4,721 Net proceeds from mortgage refinancing ............................. 5,443 1,314 Proceeds from mortgage borrowings .................................. 11,100 Repayment of mortgages ............................................. (452) (377) Deferred mortgage costs ............................................ (525) (224) -------- -------- Net cash provided by financing activities ............... 1,563 3,314 -------- -------- Net increase in cash ................................................... 421 1,837 Cash, beginning of period .............................................. 228 189 -------- -------- Cash, end of period .................................................... $ 649 $ 2,026 ======== ========
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JULY 31, 1998 AND 1997 (Unaudited) (continued) 1998 1997 -------- -------- (In Thousands of Dollars) Supplemental disclosure of cash flow data: Interest paid, net of capitalized interest of $67,000 and $51,000 in 1998 and 1997, respectively .................................... $ 2,814 $ 1,961 ======== ======== Supplemental schedule of noncash investing and financing activities: Dividends declared but not paid amounted to $624,000 and $545,000 at July 31, 1998 and 1997, respectively. During the nine months ended July 31, 1998, the Trust completed its acquisition of a 64,000 square foot commercial property in Patchogue, New York for approximately $11,000,000, in part, with the proceeds of a $7,500,000 mortgage.
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, Maryland and New York. 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 financial information included herein as at July 31, 1998 and for the nine and three months ended July 31, 1998 and 1997 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 financial position as of that date and the results of operations for those periods. The information in the balance sheet as of October 31, 1997 was derived from the Trust's audited annual report for 1997. 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 July 31, 1998 and October 31, 1997, the Trust had no cash equivalents. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and significant accounting policies (concluded): 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. Amortization of such costs is included in interest expense and approximated $49,000 and $19,000 for the nine and three months ended July 31, 1998, respectively. 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 $40,000 and $23,000 for the nine months ended July 31, 1998 and 1997, respectively, and approximately $17,000 and $10,000 for the three months ended July 31, 1998 and 1997, 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 nine and three month periods ended July 31, 1998 and 1997. Reclassification: Certain amounts in the 1997 financial statements have been reclassified to conform with the current presentation. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 2 - Investment in affiliate: The Trust is a 40% member of the Affiliate, a 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. The Affiliate owns a residential apartment complex located in Westwood, New Jersey. Summarized financial information of the Affiliate as of July 31, 1998 and October 31, 1997 and for the nine and three months ended July 31, 1998 and 1997 is as follows:
July October 31, 1998 31, 1997 -------- -------- (In Thousands of Dollars) Balance sheet data: Assets: Real estate and equipment, net ............... $14,489 $14,696 Other ........................................ 544 551 ------- ------- Total assets .......................... $15,033 $15,247 ======= ======= Liabilities and members' equity: Liabilities: Mortgage payable .......................... $10,068 $10,192 Other ..................................... 333 295 ------- ------- Totals ................................ 10,401 10,487 ------- ------- Members' equity: Trust ..................................... 1,854 1,905 Others .................................... 2,778 2,855 ------- ------- Totals ................................ 4,632 4,760 ------- ------- Total liabilities and members' equity . $15,033 $15,247 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS
Nine Months Three Months Ended Ended July 31, July 31, ------------------ ------------------ 1998 1997 1998 1997 ------ ------ ------ ------ (In Thousands of Dollars) Income statement data: Rental revenue .............. $1,953 $1,878 $ 660 $ 632 Rental expenses ............. 1,581 1,570 483 515 ------ ------ ------ ------ Net income .................. $ 372 $ 308 $ 177 $ 117 ====== ====== ====== ======
Note 3 - Real estate: Real estate consists of the following:
Range of Estimated July October Useful Lives 31, 1998 31, 1997 ------------ -------- -------- (In Thousands of Dollars) Land $22,768 $20,244 Unimproved land 2,308 2,310 Apartment buildings 7-40 years 10,929 10,711 Commercial buildings and shopping centers 15-50 years 39,866 30,328 Construction in progress 1,981 2,126 --------- --------- 77,852 65,719 Less accumulated depreciation 13,169 11,982 -------- -------- Totals $64,683 $53,737 ======= =======
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgages payable: Mortgages payable consist of the following:
July October 31, 1998 31, 1997 ----------- ----------- (In Thousands of Dollars) Northern Life Insurance Cos. (A) $ 18,940 $ 19,123 Travelers Insurance (B) 5,181 National Realty Funding L.C. (B) 10,551 Summit Bank (C) 54 125 Summit Bank (D) 7,437 Federal Home Loan Mortgage Corporation (E) 11,038 ----------- ----------- Totals $ 48,020 $ 24,429 =========== ===========
(A) The mortgage is payable in monthly installments of $152,153 including interest at 8.31% through June 2007 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 $24,665,000. (B) On January 9, 1998, the Trust repaid the existing mortgage on the Westwood, New Jersey shopping center utilizing proceeds from a new mortgage in the amount of $10,600,000 with National Realty Funding L.C. The new mortgage is payable in monthly installments of $73,248 including interest at 7.38% through February 2013 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 $11,568,000. (C) Payable in monthly installments of $8,555 including interest at 7.625% through March 1999. The mortgage is secured by an apartment building in Spring Lake, New Jersey having a net book value of approximately $566,000. One of the directors of the bank is a trustee of the Trust. (D) Payable in monthly installments of $54,816 including interest at 7.375% through January 2005 at which time the outstanding balance is due. The mortgage is secured by a commercial building in Patchogue, New York having a net book value of approximately $10,752,000. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 4 - Mortgages payable: (concluded) (E) Payable in monthly installments of $76,023 including interest at 7.29% through July 2010 at which time the outstanding balance is due. The mortgage is secured by an apartment building in Wayne, New Jersey having a net book value of approximately $1,608,000. Principal amounts (in thousands of dollars) due under the above obligations in each of the five years subsequent to July 31, 1998 are as follows: Year Ending July 31, Amount -------- ------ 1999 $648 2000 633 2001 684 2002 739 2003 799 Based on borrowing rates currently available to the Trust, the carrying amount of mortgages payable approximates fair value at July 31, 1998. Note 5 - Note payable - bank: At October 31, 1997, note payable - bank consisted of borrowings under a revolving line of credit agreement with Summit Bank which expired on April 30, 1998, at which time the agreement was renegotiated and extended to May 31, 1999. Maximum borrowings under the agreement were $12,310,000 and $20,000,000 at July 31, 1998 and October 31, 1997, respectively. The line of credit bears interest at the bank's floating base rate plus .25% or the LIBOR rate plus 175 basis points. Outstanding borrowings are secured by all of the Trust's properties except commercial property located in Frederick, Maryland, Westwood, New Jersey and Patchogue, New York, apartment buildings in Wayne, New Jersey, River Edge, New Jersey and Maywood, New Jersey and any vacant land owned by the Trust. There were no outstanding borrowings under the agreement at July 31, 1998. Note 6 - Commitments and contingencies: Leases: Commercial tenants: The Trust leases commercial space having a net book value of approximately $56,957,000 at July 31, 1998 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 July 31, 1998 are as follows: FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Year Ending July 31, Amount -------- ------ 1999 $ 6,050 2000 5,616 2001 5,406 2002 5,048 2003 4,793 Thereafter 50,433 ------- Total $ 77,346 ======== 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 nine and three months ended July 31, 1998 and 1997 were not material. Residential tenants: Lease terms for residential tenants are usually one year or less. Standby letters of credit: At July 31, 1998, the Trust was obligated under irrevocable standby letters of credit of approximately $100,000 in connection with certain required land improvements at the Franklin Lakes shopping center. Environmental concerns: In accordance with applicable regulations, the Trust reported to the New Jersey Department of Environmental Protection that a discharge of hazardous material was recently discovered at the newly renovated Franklin Crossing Shopping Center (the "Center"). At present, the discharge material appears to be isolated and management believes there will be no significant effect on the operations of the Center. In connection therewith, the Trust is required to investigate and monitor such discharge, the cost of which will not be material. FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY NOTES TO FINANCIAL STATEMENTS Note 7 - Management agreement and related party transactions: 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 $428,000 and $369,000 for the nine months ended July 31, 1998 and 1997, respectively, and approximately $155,000 and $121,000 for the three months ended July 31, 1998 and 1997, 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. * * * EX-27 2
5 9-MOS OCT-31-1998 JUL-31-1998 649 0 0 0 0 0 78,697 (13,826) 71,251 0 48,020 0 0 19,314 1,486 71,251 0 10,733 0 0 5,224 0 2,813 2,696 8 2,688 0 0 0 2,688 1.72 1.72
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