Property acquisition

9 Months Ended

Jul. 31, 2015

Property acquisition [Abstract]

Property acquisition

Note 6 – Property acquisition:

On June 18, 2014, FREIT completed the acquisition of the Regency Club (“Regency”), a residential apartment complex located in Middletown, New York. The Regency complex consists of 132 units in 11 buildings and a clubhouse. The acquisition cost was $20,625,000 (exclusive of $648,000 of transaction costs charged to expense), which was funded in part with $9.8 million in net proceeds from the sale of the South Brunswick land, and the remaining balance of $11.5 million (inclusive of the $648,000 of transaction costs) was funded utilizing $10 million of FREIT's credit line with Provident Bank, and FREIT's available cash. On December 29, 2014, FREIT secured long-term financing for this property in the amount of $16.2 million from Provident Bank.

The acquisition price of $20,625,000 has been allocated as follows: $18.5 million to the buildings and $2.1million to the land. 

FREIT identified the Regency as a replacement property for the vacant land located in South Brunswick, New Jersey that FREIT sold on December 20, 2013 (see Note 5). The Regency is part of FREIT's Residential segment.

The following unaudited pro forma information shows the results of operations for the nine and three-month periods ended July 31, 2014 for FREIT and Subsidiaries as though the Regency had been acquired at the beginning of fiscal 2014:

	Nine Months Ended			Three Months Ended
	July 31, 2014			July 31, 2014
	Pro Forma			Pro Forma
Revenues	$	33,039		$	10,754
Net expenses		29,608			9,413
Income from continuing operations		3,431			1,341
Income from discontinued operations		7			—
Gain on sale of discontinued operation		8,734			—
Net income		12,172			1,341
Net income attributable to noncontrolling interest in subsidiaries		(453	)		(162	)
Net income attributable to common equity	$	11,719		$	1,179
Earnings per share - basic and diluted:
Continuing operations	$	0.43		$	0.17
Discontinued operations		1.26			—
Net income attributable to common equity	$	1.69		$	0.17
Weighted average shares outstanding - basic and diluted		6,925			6,922

The pro forma results reflect the following adjustments: (a) additional depreciation expense based on the purchase price allocated to the buildings and a depreciable life of 40 years, and (b) additional interest expense based on the $10 million loan used towards the purchase of the property at acquisition date.

The pro forma results of operations set forth above are not necessarily indicative of the results that would have occurred had the acquisition been made at the beginning of fiscal 2014, or of future results of operations of FREIT's combined properties.