UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 10, 2020
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
(Exact name of registrant as specified in charter)
New Jersey | 000-25043 | 22-1697095 |
(State or other jurisdiction of incorporation) | (Commission File Number) |
(IRS Employer Identification No.) |
505 Main Street, Hackensack, New Jersey | 07601 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (201) 488-6400
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Shares of beneficial interest, without par value | FREVS | OTC Pink Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02 Results of Operations and Financial Condition
OPERATING RESULTS
The registrant has released its operating results for the fiscal quarter ended January 31, 2020. The Press Release is included as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Registrant’s press release dated March 10, 2020
The statements in this report which relate to future earnings or performance are forward-looking. Actual results may differ materially and be adversely affected by such factors as longer than anticipated lease-up periods or the inability of tenants to pay increased rents. Additional information about these factors is contained in the Trust’s filings with the SEC including the Trust’s most recently filed reports on Form 10-K and Form 10-Q.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY | ||
(Registrant) | ||
By: | /s/ Robert S. Hekemian, Jr. | |
Robert S. Hekemian, Jr. | ||
President and Chief Executive Officer |
Date: March 10, 2020
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EXHIBIT INDEX
Exhibit | |
Number | Description |
99.1 | Press Release – Operating results for the fiscal quarter ended January 31, 2020. |
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FREIT Announces First Quarter Fiscal 2020 Results
HACKENSACK, NJ, March 10, 2020 – First Real Estate Investment Trust of New Jersey (“FREIT” or the “Company”) reported its operating results for the fiscal quarter ended January 31, 2020. The results of operations as presented in this earnings release are unaudited and are not necessarily indicative of future results.
FINANCIAL HIGHLIGHTS & OPERATING STATISTICS | |||
For the Fiscal Quarter Ended | |||
January 31, | |||
($ in thousands, except per share amounts) | 2020 | 2019 | |
GAAP (Loss) Earnings Per Share - Basic & Diluted | ($0.32) | $0.07 | |
AFFO Per Share - Basic & Diluted | $0.04 | $0.42 | |
Dividends Per Share | $0.00 | $0.15 | |
Total Average Residential Occupancy | 93.7% | 95.2% | |
Total Average Commercial Occupancy (a) | 81.5% | 81.4% | |
(a) Occupancy metrics exclude the Patchogue, New York property from the fiscal quarter ended January 31, 2019 as the property was sold in February 2019. |
Results for the Quarter
Real estate revenue increased 4.5% to $15.6 million for the fiscal quarter ended January 31, 2020 as compared to $14.9 million for the prior year’s comparable period. The increase in revenue was primarily attributable to an increase in base rents across most properties and an increase in the average annual occupancy rate for the commercial space (office and retail) at the Rotunda property from an average occupancy rate of 81.2% in the prior year’s comparable period to 84.2% in the current quarter.
Net (loss) income attributable to common equity (“net (loss) income”) was a net loss of $2.3 million or ($0.32) per share basic and diluted for the fiscal quarter ended January 31, 2020 as compared to net income of $0.5 million or $0.07 per share basic and diluted for the prior year’s comparable period. The net loss was primarily driven by $3.4 million related to Special Committee expenses for advisory and legal fees incurred in Fiscal 2020; offset by an increase in revenue as explained above (consolidated impact of approximately $0.4 million); and a decrease in interest expense of approximately $0.4 million (consolidated impact of $0.3 million) driven by a decline in interest rates on the variable mortgage loans. (Refer to “Table of Revenue & Net (Loss) Income Components”)
Table of Revenue & Net (Loss) Income Components | ||||||||||||
For the Fiscal Quarter Ended January 31, | ||||||||||||
2020 | 2019 | Change | ||||||||||
(In Thousands of Dollars, Except Per Share Amounts) | ||||||||||||
Revenue: | ||||||||||||
Commercial properties | $ | 7,077 | $ | 6,699 | $ | 378 | ||||||
Residential properties | 8,516 | 8,229 | 287 | |||||||||
Total real estate revenues | 15,593 | 14,928 | 665 | |||||||||
Operating expenses: | ||||||||||||
Real estate operations | 6,365 | 6,326 | 39 | |||||||||
General and administrative | 772 | 608 | 164 | |||||||||
Special committee expenses | 3,382 | — | 3,382 | |||||||||
Depreciation | 2,932 | 2,824 | 108 | |||||||||
Total operating expenses | 13,451 | 9,758 | 3,693 | |||||||||
Operating income | 2,142 | 5,170 | (3,028 | ) | ||||||||
Financing costs | (4,235 | ) | (4,652 | ) | 417 | |||||||
Investment income | 72 | 71 | 1 | |||||||||
Unrealized loss on interest rate cap contract | — | (154 | ) | 154 | ||||||||
Net (loss) income | (2,021 | ) | 435 | (2,456 | ) | |||||||
Net (income) loss attributable to noncontrolling interests in subsidiaries | (241 | ) | 24 | (265 | ) | |||||||
Net (loss) income attributable to common equity | $ | (2,262 | ) | $ | 459 | $ | (2,721 | ) | ||||
(Loss) Earnings per share - basic and diluted | $ | (0.32 | ) | $ | 0.07 | $ | (0.39 | ) | ||||
Weighted average shares outstanding: | ||||||||||||
Basic and diluted | 6,979 | 6,915 |
Dividend
In view of FREIT having entered into the Purchase and Sale Agreement with Sinatra Properties, LLC, the Board of Trustees did not declare a dividend for the first quarter of Fiscal 2020. The Board will continue to evaluate the dividend on a quarterly basis.
Adjusted Funds From Operations
Funds From Operations (“FFO”) is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”). FREIT does not include sources or distributions from equity/debt sources in its computation of FFO. Although many consider FFO as the standard measurement of a REIT’s performance, FREIT modified the NAREIT computation of FFO to include other adjustments to GAAP net income, which are not considered by management to be the primary drivers of its decision making process. These adjustments to GAAP net income are straight-line rents and recurring capital improvements on FREIT’s residential apartments.
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The modified FFO computation is referred to as Adjusted Funds From Operations (“AFFO”). FREIT believes that AFFO is a superior measure of its operating performance. FREIT computes FFO and AFFO as follows:
For the Fiscal Quarter Ended January 31, | ||||||||
2020 | 2019 | |||||||
(In Thousands of Dollars, Except Per Share Amounts) | ||||||||
Funds From Operations ("FFO") (a) | ||||||||
Net (loss) income | $ | (2,021 | ) | $ | 435 | |||
Depreciation of consolidated properties | 2,932 | 2,824 | ||||||
Amortization of deferred leasing costs | 113 | 127 | ||||||
Distributions to minority interests | (583 | ) | (294 | ) | ||||
FFO | $ | 441 | $ | 3,092 | ||||
Per Share - Basic and Diluted | $ | 0.06 | $ | 0.45 | ||||
(a) As prescribed by NAREIT. | ||||||||
Adjusted Funds From Operations ("AFFO") | ||||||||
FFO | $ | 441 | $ | 3,092 | ||||
Deferred rents (Straight lining) | (63 | ) | (67 | ) | ||||
Capital Improvements - Apartments | (96 | ) | (124 | ) | ||||
AFFO | $ | 282 | $ | 2,901 | ||||
Per Share - Basic and Diluted | $ | 0.04 | $ | 0.42 | ||||
Weighted Average Shares Outstanding: | ||||||||
Basic and Diluted | 6,979 | 6,915 |
FFO and AFFO do not represent cash generated from operating activities in accordance with accounting principles generally accepted in the United States of America, and therefore should not be considered a substitute for net income as a measure of results of operations or for cash flow from operations as a measure of liquidity. Additionally, the application and calculation of FFO and AFFO by certain other REITs may vary materially from that of FREIT, and therefore FREIT’s FFO and AFFO may not be directly comparable to those of other REITs.
The statements in this report, which relate to future earnings or performance, are forward-looking. Actual results may differ materially and be adversely affected by such factors as longer than anticipated lease-up periods or the inability of tenants to pay increased rents. Additional information about these factors is contained in the Trust’s filings with the SEC including the Trust’s most recent filed reports on Form 10-K and Form 10-Q.
First Real Estate Investment Trust of New Jersey is a publicly traded (over-the-counter – symbol FREVS.) REIT organized in 1961. Its portfolio of residential and commercial properties are located in New Jersey, New York and Maryland, with the largest concentration in northern New Jersey.
For additional information, contact Shareholder Relations at (201) 488-6400
Visit us on the web: www.freitnj.com
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