Segment information

12 Months Ended

Oct. 31, 2020

Segment Reporting [Abstract]

Segment information

Note 13 - Segment information:

ASC 280-10, "Disclosures about Segments of an Enterprise and Related Information", establishes standards for reporting financial information about operating segments in interim and annual financial reports and provides for a "management approach" in identifying the reportable segments.

FREIT has determined that it has two reportable segments: commercial properties and residential properties. These reportable segments offer different types of space, have different types of tenants, and are managed separately because each requires different operating strategies and management expertise.

The commercial segment is comprised of eight (8) properties, excluding the land and building formerly occupied as a Pathmark supermarket in Patchogue, New York, which was sold on February 8, 2019 (see Note 2), during the fiscal years ended October 31, 2020 and 2019. The commercial segment was comprised of nine (9) properties during the fiscal year ended October 31, 2018. The residential segment is comprised of seven (7) properties, excluding the Pierre Towers property which was converted into a tenancy-in-common and deconsolidated from FREIT’s operating results as of February 28, 2020 (see Note 17 to FREIT’s consolidated financial statements for further details), during the fiscal year ended October 31, 2020. The residential segment was comprised of eight (8) properties during the fiscal years ended October 31, 2019 and 2018.

The accounting policies of the segments are the same as those described in Note 1. The chief operating and decision-making group of FREIT's commercial segment, residential segment and corporate/other is comprised of FREIT’s Board of Trustees.

FREIT assesses and measures segment operating results based on net operating income ("NOI"). NOI, a standard used by real estate professionals, is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes: deferred rents (straight lining), depreciation, financing costs and other items. NOI is not a measure of operating results or cash flows from operating activities as measured by accounting principles generally accepted in the United States of America, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

Real estate rental revenue, operating expenses, NOI and recurring capital improvements for the reportable segments are summarized below and reconciled to consolidated net income attributable to common equity for each of the years

93

in the three-year period ended October 31, 2020. Asset information is not reported since FREIT does not use this measure to assess performance.

	Years Ended October 31,
	2020		2019		2018
	(In Thousands of Dollars)
Real estate rental revenue:
Commercial	$	24,486	$	26,692	$	25,464
Residential		28,638		33,175		31,928
Total real estate rental revenue		53,124		59,867		57,392
Real estate operating expenses:
Commercial		11,334		11,694		11,861
Residential		11,588		14,368		13,022
Total real estate operating expenses		22,922		26,062		24,883
Net operating income:
Commercial		13,152		14,998		13,603
Residential		17,050		18,807		18,906
Total net operating income	$	30,202	$	33,805	$	32,509

Recurring capital improvements - residential $ (347 ) $ (685 ) $ (738 )

Reconciliation to consolidated net income attributable to common equity:
Segment NOI	$	30,202		$	33,805		$	32,509
Deferred rents - straight lining		(397	)		410			605
Investment income		204			360			267
Unrealized (loss) gain on interest rate cap contract		—			(160	)		72
Special Committee third party advisory, legal and other expenses		(4,606	)		(1,416	)		—
Gain on sale of property		—			836			—
Gain on deconsolidation of subsidiary		27,680			—			—
Loss on investment in tenancy-in-common		(202	)		—			—
General and administrative expenses		(3,821	)		(2,633	)		(2,305	)
Depreciation		(10,341	)		(11,339	)		(11,515	)
Tenant improvement write-off due to COVID-19		(7,277	)		—			—
Financing costs		(14,122	)		(18,070	)		(18,667	)
Net income		17,320			1,793			966
Net loss (income) attributable to noncontrolling interests in subsidiaries		3,233			(6	)		517
Net income attributable to common equity	$	20,553		$	1,787		$	1,483