Exhibit 99.1

 

 

 

 

HACKENSACK, NJ, January 9, 2015

First Real Estate Investment Trust of New Jersey (“FREIT”) reported its operating results for the year and quarter ended October 31, 2014. The results of operations as presented in this earnings release are unaudited, and are not necessarily indicative of future operating results.

 

 

FINANCIAL HIGHLIGHTS & OPERATING STATISTICS  
($ in thousands, except per share and rental rates)
Year Ended October 31,  Quarter Ended October 31, 
2014 2013 2014 2013
*  Net Income Per Share-Basic & Diluted     $1.69 $1.07 $0.09 $0.46
*  Dividends Per Share        $1.20 $1.56 $0.30 $0.66
*  AFFO Per Share-Basic & Diluted       $1.40 $1.30 $0.35 $0.38
*  AFFO Payout        85.7% 120.0% 85.7% 173.7%
               
*  Segment NOI       $23,423 $23,246 $5,734 $5,896
*  Average Residential Occupancy  (a)     95.4% 92.8% 96.4% 92.9%
*  Average Commercial Occupancy  (b)      82.3% 81.9% 81.4% 83.4%
               
*  Average residential rental rate  (per month)   $1,703 $1,683    
*  Average commercial re-leasing rates  (per sq.ft.)   $22.83 $18.70    
*  Total Assets       $305,317 $244,251    
*  Total Equity       $29,846 $23,805    
(a) Includes occupancy for the Regency apartments, acquired in June 2014. Average occupancy for the Regency was at 99.5% for the YTD and quarter periods.
(b) Includes occupancy for the Rotunda shopping center, which is undergoing a major redevelopment project. Also includes occupancy of Damascus shopping center, which recently underwent a major redevelopment project and is currently 83% leased and 81% occupied.

RESULTS OF OPERATIONS

Year End Results (Per share represents basic and diluted share amounts)

·Funds From Operations (“FFO”) was $9.2 million, or $1.33 per share, as compared to $10.5 million, or $1.51 per share, for the prior year period.
·Adjusted Funds From Operations (“AFFO”) modifies FFO for unique revenue and expense items, which the Company believes are germane to the measurement of the Company’s ongoing operating performance, such as: capital improvements, deferred rents, and acquisition expenses. AFFO was $9.7 million, or $1.40 per share, as compared to $9.0 million, or $1.30 per share, for the prior year period.
·Net income attributable to common equity was $11.7 million, or $1.69 per share, compared to $7.5 million, or $1.07 per share, for the prior year period.

Fourth Quarter Results (Per share represents basic and diluted share amounts)

·FFO was $2.4 million, or $0.34 per share, as compared to $2.9 million, or $0.41 per share, for the prior year period.
·AFFO was $2.4 million, or $0.35 per share, compared to $2.6 million, or $0.38 per share for the prior year period.
·Net income attributable to common equity was $0.6 million, or $0.09 per share, or $3.2 million or $0.46 per share for the prior year period.

Acquisitions and Dispositions – Increased Cash Flow

On December 20, 2013, FREIT sold its South Brunswick property, which consisted of vacant land, for $11 million, resulting in a net capital gain of approximately $8.7 million. FREIT structured this sale, so that the sale proceeds could be reinvested in a manner that qualifies it as a like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code. This resulted in a deferral for income tax purposes of the $8.7 million capital gain. The reinvestment was completed on June 18, 2014 with the acquisition of the Regency Club, a residential apartment complex located in Middletown, New York. This transaction effectively converted a non-income producing, non-cash producing asset to one that produces net income and cash flow that will benefit shareholders.

 

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Financing Activities

On December 9, 2013, Grande Rotunda, LLC, a 60% owned affiliate, closed on a construction loan with Wells Fargo Bank for up to $120 million to be used to fund the major redevelopment and expansion project at the Rotunda. The construction loan is for a term of four (4) years, with one 12-month extension, at a rate of 225 basis points over the monthly LIBOR.

 

Development Activity

The Rotunda property in Baltimore, MD is an 11.5 acre site containing a 138,000 sq. ft. office building and approximately 78,000 sq. ft. of retail space on the lower level of the office building. During the past fiscal year FREIT began a major development / renovation of The Rotunda that will include renovations to the office building, construction of 379 residential apartment units, an additional 170,675 sq. ft. of retail space, and over 864 above level parking spaces. Approximately $52.5 million has been incurred through October 31, 2014.

 

Common Stock Repurchases and Dividends

During December 2013 and September 2014 FREIT purchased 20,400 and 100,572 shares of its common stock, respectively. The total cost was $2.2 million, or $18.30 per share. We feel that the per share cost was favorable and outstanding share reduction will benefit existing shareholders.

During the fourth quarter FREIT declared a quarterly dividend of $.30 per share. This raised the annual dividend to $1.20 per share.

 Table of Revenue & Net Income Components

 

   Years Ended October 31,  Quarter Ended October 31,
   2014  2013  Change  2014  2013  Change
   (in thousands, except per share)  (in thousands, except per share)
Revenues:                              
    Commercial properties  $22,310   $22,840   $(530)  $5,619   $5,973   $(354)
    Residential properties   20,419    18,497    1,922    5,473    4,686    787 
      Total real estate revenues   42,729    41,337    1,392    11,092    10,659    433 
                               
Operating Expenses:                              
    Real estate operations   19,420    18,127    1,293    5,333    4,657    676 
                               
    General and administrative   1,396    1,623    (227)   174    349    (175)
                               
    Depreciation   6,346    6,233    113    1,692    1,700    (8)
                               
Investment income   (184)   (191)   7    (51)   (41)   (10)
                               
Financing costs   11,309    11,945    (636)   2,875    2,913    (38)
                               
Net income attributable to noncontrolling interests in subsidiaries   (507)   (493)   (14)   (54)   (39)   (15)
                               
     Adjusted income from operations   3,935    3,107    828    1,015    1,042    (27)
                               
Early lease termination adjustment   (371)(a)       (371)   (371)(a)       (371)
                               
Acquisition costs-Regency   (648)(b)       (648)            
                               
Income (loss) from discontinued operations   7    797    (790)       (14)   14 
                               
Gain on sale of discontinued operations   8,734    3,545    5,189        2,169    (2,169)
                               
      Net income attributable to common equity  $11,657   $7,449   $4,208   $644   $3,197   $(2,553)
                               
Earnings per share - basic and diluted:                              
    Adjusted income from operations  $0.57   $0.45   $0.12   $0.15   $0.15     
    Early lease termination adjustment   (0.05)       (0.05)   (0.06)       (0.06)
    Acquisition costs-Regency   (0.10)       (0.10)            
    Discontinued operations   1.27    0.62    0.65        0.31    (0.31)
      Net income attributable to common equity  $1.69   $1.07   $0.62   $0.09   $0.46   $(0.37)
                               
Weighted average shares outstanding - basic and diluted   6,908    6,942         6,858    6,942      

 

(a) Expense related to early lease termination of G-Mart at Westridge Square shopping center. $298 relates to write-off of straight-line rent receivable balance for G-Mart, and $73 relates to write-off of deferred leasing commissions balance for G-Mart.
(b) Transaction costs related to the acquisition of the Regency apartment complex in June 2014.

 

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Adjusted Funds From Operations

FFO is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”). 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 that are not considered by management to be the primary drivers of their decision making process. These adjustments to GAAP net income are amortization of acquired leases, under market lease amortization, straight-line rents, acquisition expenses, FFO from discontinued operations and recurring capital improvements on our residential apartments.

The modified FFO computation is referred to as AFFO. FREIT believes that AFFO is useful to investors as a supplemental gauge of our operating performance. We compute FFO and AFFO as follows:

 

   Years Ended October 31,  Quarter Ended October 31,
   2014  2013  2014  2013
   (in thousands, except per share amounts)  (in thousands, except per share amounts)
Funds From Operations ("FFO") (a)                    
                     
Net income (b)  $12,164   $7,942   $698   $3,237 
Depreciation of consolidated properties   6,346    6,233    1,692    1,700 
Depreciation of discontinued operations       11        1 
Amortization of deferred leasing costs   391    295    170    91 
Gain on sale of discontinued operations   (8,734)   (3,545)       (2,168)
Distributions to noncontrolling interests   (975)   (462)   (210)    
FFO  $9,192   $10,474   $2,350   $2,861 
                     
 Per Share - Basic and Diluted  $1.33   $1.51   $0.34   $0.41 
                     
 (a) As prescribed by NAREIT.                    
 (b) Includes net income attributable to noncontrolling interests in subsidiaries.
                     
Adjusted Funds From Operations ("AFFO")                    
                     
FFO  $9,192   $10,474   $2,350   $2,861 
Amortization of acquired leases   21    24    5    6 
Deferred rents (straight lining)   391    12    268    (114)
Acquisition expenses - Regency Apartments   648             
Less: FFO from discontinued operations   (7)   (808)       13 
Capital improvements - apartments   (549)   (681)   (198)   (139)
AFFO  $9,696   $9,021   $2,425   $2,627 
                     
 Per Share - Basic and Diluted  $1.40   $1.30   $0.35   $0.38 
                     
 Weighted Average Shares Outstanding:                    
 Basic and Diluted   6,908    6,942    6,858    6,942 

 

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’s, and therefore FREIT’s FFO and AFFO may not be directly comparable to that of other REITs.

 

 

The statements in this report that relate to future earnings or performance are forward-looking. Actual results might 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 report 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. It has approximately $305 million (historical cost basis) of assets. Its portfolio of residential and commercial properties extends from Eastern L.I. to 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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The following information was filed by First Real Estate Investment Trust Of New Jersey (FREVS) on Friday, January 9, 2015 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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