TABLE OF CONTENTS

FORM 10-K

FORWARD-LOOKING STATEMENTS

Certain information included in this Annual Report contains or may contain forward-looking statements 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 registrant’s investment policies and objectives; the financial performance of the registrant; the ability of the registrant to borrow and service its debt; the economic and competitive conditions which affect the registrant’s business; the ability of the registrant to obtain the necessary governmental approvals for the development, expansion or renovation of its properties, the impact of environmental conditions affecting the registrant’s properties, and the registrant’s liquidity and capital resources, are subject to certain risks and uncertainties. Actual results or outcomes may differ materially from those described in the forward-looking statements and will be affected by a variety of risks 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; federal, state and local governmental regulations that affect the registrant; and the competitive environment in which the registrant operates, including, the availability of retail space and residential apartment 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 rules of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The forward-looking statements are made as of the date of this Annual Report and the registrant assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those projected in such forward-looking statements.

PART I

First Real Estate Investment Trust of New Jersey (“FREIT”) is an equity real estate investment trust (“REIT”) which was organized inon November 1, 1961 as a New Jersey in 1961.Business Trust. On July 1, 2021, FREITFirst Real Estate Investment Trust of New Jersey completed the change of its form of organization from a New Jersey REITreal estate investment trust (“REIT”) to a Maryland corporation (the “Reincorporation”) which was approved by its stockholders at the annual meeting of stockholders held on May 6, 2021. The Reincorporation changeschanged the law applicable to FREIT’sFirst Real Estate Investment Trust of New Jersey’s affairs from New Jersey law to Maryland law and was accomplished by the merger of FREITFirst Real Estate Investment Trust of New Jersey with and into its wholly owned subsidiary, First Real Estate Investment Trust of New Jersey, Inc. (“FREIT Maryland”FREIT”, “Trust”, “us”, “we”, “our” or the “Company”), a Maryland corporation. As a result of the Reincorporation, the separate existence of FREIT hasFirst Real Estate Investment Trust of New Jersey ceased and FREIT Maryland has succeeded to all the business, properties, assets and liabilities of FREIT.First Real Estate Investment Trust of New Jersey. Holders of shares of beneficial interest in FREIT haveFirst Real Estate Investment Trust of New Jersey received one newly issued share of common stock of FREIT Maryland for each share of FREIT that they own,First Real Estate Investment Trust of New Jersey owned by them, without any action of stockholders required and all treasury stock held by FREITFirst Real Estate Investment Trust of New Jersey was retired.

FREIT Maryland is organized and will continue to operate in such a manner as to qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, and its stock is traded on the over-the counter market under the trading symbol FREVS. FREIT Maryland acquires, develops, constructs and holds real estate properties for long-term investment and not for resale. FREIT Maryland’sFREIT’s long-range investment policy is to review and evaluate potential real estate investment opportunities for acquisition that it believes will (i) complement its existing investment portfolio, (ii) generate increased income and distributions to its stockholders, and (iii) increase the overall value of FREIT Maryland’sFREIT’s portfolio. FREIT Maryland’sFREIT’s investments may take the form of wholly-owned fee interests, or if the circumstances warrant diversification of risk, ownership on a joint venture basis or as tenants-in-common with other parties, including employees and affiliates of Hekemian & Co., Inc. (“Hekemian & Co.”), FREIT Maryland’sFREIT’s managing agent (See “Management Agreement”). While our general investment policy is to hold and maintain properties for the long-term, we may, from time-to-time, sell or trade certain properties in order to (i) obtain capital to be used to purchase, develop or renovate other properties which we believe will provide a higher rate of return and increase the value of our investment portfolio, and (ii) divest properties which we have determined or determine are no longer compatible with our growth strategies and investment objectives for our real estate portfolio.

FREIT Maryland Website: All of FREIT Maryland’sFREIT’s Securities and Exchange Commission filings for the past three years are available free of charge on FREIT Maryland’sFREIT’s website, which can be accessed at http://www.freitnj.com.

Fiscal Year 20212022 Developments

On November 22, 2021, certain affiliates (the “Maryland Sellers”) of FREIT entered into a Purchase and Sale Agreement (the “Maryland Purchase and Sale Agreement”) with MCB Acquisition Company, LLC (the “Maryland Purchaser”), a third party, pursuant to which the Maryland Sellers agreed to sell three properties to the Maryland Purchaser. The properties consisted of retail and office space and a residential apartment community owned by Grande Rotunda, LLC (the “Rotunda Property”), a shopping center owned by Damascus Centre, LLC (the “Damascus Property”), and a shopping center owned by WestFREIT Corp. (the “Westridge Square Property”). FREIT owns 100% of its subsidiary, WestFREIT Corp. (“WestFREIT”), a 60% interest in Grande Rotunda, LLC (“Grande Rotunda”), the joint venture that owned the Rotunda Property, and a 70% interest in Damascus Centre, LLC (“Damascus Centre”), the joint venture that owned the Damascus Property.

The original purchase price for the Rotunda Property, the Damascus Property and the Westridge Square Property (collectively the “Maryland Properties”) under the Maryland Purchase and Sale Agreement was reduced by $2,723,000 from $267,000,000 to $248,750,269, after giving effect to the $15,526,731 escrow deposit described below. This reduction in the sales price of $2,723,000 was to account for improvements and repairs to the Maryland Properties and miscellaneous items identified by the Maryland Purchaser in the course of its due diligence inspection. Additionally, the Maryland Purchaser was obligated under the Maryland Purchase and Sale Agreement to deposit a total of $15,526,731 in escrow with respect to certain leases at the Maryland Properties, which have not been executed or where the rent commencement date has not occurred or economic obligations of the Maryland Sellers under certain leases remain unpaid. Although there can be no assurance, a portion of the $15,526,731 escrow deposit (the “Maryland Purchaser Escrow Payment”) may be paid to the Maryland Sellers depending upon the outcome of construction and leasing activities at the Maryland Properties. The Maryland Purchaser Escrow Payment Agreement provides for among other things, monthly disbursements from escrow to the Maryland Purchaser related to the aforementioned tenant lease agreements until the earlier of (i) the rent commencement date of the respective tenant lease agreements or (ii) 5-years from the date of the agreement. The release and amounts of escrowed funds to FREIT, generally, is contingent on the success and timing of future leasing activities at the Maryland Properties.

The sale of the Maryland Properties having a total net book value of $172.2 million was consummated by the Maryland Sellers and the Maryland Purchaser for a purchase price of $248,750,269, after giving effect to the $15,526,731 Maryland Purchaser Escrow Payment. This sale resulted in net proceeds of approximately $53.9 million (inclusive of approximately $1.9 million in funds released from the Maryland Purchaser Escrow Payment during the second quarter of Fiscal 2022), after payment of related mortgage debt in the amount of $155.8 million and the corresponding swap breakage fees of approximately $213,000 related to the early termination of the interest rate swap contracts on the Damascus Property loan, payment of loans (including interest) to each of the equity owners in Grande Rotunda in the amount of approximately $31 million and certain transactional expenses and transfer taxes including brokerage fees due to Hekemian & Co. of approximately $6.2 million. As of October 31, 2022, approximately $1,946,000 of the Maryland Purchaser Escrow Payment has been released from escrow to the Maryland Sellers. The escrow and related gain on sale were reduced by approximately $1.2 million due to a change in estimate in the second quarter of Fiscal 2022 related to a change in the timing of anticipated rent commencement dates for certain tenants, which will reduce the escrowed funds available to be released to Grande

Rotunda. Approximately $6.3 million of remaining funds are held in a post-closing escrow for rents anticipated to be fully released in Fiscal 2023 and are included in “Funds held in post-closing escrow” on the accompanying consolidated balance sheet as of October 31, 2022. The sale of the Maryland Properties resulted in a net gain of approximately $68.8 million (as adjusted) (with a consolidated impact to FREIT of approximately $45.6 million) which includes approximately $8.2 million of proceeds released and anticipated to be released from funds held in escrow, a write-off of the straight-line rent receivable of approximately $2.9 million and a write-off of unamortized lease commissions of approximately $1.7 million. (See Note 2 to FREIT’s consolidated financial statements for additional details.)

FREIT Maryland 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. Segment information for the three years ended October 31, 20212022 is included in Note 13 “Segment Information” to FREIT Maryland’sFREIT’s consolidated financial statements.

FREIT Maryland was founded and organized for the principal purpose of acquiring, developing, and owning a portfolio of diverse income producing real estate properties. FREIT Maryland’sFREIT’s developed properties include residential apartment communities and commercial properties that consist of multi and single tenanted properties. Our properties are located in New Jersey Maryland and New York. We also currently own approximately 7.37 acres of unimproved land in New Jersey. See Item 2, “Properties - Portfolio of Investments.” 

FREIT Maryland elected to be taxed as a REIT under the Internal Revenue Code. FREIT Maryland operates in such a manner as to qualify for taxation as a REIT in order to take advantage of certain favorable tax aspects of the REIT structure. Generally, a REIT will not be subject to federal income taxes on that portion of its ordinary income or capital gain that is currently distributed to its equity holders.

As an equity REIT, we generally acquire interests in income producing properties to be held as long-term investments. FREIT Maryland’sFREIT’s return on such investments is based on the income generated by such properties mainly in the form of rents.

From time to time, FREIT Maryland has sold, and may sell again in the future, certain of its properties in order to (i) obtain capital used or to be used to purchase, develop or renovate other properties which we believe will provide a higher rate of return and increase the value of our investment portfolio, and (ii) divest properties which FREIT Maryland has determined or determines are no longer compatible with our growth strategies and investment objectives for our real estate portfolio.

We do not hold any patents, registered trademarks, or licenses. 

Portfolio of Real Estate Investments

At October 31, 2021, FREIT Maryland’s2022, FREIT’s real estate holdings included (i) seven (7)six (6) multi-family apartment buildings or complexes containing a total of 1,171792 apartment units, (ii) a 65% tenancy-in-common undivided interest in the Pierre Towers property (See Item 1 “Investment in tenancy in common” of this Annual Report for additional details), (iii) eight (8)five (5) commercial properties (retail and office) containing a total of approximately 1,280,000589,000 square feet of leasable space, including one (1) one-acre parcel subject to a ground lease and (iv) three (3) parcels of undeveloped land consisting of approximately 7.37 acres in total. FREIT Maryland and its subsidiaries own all such properties in fee simple. See Item 2, “Properties - Portfolio of Investments” of this Annual Report for a description of FREIT Maryland’sFREIT’s separate investment properties and certain other pertinent information with respect to such properties that is relevant to FREIT Maryland’sFREIT’s business.

Investment in Subsidiaries 

The consolidated financial statements (See Note 1 to the Consolidated Financial Statements included in this Form 10-K) include the accounts of the following subsidiaries of FREIT Maryland:FREIT:

Westwood Hills, LLC (“Westwood Hills”): FREIT Maryland owns a 40% membership interest in Westwood Hills, which owns and operates a 210-unit residential apartment complex in Westwood, New Jersey.

Wayne PSC, LLC (“Wayne PSC”): FREIT Maryland owns a 40% membership interest in Wayne PSC, which owns a 322,000 square foot shopping center in Wayne, New Jersey.

Grande Rotunda, LLC: FREIT Maryland owns a 60% membership interest in Grande Rotunda, which owns a 295,000 square foot mixed use property (office and retail) and a 379-unit residential apartment complexowned the Rotunda Property sold in Baltimore, Maryland.December 2021.

Damascus Centre, LLC: FREIT Maryland owns a 70% membership interest in Damascus Centre, LLC which owns a 144,000 square foot shopping centerowned the Damascus Property sold in Damascus, Maryland.January 2022.

WestFREIT, Corp: FREIT Maryland owns 100% of the capital stock of WestFREIT, Corp., which ownsowned the Westridge Square a 253,000 square foot shopping centerProperty sold in Frederick, Maryland.January 2022.

FREIT Regency, LLC: FREIT Maryland owns a 100% membership interest in FREIT Regency, LLC, which owns a 132-unit residential apartment complex located in Middletown, New York.

Station Place on Monmouth, LLC: FREIT Maryland owns a 100% membership interest in Station Place on Monmouth, LLC, which owns a 45-unit residential apartment complex located in Red Bank, New Jersey.

Berdan Court, LLC: FREIT Maryland owns a 100% membership interest in Berdan Court, LLC, which owns a 176-unit residential apartment complex located in Wayne, New Jersey.

Investment in tenancy-in-common 

On February 28, 2020, FREIT Maryland reorganized its subsidiary S and A Commercial Associates Limited Partnership (“S&A”) from a partnership into a tenancy-in-common form of ownership (“TIC”). Prior to this reorganization, FREIT Maryland owned a 65% partnershipmembership interest in S&A, which owned 100% of the Pierre Towers property located in Hackensack, New Jersey through its 100% interest in Pierre Towers, LLC. Pursuant to the TIC agreement, FREIT Maryland ultimately acquired a 65% undivided interest in the Pierre Towers property, a 266-unit residential apartment complex in Hackensack, New Jersey (which was formerly owned by S&A). (See Note 3 to FREIT Maryland’sFREIT’s consolidated financial statements for further details.)

Purchase and Sale Agreement

On November 22, 2021, certain affiliates (the “Sellers”) of FREIT Maryland entered into a Purchase and Sale Agreement (the “Maryland Purchase and Sale Agreement”) with MCB Acquisition Company, LLC (the “Purchaser”), a third party, pursuant to which the Sellers agreed to sell three properties to the Purchaser. The properties consisted of retail and office space and a residential apartment community owned by Grande Rotunda, LLC (the “Rotunda Property”), a shopping center owned by Damascus Centre, LLC (the “Damascus Property”), and a shopping center owned by WestFREIT Corp. (the “Westridge Square Property”). FREIT Maryland owns 100% of its subsidiary, WestFREIT Corp. (“WestFREIT”), a 60% interest in Grande Rotunda, LLC (“Grande Rotunda”), the joint venture that owned the Rotunda Property, and a 70% interest in Damascus Centre, LLC (“Damascus Centre”), the joint venture that owned the Damascus Property.

The original purchase price for the Rotunda Property, the Damascus Property and the Westridge Square Property (collectively the “Properties”) under the Maryland Purchase and Sale Agreement was reduced by $2,723,000 from $267,000,000 to $248,750,269, after giving effect to the $15,526,731 escrow deposit described below. This reduction in the sales price was to account for improvements and repairs to the Properties and miscellaneous items identified by the Purchaser in the course of its due diligence inspection. Additionally, the Purchaser was obligated under the Purchase and Sale Agreement to deposit a total of $15,526,731 in escrow with respect to certain leases at the Properties where the rent commencement date has not occurred or economic obligations of the Sellers under certain leases remain unpaid. Although there can be no assurance, a portion of the $15,526,731 escrow deposit (the “Purchaser Escrow Payment”) may be paid to the Sellers depending upon the outcome of construction and leasing activities at the Properties.

On December 30, 2021, the sale of the Rotunda Property was consummated by Grande Rotunda and the Purchaser for a purchase price of $191,080,598. Grande Rotunda received net proceeds from the sale of approximately $68.7 million, after payment of related mortgage debt in the amount of $116.5 million and certain transactional expenses and transfer taxes, and not including loans (including interest) from each of the partners in Grande Rotunda (FREIT Maryland and Rotunda 100, LLC), totaling approximately $30.9 million which will be repaid with proceeds from the sale. In addition, the Purchaser deposited a total of $14,026,401 of the Purchaser Escrow Payment in escrow with respect to certain leases at the Rotunda Property where the rent commencement date has not occurred or economic obligations of Grande Rotunda under certain leases remain unpaid. The sale

of the Rotunda Property resulted in a net gain of approximately $52 million which includes approximately $8.2 million of proceeds anticipated to be released from the $14,026,401 held in escrow.

On January 7, 2022, the sale of the Westridge Square Property was consummated by WestFREIT and the Purchaser for a purchase price of $20,984,604. WestFREIT paid net cash outlays from the sale of approximately $0.7 million, after payment of related mortgage debt in the amount of approximately $21.1 million and certain transactional expenses and transfer taxes. In addition, the Purchaser deposited a total of $1,015,396 of the Purchaser Escrow Payment in escrow with respect to certain leases at the Westridge Square Property where the rent commencement date has not occurred or economic obligations of WestFREIT under certain leases remain unpaid. The sale of the Westridge Square Property resulted in a net gain of approximately $8.7 million which includes approximately $0.7 million of proceeds anticipated to be released from the $1,015,396 held in escrow.

On January 10, 2022, the sale of the Damascus Property was consummated by Damascus Centre and the Purchaser for a purchase price of $36,685,067. Damascus Centre received net proceeds from the sale of approximately $16.9 million, after payment of related mortgage debt in the amount of approximately $18.2 million and certain transactional expenses and transfer taxes. In addition, the Purchaser deposited a total of $484,934 of the Purchaser Escrow Payment in escrow with respect to certain leases at the Damascus Property where the rent commencement date has not occurred or economic obligations of Damascus Centre under certain leases remain unpaid. The sale of the Damascus Property resulted in a net gain of approximately $10.1 million which includes approximately $0.4 million of proceeds anticipated to be released from the $484,934 held in escrow. (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

Employees

On October 31, 2021, 2022, FREIT Maryland and its subsidiaries had twenty-three (23)thirteen (13) full-time employees and two (2)one (1) part-time employees employed through a professional services organization,employee who work solely at the properties owned by FREIT Maryland or its subsidiaries. The number of part-time employees varies seasonally.

Robert S. Hekemian, Jr., Chief Executive Officer and President, Ronald J. Artinian, Chairman of the Board, Allan Tubin, Treasurer and Chief Financial Officer, and John A. Aiello, Esq., Secretary, are the executive officers of FREIT. FREIT Maryland. FREIT Maryland does not retain the services of its executive officers on an exclusive basis, and accordingly FREIT Maryland’sFREIT’s executive officers are permitted to engage in other business activities as all of their business activities are not devoted to FREIT Maryland.FREIT. Please see “Item 10 – Directors, Executive Officers and Corporate Governance,” for additional information about FREIT Maryland’sFREIT’s executive officers. Hekemian & Co. has been retained by FREIT Maryland to manage FREIT Maryland’sFREIT’s properties and is responsible for recruiting, on behalf of FREIT, Maryland, the personnel required to perform all services related to the operation of FREIT Maryland’sFREIT’s properties. See “Management Agreement” below. 

Effective upon the late Robert S. Hekemian’s retirement as Chairman, Chief Executive Officer and as a Director on April 5, 2018, FREIT Maryland entered into a consulting agreement with Mr. Hekemian, pursuant to which Mr. Hekemian provided consulting services to FREIT Maryland through December 2019. The consulting agreement obliged Mr. Hekemian to provide advice and consultation with respect to matters pertaining to FREIT Maryland and its subsidiaries, affiliates, assets and business for no fewer than 30 hours per month during the term of the agreement. FREIT Maryland paid Mr. Hekemian a consulting fee of $5,000 per month during the term of the consulting agreement, which was payable in the form of shares on a quarterly basis (i.e. in quarterly installments of $15,000). In connection with the termination of Robert S. Hekemian’s service to FREIT Maryland under the consulting agreement between Mr. Hekemian and FREIT Maryland in December 2019, Mr. Hekemian’s accrued plan benefits under FREIT Maryland’sFREIT’s Deferred Fee Plan became payable to him and were paid in a single lump sum in the amount of approximately $4.8 million. See Note 11 to FREIT Maryland’sFREIT’s consolidated financial statements for a more complete description of the Deferred Fee Plan.

Management Agreement

On April 10, 2002, FREIT Maryland and Hekemian & Co. executed a Management Agreement whereby Hekemian & Co. would continue as managing agent for FREIT Maryland.FREIT. The Management Agreement automatically renews for successive periods of two years unless either party gives not less than six (6) months prior notice to the other of non-renewal. The term of the Management Agreement was renewed for a two-year term, which will expire on October 31, 2023. Hekemian & Co. currently manages all the properties owned by FREIT Maryland and its affiliates, except for the office building at the Rotunda property located in Baltimore, Maryland, which iswas sold on December 30, 2021 and was formerly managed by an independent third party management company. However, FREIT Maryland may retain other managing agents to manage properties acquired after April 10, 2002 and to perform various other duties such as sales, acquisitions, and development with respect to any or all properties. Hekemian & Co. does not serve as the exclusive property acquisition advisor to FREIT Maryland and is not required to offer potential acquisition properties exclusively to FREIT Maryland before acquiring those properties for its own account. The Management Agreement includes a detailed schedule of fees for those services, which Hekemian & Co. may be called upon to perform. The Management Agreement provides for a termination fee in the event of a termination or non-renewal of the Management Agreement under certain circumstances.

Pursuant to the terms of the Management Agreement, FREIT Maryland pays Hekemian & Co. fees and commissions as compensation for its services. From time to time, FREIT Maryland engages Hekemian & Co., or certain affiliates of Hekemian

& Co., to provide additional services, such as consulting services related to development, property sales and financing activities of FREIT Maryland.FREIT. Separate fee arrangements are negotiated between Hekemian & Co. and FREIT Maryland with respect to such additional services. Employees of Hekemian & Co. own an interest in certain FREIT Maryland properties. (See Note 8 to FREIT Maryland’sFREIT’s consolidated financial statements.)

Robert S. Hekemian, Jr., Chief Executive Officer, President and a Director of FREIT, Maryland, is the Chief Executive Officer of Hekemian & Co., and owns approximately 33.3% of all of the issued and outstanding shares of Hekemian & Co. David Hekemian, a Director of FREIT, Maryland, is the President of Hekemian & Co., and owns approximately 33.3% of all of the issued and outstanding shares of Hekemian & Co. Allan Tubin, Chief Financial Officer and Treasurer of FREIT, is the Chief Financial Officer of Hekemian & Co.

Real Estate Financing

FREIT Maryland funds acquisition opportunities and the development of its real estate properties largely through debt financing, including mortgage loans collateralized by certain of its properties. At October 31, 2021, FREIT Maryland’s2022, FREIT’s aggregate outstanding mortgage debt was $301.3$139.2 million, which bears a weighted average interest rate of 3.56%4.72% and an average life of 2.442.46 years. See the tables in Item 2, “Properties - Portfolio of Investments” for the outstanding mortgage balances at October 31, 20212022 with respect to each of these properties.

FREIT Maryland is highly leveraged and will continue to be for the foreseeable future. This level of indebtedness results in increased debt service requirements that could adversely affect the financial condition and results of operations of FREIT Maryland.FREIT. A number of FREIT Maryland’sFREIT’s mortgage loans are amortized over a period that is longer than the terms of such loans; thereby requiring balloon payments at the expiration of the terms of such loans. FREIT Maryland has not established a cash reserve sinking fund with respect to such obligations and at this time does not expect to have sufficient funds from operations to make such balloon payments when due under the terms of such loans. FREIT Maryland and its subsidiaries expect to refinance such mortgage loans as they become due. See “Liquidity and Capital Resources” under Item 7.

FREIT Maryland is subject to the normal risks associated with debt financing, including the risk that FREIT Maryland’sFREIT’s cash flow will be insufficient to meet required payments of principal and interest; the risk that indebtedness on its properties will not be able to be renewed, repaid or refinanced when due; or that the terms of any renewal or refinancing will not be as favorable as the terms of the indebtedness being replaced. If FREIT Maryland were unable to refinance its indebtedness on acceptable terms, or at all, FREIT Maryland might be forced to dispose of one or more of its properties on disadvantageous terms which might result in losses to FREIT Maryland.FREIT. These losses could have a material adverse effect on FREIT Maryland and its ability to make distributions to stockholders and to pay amounts due on its debt. If a property is mortgaged to secure payment of indebtedness and FREIT Maryland is unable to meet mortgage payments, the mortgagee could foreclose upon the property, appoint a receiver and receive an assignment of rents and leases or pursue other remedies, all with a consequent loss of revenues and asset value to FREIT Maryland.FREIT. Further, payment obligations on FREIT Maryland’sFREIT’s mortgage loans will not be reduced if there is a decline in the economic performance of any of FREIT Maryland’sFREIT’s properties. If any such decline in economic performance occurs, FREIT Maryland’sFREIT’s revenues, earnings, and funds available for distribution to stockholders would be adversely affected.

Neither FREIT Maryland’sFREIT’s Amended and Restated Articles of Incorporation, as amended, nor any policy statement formally adopted by the Board limits either the total amount of indebtedness or the specified percentage of indebtedness (based on the total capitalization of FREIT Maryland)FREIT), which may be incurred by FREIT Maryland.FREIT. Accordingly, FREIT Maryland may incur additional secured or unsecured indebtedness in the future in furtherance of its business activities, including, if or when necessary, to refinance its existing debt. Future debt incurred by FREIT Maryland could bear interest at rates, which are higher than the rates on FREIT Maryland’sFREIT’s existing debt. Future debt incurred by FREIT Maryland could also bear interest at a variable rate. Increases in interest rates would increase FREIT Maryland’sFREIT’s variable interest costs (to the extent that the related indebtedness was not protected by interest rate protection arrangements), which could have a material adverse effect on FREIT Maryland and its ability to make distributions to stockholders and to pay amounts due on its debt or cause FREIT Maryland to be in default under its debt. Further, in the future, FREIT Maryland may not be able to, or may determine that it is not able to, obtain financing for property acquisitions or for capital expenditures to develop or improve its properties on terms, which are acceptable to FREIT Maryland.FREIT. In such event, FREIT Maryland might elect to defer certain projects unless alternative sources of capital were available, such as through an equity or debt offering by FREIT Maryland.FREIT.

Competitive Conditions

FREIT Maryland is subject to normal competition with other investors to acquire real property and to profitably manage such property. Numerous other REITs, banks, insurance companies and pension funds, as well as corporate and individual developers and owners of real estate, compete with FREIT Maryland in seeking properties for acquisition and for tenants. Many of these competitors have significantly greater financial resources than FREIT Maryland.FREIT.

In addition, retailers at FREIT Maryland'sFREIT's commercial properties face increasing competition from online shopping, outlet malls and discount shopping clubs. In many markets, the trade areas of FREIT Maryland'sFREIT's commercial properties overlap with the trade areas of other shopping centers. Renovations and expansions at those competing shopping centers and malls could negatively affect FREIT Maryland'sFREIT's commercial properties by encouraging shoppers to make their purchases at such new, expanded or renovated shopping centers and malls. Increased competition through these various sources could adversely affect

the viability of FREIT Maryland'sFREIT's tenants, and any new commercial real estate competition developed in the future could potentially have an adverse effect on the revenues of and earnings from FREIT Maryland'sFREIT's commercial properties.

The revenues and value of FREIT Maryland’sFREIT’s commercial and residential apartment properties may be adversely affected by a number of factors, including, without limitation, public health crises, epidemics and pandemics (See Note 16 to FREIT Maryland’sFREIT’s consolidated financial statements for additional details regarding the impact of COVID-19 pandemic on FREIT Maryland)statements); the national economic climate;climate (including rising interest rates and inflation); the regional economic climate (which may be adversely affected by plant closings, industry slow-downs and other local business factors); local real estate conditions (such as an oversupply of retail space or apartment units); perceptions by retailers or shoppers of the security, safety,

convenience and attractiveness of a shopping center; perception by residential tenants of the safety, convenience and attractiveness of an apartment building or complex; the proximity and the number of competing shopping centers and apartment complexes; the availability of recreational and other amenities and the willingness and ability of the owner to provide capable management and adequate maintenance. In addition, other factors may adversely affect the fair market value of a commercial property or apartment building or complex without necessarily affecting the revenues, including changes in government regulations (such as limitations on development or on hours of operation) changes in tax laws or rates, and potential environmental or other legal liabilities.

FREIT Maryland believes that its revenues and earnings, its ability to meet its debt obligations, and its funds available for distribution to stockholders would be adversely affected if space in FREIT Maryland'sFREIT's multi-store shopping center properties could not be leased or if anchor store tenants or satellite tenants failed to meet their lease obligations.

The success of FREIT Maryland'sFREIT's investment in its shopping center properties is largely dependent upon the success of its tenants. Unfavorable economic, demographic, or competitive conditions may adversely affect the financial condition of tenants and consequently the lease revenues from and the value of FREIT Maryland'sFREIT's investments in its shopping center properties. If the sales of stores operating in FREIT Maryland'sFREIT's shopping center properties were to decline due to deteriorating economic conditions, the tenants may be unable to pay their base rents or meet other lease charges and fees due to FREIT Maryland.FREIT. In addition, any lease provisions providing for additional rent based on a percentage of sales would not be operative in this economic environment. In the event of default by a tenant, FREIT Maryland could suffer a loss of rent and experience extraordinary delays while incurring additional costs in enforcing its rights under the lease, which FREIT Maryland may not be able to recapture.

As of October 31, 2021,2022, the following table lists the ten (10) largest commercial tenants, which account for approximately 53.4%73% of FREIT Maryland’sFREIT’s leased commercial rental space and 40.3%60.7% of fixed commercial rents.

(1)  On May 4, 2021, Burlington Coat Factory Warehouse Corp. ("Burlington") amended its lease extendingSince the term of the lease for a period of one (1) year and ninety (90) days commencing on December 1, 2021 and expiring on February 28, 2023 (“Fourth Extension Period”).  The fixed rent during this Fourth Extension Period shall be reduced from $59,120 per month to $35,830 per month.  Additionally, Burlington has the right to terminate the lease at any time prior to the last day of the Fourth Extension Period by providing at least twelve (12) months prior written notice of such termination (the “Termination Notice”). In the event that Burlington delivers the Termination Notice, the term of the lease shall automatically end on the last day of the twelfth (12th) full calendar month immediately following receipt of the Termination Notice.     See “Renewal of leases and Reletting of Space”below for additional details. On January 7, 2022, the property owned by WestFREIT was sold.  See Note 17 to FREIT Maryland's consolidated financial statements for additional details.

(2) T-Bowl, Inc. was shut downshutdown for several months in Fiscal 2020 due to the effects of COVID-19, and resumed operations at a very low capacity in Fiscal 2021. Although this tenant has been paying common are maintenance, insurance reimbursementsnot paid full base rent and real estate tax reimbursements ("additional rent") in Fiscal 2021, rentalrent. Rental revenue for this tenant of approximately $258,000, $369,000 and $363,000 during the fiscal yearyears ended October 31, 2022, 2021 has been deemed uncollectible and classified2020, respectively, was either not recognized as a reductionrevenue or reversed from revenue in rental revenue.the respective year. See “Renewal of leases and Reletting of Space” below and Note 16 to FREIT Maryland’sFREIT’s consolidated financial statements for additional details.

(3) Gold's Gym did(2)  Since the shutdown for several months in Fiscal 2020 due to the effects of COVID-19, American Women Swim & Fitness has not exercise its option to renew its lease which expires on March 31, 2022. In the fourth quarter of Fiscal 2021, Gold's Gym ceased operations at this location while continuing to pay only additional rent. FREIT Maryland's operating results will be adversely affected from loss ofpaid full base rent and additional rentrent. Rental revenue for this tenant of approximately $330,000 on an annualized basis.$86,000, $159,000 and $133,000 during the fiscal years ended October 31, 2022, 2021 and 2020, respectively, was either not recognized as revenue or reversed from revenue in the respective year. See ““Renewal of leases and Reletting of SpaceSpace”” below for additional details. On January 7, 2022, the property owned by WestFREIT was sold.  Seeand Note 1716 to FREIT Maryland'sFREIT’s consolidated financial statements for additional details.

(4) On December 30, 2021, January 7, 2022 and January 10, 2022 the property owned by Grande Rotunda, WestFREIT and Damascus Centre, respectively, was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

There is no assurance that we will be able to retain tenants at our commercial properties upon expiration of their leases. Upon expiration or termination of leases for space located in FREIT Maryland'sFREIT's commercial properties, the premises may not be relet or the terms of reletting (including the cost of concessions to tenants) may not be as favorable as lease terms for the terminated lease. If FREIT Maryland werewas unable to promptly relet all or a substantial portion of this space or if the rental rates upon such reletting were significantly lower than current or expected rates, FREIT Maryland'sFREIT's revenues and earnings, FREIT Maryland’sFREIT’s ability to service its debt, and FREIT Maryland’sFREIT’s ability to make distributions to its stockholders, could be adversely affected.

During the first quarter of Fiscal 2021, Pet Valu, Inc., a pet store tenant, vacated several stores located in shopping centers owned by FREIT Maryland affiliates (Wayne PSC, Damascus Centre and Grande Rotunda) and terminated the related leases early paying an aggregate lease termination fee in the amount of approximately $260,000 (with a consolidated impact to FREIT Maryland of approximately $140,000). The properties owned by Grande Rotunda and Damascus Centre were sold on December 30, 2021 and January 10, 2022, respectively. See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.

FREIT Maryland owns and operates an 87,661 square foot shopping center located in Franklin Lakes, New Jersey, the anchor tenant of which is The Stop & Shop Supermarket Company, LLC (“Stop & Shop”). On July 26, 2017, Stop & Shop entered into a lease modification with FREIT Maryland whereby the tenant exercised its option to renew the lease for a ten-year period with a right of the tenant to terminate the lease at any time during the fifth year if the store did not meet certain sales volume levels set forth in the modification. Based on Stop & Shop’s sales volume levels at this location, the tenant will not be able to exercise its right terminate the lease prior to the end of its ten-year renewal period, which is June 30, 2027. This lease modification provided for a $250,000 reduction in annual rent over the renewed term.

On April 26, 2020, CB Theatre Experience, LLC filed for protection under Chapter 11 of the United States bankruptcy code (“Bankruptcy Code”) as disclosed in its bankruptcy filings. The theatre operated by CB Theatre Experience, LLC (known as “Cobb Theatre”) at the Rotunda retail property in Baltimore, Maryland, under a lease with Grande Rotunda, has been closed since April 2020 due to the mandated shut down related to the COVID-19 pandemic and on July 14, 2020, Cobb Theatre rejected its lease at this property as of June 30, 2020. Additionally, there were unamortized tenant improvements related to the buildout of the movie theatre space in the amount of approximately $7.3 million (with a consolidated impact to FREIT Maryland of approximately $4.4 million) which were deemed to be impaired, written off and charged to operating expenses in the fourth quarter of Fiscal 2020. During the first quarter ended January 31, 2021, FREIT Maryland received a settlement payment from Cobb Theatre in the amount of approximately $0.2 million (with a consolidated impact to FREIT Maryland of approximately $0.1 million). On December 30, 2021, the property owned by Grande Rotunda was sold. See “Results of Operations – Segment Information – Commercial Segment” under Item 7 and Notes 16 and 17 to FREIT Maryland’s consolidated financial statements for further details.

In Fiscal 2021, the lease for T-Bowl, Inc., which does business as a bowling alley at the Preakness Shopping Center located in Wayne, New Jersey, expired and has been on a month-to-month basis. As a result ofSince the COVID-19 pandemic mandated shut downs and imposed restrictions, this tenant was shut downshutdown for several months in Fiscal 2020 and resumed operations at a very low capacity in Fiscal 2021. Although

due to the effects of COVID-19, this tenant has been payingnot paid full base rent and additional rents in Fiscal 2021, rentalrent. Rental revenue for this tenant of approximately $258,000, $369,000 and $363,000 during the fiscal yearyears ended October 31, 2022, 2021 has been deemed uncollectible and classified2020, respectively, was either not recognized as a reductionrevenue or reversed from revenue in rental revenue.the respective year. If the tenant is unable to recommence operations and does not extend or renew this lease FREIT Maryland’sand vacates this space, FREIT’s operating results will be adversely impacted from loss of potential base rent and additional rent of approximately $551,000$576,000 on an annualized basis. The Company is currently in discussions with this tenant.

There were no other material lease expirations during Fiscal 20212022 and Fiscal 2020.2021.

On May 4, 2021, Burlington amended its lease at the Westridge Square Shopping Center (owned by WestFREIT) extending the term of the lease for a period of one (1) year and ninety (90) days commencing on December 1, 2021 and expiring on February 28, 2023 (“Fourth Extension Period”). The fixed rent during this Fourth Extension Period was reduced from $59,120 per month to $35,830 per month. Additionally, Burlington has the right to terminate the lease at any time prior to the last day of the Fourth Extension Period by providing at least twelve (12) months prior written notice of such termination (the “Termination Notice”). In the event that Burlington delivers the Termination Notice, the term of the lease shall automatically end on the last day of the twelfth (12th) full calendar month immediately following receipt of the Termination Notice. On January 7, 2022, the property owned by WestFREIT was sold. (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

Gold's Gym, which does business as a gym at the Westridge Square Shopping Center did not exercise its option to renew its lease which expires on March 31, 2022. In the fourth quarter of Fiscal 2021, Gold's Gym ceased operations at this location while continuing to pay only additional rent. FREIT Maryland's operating results will be adversely affected from loss of base rent and additional rent of approximately $330,000 on an annualized basis.  On January 7, 2022, the property owned by WestFREIT was sold. (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)  

Equity real estate investments are relatively illiquid. Accordingly, the ability of FREIT Maryland to vary its portfolio in response to changing economic, market or other conditions is limited. Also, FREIT Maryland'sFREIT's interests in its partially owned subsidiaries are subject to transfer constraints imposed by the operating agreements which govern FREIT Maryland’sFREIT’s investment in these partially owned subsidiaries. Even without such restrictions on the transfer of its interests, FREIT Maryland believes that there would be a limited market for its interests in these partially owned subsidiaries.

If FREIT Maryland had to liquidate all or substantially all of its real estate holdings, the value of such assets would likely be diminished if a sale were required to be completed in a limited time frame. The proceeds to FREIT Maryland from any such sale of the assets in FREIT Maryland’sFREIT’s real estate portfolio would therefore be less than the fair market value of those assets.

Impact of Governmental Laws and Regulations on Registrant's Business

FREIT Maryland’sFREIT’s properties are subject to various federal, state and local laws, ordinances and regulations, including those relating to the environment and local rent control and zoning ordinances.

Both federal and state governments are concerned with the impact of real estate construction and development programs upon the environment. Environmental legislation affects the cost of selling real estate, the cost to develop real estate, and the risks associated with purchasing real estate.

Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). Such laws often impose such liability without regard to whether the

owners knew of, or were responsible for, the presence or disposal of such substances. Such liability may be imposed on the owner in connection with the activities of any operator of, or tenant at, the property. The cost of any required remediation, removal, fines or personal injury or property damages and the property owner's liability for same could exceed the value of the property and/or the aggregate assets of the owner. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. If FREIT Maryland incurred any such liability, it could reduce FREIT Maryland'sFREIT's revenues and ability to make distributions to its stockholders.

A property can also be negatively impacted by either physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties.

At this time, FREIT Maryland is aware of the following environmental matters affecting its properties:

This property is in a Flood Hazard Zone. FREIT Maryland maintains flood insurance in the amount of $500,000 for the subject property, which is the maximum available under the Flood Program for the property. Any reconstruction of that portion of the property situated in the flood hazard zone is subject to regulations promulgated by the New Jersey Department of Environmental Protection ("NJDEP"), which could require extraordinary construction methods. FREIT Maryland acquired the Westwood Plaza property in 1988, and the property has not experienced any flooding that gave rise to any claims under FREIT Maryland’sFREIT’s flood insurance in this time period.since the date of acquisition.

a) The State of New Jersey has adopted an underground fuel storage tank law and various regulations with respect to underground storage tanks.

FREIT Maryland no longer has underground storage tanks on any of its properties.

During the fiscal year ended October 31, 2019, FREIT Maryland conducted environmental audits for all of its properties. The environmental reports secured by FREIT Maryland have not revealed any environmental conditions on its properties, which require any further remediation pursuant to any applicable federal or state law or regulation.

b) FREIT Maryland has determined that several of its properties contain lead based paint (“LBP”). FREIT Maryland has obtained lead-free interior certifications with respect to all properties that were found to contain LBP, certifying that such properties contain no LBP on the interior surfaces. FREIT Maryland believes that it complies with all federal, state and local requirements as they pertain to LBP.

FREIT Maryland does not believe that the environmental conditions described in subparagraphs (i) and (ii) above will have a material adverse effect upon the capital expenditures, revenues, earnings, financial condition or competitive position of FREIT Maryland.FREIT.

Each of the apartment buildings or complexes owned by FREIT Maryland or an affiliate of FREIT, Maryland, is subject to some form of rent control ordinance which limits the amount by which FREIT Maryland or an affiliate of FREIT, Maryland, can increase the rent for renewed leases, and in some cases, limits the amount of rent which FREIT Maryland or an affiliate of FREIT Maryland can charge for vacated units, except for The Regency, Westwood Hills, The Boulders at Rockaway, and Station Place and Icon which are not subject to any rent control law or regulation.

Local zoning ordinances may prevent FREIT Maryland from renovating, expanding or converting its existing properties for their highest and best use as determined by the Board. In Fiscal 2021, Wayne PSC received approvals from the Township of Wayne to allow it to redevelop the site immediately behind the former Macy’s department store to include 244 residential units with 37 units earmarked for affordable housing.

FREIT Maryland does not engage in operations in foreign countries and it does not derive any portion of its revenues from customers in foreign countries.

Almost all of FREIT Maryland’sFREIT’s income and cash flow are derived from the net rental income (revenues after expenses) from our properties. FREIT Maryland’sFREIT’s business and financial results are affected by the following fundamental factors:

A negative or adverse quality change in the above factors could potentially cause a detrimental effect on FREIT Maryland’sFREIT’s revenue, earnings and cash flow. If rental revenues decline, we would expect to have less cash available to pay our indebtedness and distribute to our stockholders.

Adverse impact resulting from the COVID-19 pandemic:public health crises, epidemics and pandemics: FREIT Maryland is subject to risks related to the effects of public health crises, epidemics and pandemics, including the COVID-19 pandemic.COVID-19. Such events could inhibit global, national and local economic activity; constrain our access to capital and other sources of funding, which could adversely affect the availability and terms of future borrowings or refinancings; adversely affect our residential tenants’ financial condition due to a sustained loss of income, which could affect their ability to pay rent; adversely affect our commercial tenants’ financial condition by limiting foot traffic and staffing at their businesses, which could affect their ability to pay rent and willingness to make new leasing commitments; reduce our cash flow, which could impact our ability to pay dividends or to service our debt; temporarily or permanently reduce the demand for retail or office space; reduce the value of our real estate assets, which may result in material non-cash impairment charges in future periods; and have other direct and indirect effects that are difficult to predict. Such risks depend upon the nature and severity of the public health concern, as well as the extent and duration of government-mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be predicted with confidence. In particular, we cannot predict the duration of certain government orders instituted in response to the COVID-19 pandemic, which vary by jurisdiction, or the short and long term economic effects caused by the pandemic, each of which could have a material adverse effect on our business.

Adverse Changes in General Economic Climate: FREIT Maryland derives the majority of its revenues from renting apartments to individuals or families, and from retailers renting space at its shopping centers. Over the past several years, there have been many factors aiding in economic growth in the United States such as: (a) improvement in the housing market; (b) increased consumer confidence to push spending modestly higher; (c) improvements in private sector employment; and (d) improved credit availability. However, there have been many factors impacting long-term economic growth, including, without limitation: (i) continued political gridlock in the federal government; (ii) regulatory uncertainties; (iii) continued infrastructure deterioration; (iv) increasing concerns regarding terrorism; (v) rising healthcare costs; (vi) the impact of trade policies; and more recently, (vii) rising energy, wages and consumer prices driving an increase in inflation.inflation along with increasing interest rates.

FREIT Maryland receives a substantial portion of its operating income as rent under long-term leases with commercial tenants. At any time, any of our commercial tenants could experience a downturn in its business that might weaken its financial condition. These tenants might defer or fail to make rental payments when due, delay lease commencement, voluntarily vacate the premises or declare bankruptcy, which could result in the termination of the tenant’s lease, and could result in material losses to us and harm to our results of operations. Also, it might take time to terminate leases of underperforming or nonperforming tenants and FREIT Maryland might incur costs to remove such tenants. Also, if tenants are unable to comply with the terms of their leases, FREIT Maryland might modify lease terms in ways that are less favorable to FREIT Maryland.FREIT.

Tenants unable to pay rent: Financially distressed tenants may be unable to pay rents and expense recovery charges, where applicable, and may default on their leases. Enforcing FREIT Maryland’sFREIT’s rights as landlord could result in substantial costs and may not result in a full recovery of unpaid rent. If a tenant files for bankruptcy, the tenant’s lease may be terminated. In each such instance FREIT Maryland’sFREIT’s income and cash flow would be negatively impacted. The Company is closely monitoring changes in the collectability assessment of its tenant receivables as a result of certain tenants suffering adverse financial consequences related to the COVID-19 pandemic. During the fiscal years ended October 31, 2021 and 2020, rental revenue deemed uncollectible of approximately $1.3 million (with a consolidated impact to FREIT Maryland of approximately $0.8 million) and $1.4 million (with a consolidated impact to FREIT Maryland of approximately $0.9 million), respectively, was

classified as a reduction in rental revenue based on our assessment of the probability of collecting substantially all of the remaining rents for certain tenants.

Costs of re-renting space: If tenants fail to renew leases, fail to exercise renewal options, or terminate their leases early, the lost rents due to vacancy and the costs of re-renting the space could prove costly to FREIT Maryland.FREIT. In addition to cleaning and renovating the vacated space, we may be required to grant concessions to a new tenant, and may incur leasing brokerage commissions. The lease terms to a new tenant may be less favorable than the prior tenant’s lease terms, and will negatively impact FREIT Maryland’sFREIT’s income and cash flow and adversely affect FREIT Maryland’sFREIT’s ability to pay mortgage debt and interest or make distributions to its stockholders.

Inflation may adversely affect our financial condition and results of operations: Increased inflation could have a pronounced negative impact on FREIT Maryland’sFREIT’s operating and administrative expenses, as these costs may increase at a higher rate than FREIT Maryland’sFREIT’s rents. While increases in most operating expenses at FREIT Maryland’sFREIT’s commercial properties can be passed on to retail tenants, increases in expenses at its residential properties cannot be passed on to residential tenants. Unreimbursed increased operating expenses may reduce cash flow available for payment of mortgage debt and interest and for distributions to stockholders.

Development and construction risks: As part of its investment strategy, FREIT Maryland seeks to acquire property for development and construction, as well as to develop and build on land already in its portfolio. Development and construction activities are challenged with the following risks, which may adversely affect FREIT Maryland’sFREIT’s cash flow:

Debt financing could adversely affect income and cash flow: FREIT Maryland relies on debt financing to fund its growth through acquisitions and development activities. To the extent third party debt financing is not available or not available on acceptable terms, acquisitions and development activities will be curtailed.

As of October 31, 2021,2022, FREIT Maryland had approximately $138.6$114.2 million of non-recourse fixed interest rate mortgage debt, including deferred interest, and approximately $162.7$25 million of non-recourse variable interest rate mortgage debt of which $116.5 million related to the outstanding loan balance on the Grande Rotunda, LLC loan with Aareal Capital. On December 30, 2021 the property owned by Grande Rotunda was sold and a portion of the proceeds was used to pay off the $116.5 million then outstanding balance of this loan. On January 7, 2022 the property owned by WestFREIT was sold and a portion of the proceeds was used to pay off the $21.1 million then outstanding balance of this loan. On January 10, 2022 the property owned by Damascus Centre was sold and a portion of the proceeds was used to pay off the $18.2 million then outstanding balance of this loan. See Note 17 to FREIT’s consolidated financial statements for additional details.debt. These mortgages are being repaid over periods (amortization schedules) that are longer than the terms of the mortgages. Accordingly, when the mortgages become due (at various times), significant balloon payments (the unpaid principal amounts) will be required. FREIT Maryland expects to refinance the individual mortgages with new mortgages or exercise extension options available to FREIT Maryland or its subsidiaries when their terms expire. To this extent, FREIT Maryland has exposure to capital availability and interest rate risk. If interest rates, at the time any individual mortgage note is due, are higher than the current fixed interest rate, higher debt service may be required and/or refinancing proceeds may be less than the amount of the mortgage debt being retired. To the extent FREIT Maryland is unable to refinance its indebtedness on acceptable terms, FREIT Maryland might need to dispose of one or more of its properties upon disadvantageous terms.

FREIT Maryland’sFREIT’s revolving $13 million credit line (of which $13 million was available as of October 31, 2021)2022), and several of its loan agreements require FREIT Maryland or its subsidiaries to meet or maintain certain financial covenants that could restrict FREIT Maryland’sFREIT’s acquisition activities and result in a default on these loans if FREIT Maryland fails to satisfy these covenants. As a result of COVID-19 pandemic rent losses and the planning for a potential redevelopment of its shopping center, as of October 31, 2021, Wayne PSC was not, and currently is not, in compliance with a look back debt service coverage ratio loan covenant contained in the mortgage loan agreement held by People’s United Bank in the amount of approximately $22.6 million as of October 31, 2021. Although the Company continues to make its required debt service payments in accordance with the loan agreement, it is unable to comply with this covenant. As such, the bank could exercise its remedies under the loan agreement including, among other things, requiring a partial or full repayment of the loan. The Company is currently working with the lender to remediate this covenant default. As of the date of the filing of this Form 10K report, the bank has not declared this loan to be in default. Until such time as a definitive agreement is entered into, there can be no assurance the loan covenant will be amended and the bank will not declare this loan to be in default. (See Note 5 to FREIT Maryland’sFREIT’s consolidated financial statements.)

Failure of banking and financing institutions: Banking and financing institutions such as insurance companies provide FREIT Maryland with credit lines and construction financing. The credit lines available to FREIT Maryland may be used for a variety of business purposes, including general corporate purposes, acquisitions, construction, and letters of credit. Construction

financing enables FREIT Maryland to develop new properties, or renovate or expand existing properties. A failure of the banking institution making credit lines available may render the line unavailable and adversely affect FREIT Maryland’sFREIT’s liquidity, and negatively impact FREIT Maryland’sFREIT’s operations in a number of ways. A failure of a financial institution unable to fund its construction financing obligations to FREIT Maryland may cause the construction to halt or be delayed. Substitute financing may be significantly more expensive, and construction delays may subject FREIT Maryland to delivery penalties.

Failure of insurance carriers: FREIT Maryland’sFREIT’s properties are insured against unforeseen liability claims, property damages, and other hazards. The insurance companies FREIT Maryland uses have good ratings at the time the policies are put into effect. Substantially all of FREIT Maryland’sFREIT’s insurance coverage is provided by one carrier. Financial failure of FREIT Maryland’sFREIT’s carriers may result in their inability to pay current and future claims. This inability to pay claims may have an adverse impact on FREIT Maryland’sFREIT’s financial condition. In addition, a failure of a FREIT Maryland insurance carrier may cause FREIT Maryland’sFREIT’s insurance renewal or replacement policy costs to increase.

Real estate is a competitive business: FREIT Maryland is subject to normal competition with other investors to acquire real property and to profitably manage such property. Numerous other REITs, banks, insurance companies and pension funds, as well as corporate and individual developers and owners of real estate, compete with FREIT Maryland in seeking properties for acquisition and for tenants. Many of these competitors have significantly greater financial resources than FREIT Maryland.FREIT. In addition, retailers at FREIT Maryland'sFREIT's commercial properties face increasing competition from online shopping, outlet malls and discount shopping clubs. In many markets, the trade areas of FREIT Maryland'sFREIT's commercial properties overlap with the trade areas of other shopping centers. Renovations and expansions at those competing shopping centers and malls could negatively affect FREIT Maryland'sFREIT's commercial properties by encouraging shoppers to make their purchases at such new, expanded or renovated shopping centers and malls. Increased competition through these various sources could adversely affect the viability of FREIT Maryland'sFREIT's tenants, and any new commercial real estate competition developed in the future could potentially have an adverse effect on the revenues of and earnings from FREIT Maryland'sFREIT's commercial properties.

FREIT Maryland also faces competition with respect to its residential properties based on a variety of factors, including perception by residential tenants of the safety, convenience and attractiveness of an apartment building or complex; the proximity and the

number of competing apartment complexes; the proximity of commercial shopping centers; the availability of recreational and other amenities and the willingness and ability of the owner to provide capable management and adequate maintenance. Certain of these factors, such as the availability of amenities in the area surrounding a residential property, are not within FREIT Maryland’sFREIT’s control.

Illiquidity of real estate investment: Real estate investments are relatively difficult to buy and sell quickly. Accordingly, the ability of FREIT Maryland to diversify its portfolio in response to changing economic, market or other conditions is limited. Also, FREIT Maryland’sFREIT’s interests in its partially owned subsidiaries are subject to transfer constraints imposed under the operating agreements that govern FREIT Maryland’sFREIT’s investment in these partially owned subsidiaries.

Environmental problems may be costly: Both federal and state governments are concerned with the impact of real estate construction and development programs upon the environment. Environmental legislation affects the cost of selling real estate, the cost to develop real estate, and the risks associated with purchasing real estate.

Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such

property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). Such laws often impose such liability without regard to whether the owners knew of, or were responsible for, the presence or disposal of such substances. Such liability may be imposed on the owner in connection with the activities of any operator of, or tenant at the property. The cost of any required remediation, removal, fines or personal injury or property damages and the property owner's liability for same could exceed the value of the property and/or the aggregate assets of the owner. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. If FREIT Maryland incurred any such liability, it could reduce FREIT Maryland'sFREIT's revenues and ability to make distributions to its stockholders. During the fiscal year ended October 31, 2019, FREIT Maryland conducted environmental audits for all of its properties. The environmental reports secured by FREIT Maryland have not revealed any environmental conditions on its properties which require any further remediation pursuant to any applicable federal or state law or regulations.

A property can also be negatively impacted by either physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties.

Qualification as a REIT: Since its inception in 1961, FREIT Maryland has elected to qualify as a REIT for federal income tax purposes, and will continue to operate soin such a manner as to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of highly technical and complex provisions of the Internal Revenue Code. Governmental legislation, new regulations, and administrative interpretations may significantly change the tax laws with respect to the requirements for qualification as a REIT, or the federal income tax consequences of qualifying as a REIT. Although FREIT Maryland intends to continue to operate in a

manner to allow it to qualify as a REIT, future economic, market, legal, tax or other considerations may cause it to revoke the REIT election or fail to qualify as a REIT. Such a revocation would subject FREIT Maryland’sFREIT’s income to federal income tax at regular corporate rates, and failure to qualify as a REIT would also eliminate the requirement that FREIT Maryland pay dividends to its stockholders.

Change of investment and operating policies: FREIT Maryland’sFREIT’s investment and operating policies, including indebtedness and dividends, are exclusively determined by the Board, and not subject to stockholder approval.

None.

Portfolio of Investments: The following tables set forth certain information relating to each of FREIT Maryland'sFREIT's real estate investments in addition to the specific mortgages encumbering the properties.

* Average monthly rent per unit excludes the impact of rent concessions and abatements.

(1) Berdan Court is 100% owned by Berdan Court, LLC, which is 100% owned by FREIT Maryland.FREIT.

(2) FREIT Maryland owns a 40% equity interest in Westwood Hills, LLC which owns 100% of Westwood Hills.

(3) Construction completed in August 2006 on land acquired in 1963 / 1964.

(4) FREIT Maryland owns a 60% equity interest in Grande Rotunda, LLC ("Grande Rotunda").  A major redevelopment and expansion project was substantially completed in the third quarter of Fiscal 2016, in which a 379-unit residential complex was constructed upon property acquired in 2005. On December 30, 2021 the property owned by Grande Rotunda was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(5) Station Place is 100% owned by Station Place on Monmouth, LLC, which is 100% owned by FREIT Maryland.FREIT.

(6) Effective February 6, 2021, Grande Rotunda(4) On August 19, 2022, Westwood Hills, LLC exercised the first extension option on this loan with a balance in the amount of approximately $118.5 million, extendingits right, pursuant to the loan one year withagreement, to extend the term of its $25 million loan on its property located in Westwood, New Jersey, for an additional six (6) months from an initial maturity date of October 1, 2022 to a new maturity date of April 1, 2023.  This loan was extended on the same terms and conditions as stated in the loan agreement and has one remaining six (6) month extension. See Note 5 to FREIT's consolidated financial statements for further details.

(5) On December 30, 2021, FREIT refinanced its $14.4 million loan (which would have matured on February 6, 2022. Principal payments1, 2022) with a new loan held by ConnectOne Bank in the amount of $500,000 were required$7,500,000, with additional funding available to be drawn upon exercisein the amount of the first$7,500,000 for corporate needs. This loan extension optionis interest-only and per calendar quarter thereafter. Additionally, Grande Rotunda purchased an interest rate cap on LIBOR, with an effectivehas a maturity date of March 5, 2021, forJanuary 1, 2024 with the loan amountoption of approximately $118.5 million, capping the one-month LIBOR rate at 3%FREIT to extend for one year expiring on February 6, 2022. At October 31, 2021,from the totalmaturity date, subject to certain provisions of the loan agreement. This refinancing will provide annual debt service savings of approximately $1,173,000 as a result of the reduction in the principal amount, outstanding on this loan was approximately $116.5 million anda reduction in the annual interest rate was approximately 2.93%. Approximately 55%from a fixed rate of 5.37% to a fixed rate of 2.85% and interest-only payments being required under this outstanding loan balance was allocated to the residential segment based on a historical appraisal.  (Seenew loan. See Note 5 to FREIT Maryland’s consolidated financial statements.) On December 30, 2021 the property owned by Grande Rotunda was sold and a portion of the proceeds was used to pay off the $116.5 million then outstanding balance of this loan.  (See Note 17 to FREIT Maryland’sFREIT's consolidated financial statements for additionalfurther details.)

* Average annualized rent per sq. ft. includes the impact of straight-line rent adjustments and the amortization of rent concessions and abatements.

** See Note 16 to FREIT Maryland's consolidated financial statements for additional details in regards to the impact of the COVID-19 pandemic on rents from commercial tenants.

(1) These properties are security for draws against FREIT Maryland'sFREIT's Credit Line.  (See Note 5 to FREIT Maryland’sFREIT’s consolidated financial statements for additional details.)

(2) The original 33,000 sq. ft. shopping center was replaced with a new 87,661 sq. ft. center that opened in October 1997.

(3) FREIT Maryland owns a 100% interest in WestFREIT Corp, that owns the center. On January 7, 2022 the property owned by WestFREIT was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(4) FREIT Maryland owns a 40% equity interest in Wayne PSC, LLC, that owns the center.

(5) FREIT Maryland owns a 70% equity interest(4) The mortgage payable balance includes debt payment relief granted from the lender in Damascus Centre, LLC, that ownsFiscal 2020 resulting in total deferred payments of approximately $390,000, of which approximately $222,000 relates to deferred interest. These deferred payments are due at the center. A major renovationmaturity of this loan. See Notes 5 and expansion project was completed in November 2011. On January 10, 2022 the property owned by Damascus Centre was sold.  (See Note 1716 to FREIT Maryland’sFREIT's consolidated financial statements for additional details.

(5) On July 22, 2022, Wayne PSC, LLC (“Wayne PSC”)

(6) FREIT Maryland owns refinanced its $22.1 million loan (inclusive of deferred interest of approximately $136,000), which would have matured on October 1, 2026, on its Preakness Shopping center located in Wayne, New Jersey with a 60% equity interest in Grande Rotunda, that owns the center. A major redevelopment and expansion project was substantially completednew loan held by ConnectOne Bank in the third quarteramount of Fiscal 2016, which included modernization of the office building containing 137,000 sq. ft. of office space and approximately 83,000 sq. ft. of retail space on the lower level of the building and an additional 75,000 square feet of new retail space. On December 30, 2021 the property owned by Grande Rotunda was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(7) WestFREIT Corp. entered into a$25,000,000. This loan extension and modification agreement with M&T Bank, effective beginning on February 1, 2021, which requires monthly principal payments of $49,250 plus interestis interest-only based on a floatingfixed interest rate equal to 255 basis points over the one-month LIBORof 5% and has a term of three years with a maturity date of January 31, 2022, with the optionAugust 1, 2025. Additionally, an interest reserve escrow was established at closing representing twelve months of WestFREIT Corp. to extend for an additional one-year period through January 31, 2023, subject to certain requirements as provided for in the loan agreement including the lease-upinterest of certain space. (See Note 5 to FREIT Maryland’s consolidated financial statements.)  On January 7, 2022 the property owned by WestFREIT Corp. was sold and a portion of the proceeds was$1,250,000, which can be used to pay off the approximately $21.1 million then outstanding balance of this loan.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(8) Effective February 6, 2021, Grande Rotunda exercised the first extension optionmonthly interest on this loan with a requirement to replenish the escrow account back to $1,250,000 when the balance in the amountescrow account is reduced to three months of interest. This refinancing resulted in (i) annual debt service savings of approximately $118.5 million, extending the loan one year with a new maturity date of February 6, 2022. Principal payments$340,000 due to interest-only payments; (ii) an increase in the amount of $500,000 were required upon exercise of the first loan extension option and per calendar quarter thereafter. Additionally, Grande Rotunda purchased an interest rate cap on LIBOR, with an effective date of March 5, 2021, for the loan amount of approximately $118.5 million, capping the one-month LIBOR rate at 3% for one year expiring on February 6, 2022. At October 31, 2021, the total amount outstanding on this loan was approximately $116.5 million and the interest rate from a fixed interest rate of 3.625% to a fixed interest rate of 5%; and (iii) net refinancing proceeds of approximately $1.1 million which can be used for capital expenditures and general corporate purposes. As part of the refinancing, Wayne PSC terminated the interest rate swap contract on the underlying loan resulting in a realized gain on the swap breakage of approximately $1.4 million, which was approximately 2.93%. Approximately 45%recorded as a realized gain on the accompanying consolidated statement of this outstanding loan balance was allocatedincome for year ended October 31, 2022. See Notes 5 and 6 to the commercial segment based on a historical appraisal.  (See Note 5 to FREIT Maryland’sFREIT’s consolidated financial statements.) On December 30, 2021 the property owned by Grande Rotunda was sold and a portion of the proceeds was used to pay off the $116.5 million then outstanding balance of this loan.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(9) See Note 5 to FREIT Maryland’s consolidated financial statements.

(10) On January 10, 2022 the property owned by Damascus Centre was sold and a portion of the proceeds was used to pay off the approximately $18.2 million then outstanding balance of this loan.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

16 

Supplemental Segment Information:

Supplemental Segment Information:

The following table includes commercial lease expirations for tenants at the Grande Rotunda, WestFREIT and Damascus Centre properties which were sold subsequent to October 31, 2021. (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

Vacant Land as of October 31, 2021:2022:

FREIT Maryland believes that it has a diversified portfolio of residential and commercial properties. FREIT Maryland does not derive 10% or greater of its total consolidated revenue from any single lease agreement.

In Fiscal 2021, 2020 and 2019,2022, FREIT Maryland had one (1) property that contributed over 15% of FREIT’s total consolidated revenue: within the residential segment, the Westwood Hills property, which accounted for 16.1% of total consolidated revenue. In Fiscal 2021 and 2020, FREIT Maryland’shad one (1) property that contributed over 15% of FREIT’s total consolidated revenue: within both the residential and commercial segment, the Rotunda property in Baltimore, Maryland. The Rotunda property accounted for 34% for Fiscal 2021 and 31.3% for Fiscal 2020 and 29.3% for Fiscal 2019 of total consolidated revenue. On December 30, 2021, the property owned by Grande Rotunda was sold. (See Note 172 to FREIT Maryland’sFREIT’s consolidated financial statements for additional details.)

Although FREIT Maryland’sFREIT’s general investment policy is to hold properties as long-term investments, FREIT Maryland could selectively sell certain properties if it determines that any such sale is in FREIT Maryland’sFREIT’s and its stockholders’ best interests. See “Business-DispositionMaryland Property Dispositions” under Item 1 above. With respect to FREIT Maryland’sFREIT’s future acquisition and development activities, FREIT Maryland will evaluate various real estate opportunities, which FREIT Maryland believes would increase FREIT Maryland’sFREIT’s revenues and earnings, as well as complement and increase the overall value of FREIT Maryland’sFREIT’s existing investment portfolio.

Except for the TD Bank branch located in Rockaway, New Jersey and the property located in Glen Rock, New Jersey, all of FREIT Maryland’sFREIT’s and its subsidiaries’ commercial properties have multiple tenants.

As of October 31, 2021,2022, FREIT Maryland and its subsidiaries’ commercial properties have seventeen (17)seven (7) anchor/major tenants, which account for approximately 64.1%70.2% of the space leased. The balance of the space is leased to one hundred fifty-five (155)fifty-two (52) satellite and office tenants. The following table lists the anchor/major tenants at each center and the number of satellite tenants:

(1) FREIT Maryland has a 40% interest in this property.

(2) FREIT Maryland has a 70% interest in this property. On January 10, 2022 the property owned by Damascus Centre was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(3) FREIT Maryland has a 60% interest in this property. On December 30, 2021 the property owned by Grande Rotunda was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(4) Tenants were shut down in Fiscal 2020 due to the COVID-19 impact and have either resumed operations at a low capacity or not yet re-opened. See Note 16 to FREIT Maryland'sFREIT's consolidated financial statements and “Renewal of leases and Reletting of Space” for additional details.

(5) On May 4, 2021, Burlington amended its lease extending the term of the lease for a period of one (1) year and ninety (90) days commencing on December 1, 2021 and expiring on February 28, 2023 (“Fourth Extension Period”).  The fixed rent during this Fourth Extension Period shall be reduced from $59,120 per month to $35,830 per month.  Additionally, Burlington has the right to terminate the lease at any time prior to the last day of the Fourth Extension Period by providing at least twelve (12) months prior written notice of such termination (the “Termination Notice”). In the event that Burlington delivers the Termination Notice, the term of the lease shall automatically end on the last day of the twelfth (12th) full calendar month immediately following receipt of the Termination Notice.     See “Renewal of leases and Reletting of Space” for additional details. On January 7, 2022 the property owned by WestFREIT was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

(6) Gold's Gym did not exercise its option to renew its lease which expires on March 31, 2022. In the fourth quarter of Fiscal 2021, Gold's Gym ceased operations at this location while continuing to pay only additional rent. FREIT Maryland's operating results will be adversely affected from loss of base rent and additional rent of approximately $330,000 on an annualized basis.  See “Renewal of leases and Reletting of Space” for additional details. On January 7, 2022 the property owned by WestFREIT was sold.  (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)   

With respect to most of FREIT Maryland’sFREIT’s commercial properties, lease terms range from five (5) years to twenty-five (25) years with options, which if exercised would extend the terms of such leases. The lease agreements generally provide for reimbursement of real estate taxes, maintenance, insurance and certain other operating expenses of the properties. During the last three (3) completed fiscal years, occupancy at FREIT Maryland’sFREIT’s commercial properties averaged 79.2%69.2%, which represents the actual “physical” occupancy rate (based upon possession and use of leased space). The lower average and excludes from each of these years the occupancy level is attributed to uncertaintiesat the Maryland Properties sold in theFiscal 2022. While our retail market as well asproperties have stabilized from the impact of the COVID-19 pandemic, on retail businesscertain of our properties still have not attained pre-pandemic occupancy levels despite some recovery in Fiscal 2021brick and Fiscal 2020, making it difficult to attract and retain tenants due to the financial hardship driven by the mandated shut downs and continued restrictions imposed upon them.mortar retail.

Leases for FREIT Maryland’sFREIT’s apartment buildings and complexes are usually one to two years in duration. Even though the residential units are leased on a short-term basis, FREIT Maryland has averaged, during the last three (3) completed fiscal years,

a 95.4%96.9% occupancy rate with respect to FREIT Maryland’sFREIT’s available apartment units, excluding from each of these fiscal years the occupancy at the Pierre TowersIcon property which was converted to a TIC and deconsolidated from FREIT Maryland’s operating results as of February 28, 2020.sold in Fiscal 2022.

FREIT Maryland does not believe that any seasonal factors materially affect FREIT Maryland’sFREIT’s business operations and the leasing of its commercial and apartment properties.

FREIT Maryland believes that its properties are covered by adequate fire and property insurance provided by reputable companies and with commercially reasonable deductibles and limits. 

On January 14, 2020, FREIT Maryland and certain of its affiliates (collectively, the “Sellers” or “Defendant”), entered into a Purchase and Sale Agreement (as subsequently amended, the “Purchase and Sale Agreement”) with Sinatra Properties LLC (the “Purchaser”, “Sinatra” or “Plaintiff”), which provided for the sale by the Sellers to the Purchaser of 100% of the Sellers’ ownership interests in six real properties held by the Sellers in exchange for the purchase price described therein, subject to the terms and conditions of the Purchase and Sale Agreement. On April 30, 2020, the Sellers delivered written notice to the Purchaser of the Sellers’ termination of the Purchase and Sale Agreement in accordance with its terms due to the occurrence of a “Purchaser Default” thereunder, based on the Purchaser’s failure to perform its obligations under the Purchase and Sale Agreement and close the transactions contemplated therein.

Upon the execution of the Purchase and Sale Agreement, the Purchaser delivered into escrow a deposit in the amount of $15 million (the “Deposit”), in the form of an unconditional, irrevocable letter of credit in such amount (the “Letter of Credit”). The Purchase and Sale Agreement provides that the Sellers’ exclusive remedy, in the event of a “Purchaser Default” and the termination of the Purchase and Sale Agreement, is the forfeiture of the Deposit to the Sellers as liquidated damages. Accordingly, contemporaneously with the Sellers’ delivery of the termination notice to the Purchaser, the Sellers delivered written notice to the escrow agent requesting that the escrow agent release the Letter of Credit from escrow and deliver same to the Sellers.

On May 6, 2020, the Purchaser filed a complaint (the “Complaint”) against the Sellers in the Superior Court of New Jersey, Monmouth County (“Court”), in which, among other things, the Purchaser alleges breach of contract and breach of the covenant of good faith and fair dealing against the Sellers in connection with the Sellers’ termination of the Purchase and Sale Agreement. The Purchaser seeks (a) a judgment of specific performance compelling the Sellers to convey the properties under the Purchase and Sale Agreement to the Purchaser; (b) declaratory judgment from the court that (i) the Purchase and Sale Agreement is not terminated, (ii) the Purchaser is not in default under the Purchase and Sale Agreement, and (iii) the Sellers are in default under the Purchase and Sale Agreement, subject to a right to cure; (c) an order for injunctive relief compelling the Sellers to perform the Purchase and Sale Agreement; (d) in the event that the court does not order specific performance, a judgment directing that the Purchaser’s $15 million deposit under the Purchase and Sale Agreement be returned to the Purchaser, and compensatory, consequential and incidental damages in an amount to be determined at trial; and (e) attorneys’ fees and costs.

The Purchaser has filed lis pendens with respect to each of the six properties that were subject to the Purchase and Sale Agreement. The lis pendens provides notice to the public of the Complaint. Pending the resolution of this litigation, the filing of the lis pendens will adversely affect the future sale or financing of those properties.

On June 17, 2020, the Sellers filed their answer, separate defenses, and counterclaims (the “Answer”) in response to the Complaint, in which, among other things, the Sellers (a) deny the Purchaser’s claim that the Sellers’ termination of the Purchase and Sale Agreement was wrongful, and assert that there was no contractual basis in the Purchase and Sale Agreement to relieve the Purchaser from its obligation to perform thereunder, or to defer or postpone the Purchaser’s obligation to perform, (b) assert certain defenses to the allegations set forth in the Complaint without admitting any liability, and (c) request relief from the Court in the form of (i) judgment in the Sellers’ favor dismissing all of the Purchaser’s claims against them with prejudice and denying all of the Purchaser’s requests for relief, (ii) reasonable attorneys’ fees and costs, and (iii) such other and further relief as the Court deems just.

In addition, the Answer asserts counterclaims by the Sellers against the Purchaser for breach of contract due to the Purchaser’s failure to close the Purchase and Sale Agreement in accordance with its terms, and the Sellers seek a declaratory judgment from the Court that the Sellers properly terminated the Purchase and Sale Agreement in accordance with its terms due to the Purchaser’s default and an order from the Court that the Purchaser authorize the escrow agent to release the $15 million deposit under the Purchase and Sale Agreement to the Sellers. On April 28, 2021, the Sellers amended the Answer to include (1) counterclaims against the Purchaser for breach of contract due to the Purchaser’s breach of confidentiality and non-disclosure obligations contained in the Purchase and Sale Agreement, and (2) third-party claims against Purchaser’s affiliate Kushner Realty Acquisition LLC for breach of its confidentiality and non-disclosure obligations contained in the non-disclosure agreement entered into by the parties in connection with the negotiation of the transactions contemplated by the Purchase and Sale Agreement, based on the conduct of the Purchaser and its affiliates after the Sellers terminated the Purchase and Sale Agreement.

In connection with these counterclaims and third-party claims, the Answer seeks the following relief from the Court: (a) liquidated damages in the amount of $15 million, as provided in the Purchase and Sale Agreement; (b) in the alternative to the liquidated damages provided for in the Purchase and Sale Agreement, money damages in an amount to be determined at trial; (c) interest, attorneys’ fees and costs associated with the defense of the Purchaser’s claims and the prosecution of the Sellers’ counterclaims against the Purchaser, as provided for in the Purchase and Sale Agreement; (d) judgment declaring that the Sellers properly terminated the Purchase and Sale Agreement due to the Purchaser’s default thereunder; (e) judgment declaring that the Purchaser must authorize the escrow agent to release the $15 million deposit to the Sellers; (f) an order enjoining the Purchaser and its affiliates from engaging in further breaches of the Purchase and Sale Agreement and non-disclosure agreement, and compelling the Purchaser and its affiliates to return the Sellers’ confidential information and materials and to use best efforts to

ensure the return of the Sellers’ confidential information and materials from third parties to whom the Purchaser and/or its affiliates provided such materials; and (g) such other relief as the Court deems just and equitable.

In the Answer filed by the Purchaser on September 15, 2020 and the Answer and Affirmative Defenses filed by the Purchaser and Kushner Realty Acquisition LLC on June 7, 2021, the Purchaser and Kushner Realty Acquisition LLC have generally denied the claims, counterclaims and allegations contained in the Sellers’ original and amended Answer, and asserted affirmative defenses to the Sellers’ claims and counterclaims.

Each of the Sellers and the Purchaser filed motions for summary judgment (“Summary Judgment Motions”) with the Court in which the litigation is pending seeking, among other things, the dismissal of the other parties’ claims.

On February 4, 2022, the Court entered an Order (the “February 4 Order”) with respect to the Summary Judgment Motions which provides as follows:

On May 31, 2022, Sinatra filed a Motion for Reconsideration with the Court, requesting that the Court reconsider its February 4, 2022 Order and, among other things, (a) grant Sinatra’s motion for summary judgment, and (b) reverse the Court’s findings that (1) Sinatra breached the Purchase and Sale Agreement, (2) the Sellers did not breach the Purchase and Sale Agreement and (3) the Court’s dismissal of the Complaint and Lis Pendens. On July 8, 2022, the Court denied Sinatra’s Motion for Reconsideration.

Following the February 4 Order, the Sellers and the Purchaser each filed a motion for an award of attorney’s fees and costs pursuant to the applicable provisions of the Purchase and Sale Agreement. On December 8, 2022 the Court entered an Order awarding Sellers $3,420,422.88 in attorneys’ fees and denying the Plaintiff’s request for attorneys’ fees (the “December 8 Order”). Upon entering the December 8 Order, the Court had adjudicated all unresolved issues in the action.

On December 8, 2022, the Sellers filed a Notice of Appeal, appealing from that portion of the February 4 Order which declined to enforce the liquidated damages provision in the Purchase and Sale Agreement.

On December 22, 2022, the Purchaser filed a Notice of Cross Appeal appealing from all determinations by the Court adverse to the Purchaser, including (i) that portion of the February 4 Order holding that the Purchaser breached the contract; (ii) the denial of the Purchaser’s motion for reconsideration of the February 4 Order; and (iii) the December 8 Order awarding the Sellers $3,420,422.88 in attorneys’ fees and denying the Purchaser’s request for attorneys’ fees.

The Sellers continue to believe that the allegations set forth in the Complaint and Answer filed by the PurchaserSinatra and in the Answer to Counterclaims and Third-Party Complaint and Affirmative Defenses filed by the PurchaserSinatra and Kushner Realty Acquisition LLC, are without merit and intend to vigorously defend the action and enforce the Sellers’ rights and remedies under the Purchase and Sale Agreement in connection with the “Purchaser Default” thereunder, including the Purchaser’s forfeiture of its $15 million deposit to the Sellers as liquidated damages as provided in the Purchase and Sale Agreement. (See Note 14 to FREIT Maryland’s consolidated financial statements for further details.)merit.

Except as disclosed in the preceding paragraphs, there are no other material pending legal proceedings to which FREIT Maryland is a party, or of which any of its properties is the subject. There is, however, ordinary and routine litigation involving FREIT Maryland'sFREIT's business including various tenancy and related matters. Except for the environmental conditions involving remediation disclosed in “Item 1(c) Narrative Description of Business - Impact of Governmental Laws and Regulations on Registrant’s Business; Environmental Matters,” there are no legal proceedings concerning environmental issues with respect to any property owned by FREIT Maryland.FREIT.

Not applicable.

PART II

Reincorporation

First Real Estate Investment Trust of New Jersey was organized on November 1, 1961 as a New Jersey Business Trust. On July 1, 2021, FREITFirst Real Estate Investment Trust of New Jersey completed the change of its form of organization from a New Jersey REITreal estate investment trust to a Maryland corporation (the “Reincorporation”) which was approved by its shareholdersstockholders at the annual meeting of shareholdersstockholders held on May 6, 2021. The Reincorporation changeschanged the law applicable to FREIT’sFirst Real Estate Investment Trust of New Jersey’s affairs from New Jersey law to Maryland law and was accomplished by the merger of FREITFirst Real Estate Investment Trust of New Jersey with and into its wholly owned subsidiary, First Real Estate Investment Trust of New Jersey, Inc. (“FREIT Maryland”FREIT”, “Trust”, “us”, “we”, “our” or the “Company”), a Maryland corporation. As a result of the Reincorporation, the separate existence of FREIT hasFirst Real Estate Investment Trust of New Jersey ceased and FREIT Maryland has succeeded to all the business, properties, assets and liabilities of FREIT.First Real Estate Investment Trust of New Jersey. Holders of shares of beneficial interest in FREIT haveFirst Real Estate Investment Trust of New Jersey received one newly issued share of common stock of FREIT Maryland for each share of FREIT that they own,First Real Estate Investment Trust of New Jersey owned by them, without any action of stockholders required and all treasury stock held by FREITFirst Real Estate Investment Trust of New Jersey was retired. FREIT is organized and will continue to operate in such a manner as to qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, and its stock is traded on the over-the-counter market under the trading symbol FREVS.

Shares

FREIT Maryland has the authority to issue 25,000,000 shares, consisting of 20,000,000 shares of common stock with a par value of $0.01 per share and 5,000,000 shares of preferred stock with a par value of $0.01 per share. FREIT Maryland’sFREIT’s only authorized, issued and outstanding class of equity is common stock (“Shares”). As of January 28, 2022,27, 2023, there were approximately 500 holders of record of the Shares.

The Shares are traded in the over-the-counter market through use of the OTC Bulletin Board Service (the “OTC Bulletin Board”) provided by FINRA,the Financial Industry Regulatory Authority, Inc. (“FINRA”). FREIT Maryland does not believe that an active United States public trading market exists for the Shares since historically only small volumes of the Shares are traded on a sporadic basis. The following table sets forth, at the end of the periods indicated, the Bid and Asked quotations for the Shares on the OTC Bulletin Board.

The bid quotations set forth above for the Shares reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. The source of the bid and asked quotations is Bloomberg.

Dividends

The holders of Shares are entitled to receive distributions as may be declared by the FREIT Maryland Board of Directors (“Board”). Dividends may be declared from time to time by the Board and may be paid in cash, property, or Shares. The Board’s present policy is to distribute annually at least ninety percent (90%) of FREIT Maryland’sFREIT’s REIT taxable income as dividends to the holders of Shares in order to qualify as a REIT for federal income tax purposes. Distributions are made on a quarterly basis. For Fiscal 2022, FREIT paid/declared an annual dividend of $9.20 per share. For Fiscal 2021, FREIT Maryland paid/declared an annual dividend of $0.25 per share. For Fiscal 2020, FREIT Maryland did not pay/declare a dividend. For Fiscal 2019, FREIT Maryland paid/declared an annual dividend of $0.60 per share. In Fiscal 2018 and Fiscal 2017, FREIT Maryland paid/declared an annual dividend of $0.15 per share for each fiscal year.

See Item 7, “Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Distributions to Stockholders.”

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

OVERVIEW

FREIT Maryland is an equity real estate investment trust ("REIT") that is self-administered and externally managed. FREIT Maryland owns a portfolio of residential apartment and commercial properties. FREIT Maryland’sFREIT’s revenues consist primarily of rental income and other related revenues from its residential and commercial properties and additional rents derived from operating commercial properties. FREIT Maryland’sFREIT’s properties are primarily located in northern New Jersey Maryland and New York.

COVID-19 PandemicMaryland Property Dispositions::

On November 22, 2021, certain affiliates (the “Maryland Sellers”) of FREIT entered into a Purchase and Sale Agreement (the “Maryland Purchase and Sale Agreement”) with MCB Acquisition Company, LLC (the “Maryland Purchaser”), a third party, pursuant to which the Maryland Sellers agreed to sell three properties to the Maryland Purchaser. The international spreadproperties consisted of COVID-19retail and office space and a residential apartment community owned by Grande Rotunda, LLC (the “Rotunda Property”), a shopping center owned by Damascus Centre, LLC (the “Damascus Property”), and a shopping center owned by WestFREIT Corp. (the “Westridge Square Property”). FREIT owns 100% of its subsidiary, WestFREIT Corp. (“WestFREIT”), a 60% interest in Grande Rotunda, LLC (“Grande Rotunda”), the joint venture that owned the Rotunda Property, and a 70% interest in Damascus Centre, LLC (“Damascus Centre”), the joint venture that owned the Damascus Property.

The original purchase price for the Rotunda Property, the Damascus Property and the Westridge Square Property (collectively the “Maryland Properties”) under the Maryland Purchase and Sale Agreement was declared a global pandemicreduced by $2,723,000 from $267,000,000 to $248,750,269, after giving effect to the $15,526,731 escrow deposit described below. This reduction in the sales price of $2,723,000 was to account for improvements and repairs to the Maryland Properties and miscellaneous items identified by the World Health Organization on March 11, 2020. The extent to which this pandemic could continue to affect our financial condition, liquidity, and results of operations is difficult to predict and depends on evolving factors, including: duration, scope, government actions, and other social responses. Beginning in March 2020 and throughout most of 2020, many statesMaryland Purchaser in the U.S., including New Jersey, New Yorkcourse of its due diligence inspection. Additionally, the Maryland Purchaser was obligated under the Maryland Purchase and Sale Agreement to deposit a total of $15,526,731 in escrow with respect to certain leases at the Maryland Properties, which have not been executed or where our properties are located, implemented stay-at-homethe rent commencement date has not occurred or economic obligations of the Maryland Sellers under certain leases remain unpaid. Although there can be no assurance, a portion of the $15,526,731 escrow deposit (the “Maryland Purchaser Escrow Payment”) may be paid to the Maryland Sellers depending upon the outcome of construction and shut down ordersleasing activities at the Maryland Properties. The Maryland Purchaser Escrow Payment Agreement provides for all "non-essential" businessamong other things, monthly disbursements from escrow to the Maryland Purchaser related to the aforementioned tenant lease agreements until the earlier of (i) the rent commencement date of the respective tenant lease agreements or (ii) 5-years from the date of the agreement. The release and activity in an aggressive effortamounts of escrowed funds to mitigateFREIT, generally, is contingent on the spreadsuccess and timing of COVID-19. These orders have continuedfuture leasing activities at the Maryland Properties.

The sale of the Maryland Properties having a total net book value of $172.2 million was consummated by the Maryland Sellers and the Maryland Purchaser for a purchase price of $248,750,269, after giving effect to evolve resulting in the lifting of these restrictions over the past year. Vaccinations for the COVID-19 virus have been widely distributed among the general U.S. population which has$15,526,731 Maryland Purchaser Escrow Payment. This sale resulted in loosened restrictions previously mandated on our tenants identified as nonessential. However,net proceeds of approximately $53.9 million (inclusive of approximately $1.9 million in funds released from the potential emergenceMaryland Purchaser Escrow Payment during the second quarter of vaccine-resistant variantsFiscal 2022), after payment of COVID-19 could trigger restrictions to be put back in place. Such restrictions may include mandatory business shut-downs, reduced business operations and social distancing requirements.

As the impact of the pandemic evolves, it continues to cause uncertainty and volatility in the financial markets. Many U.S. industries and businesses were negatively affected and millions of people filed for unemployment resulting in the U.S. unemployment rate rising to 14.7% in April 2020, which was the highest recorded rate since the Great Depression. Since April 2020, the U.S unemployment rate has declined to 4.6% as of October 2021, as many businesses continue to reopen and rehire employees following many of the COVID-19 mandated shut down orders being lifted. However, the jobless rate remains aboverelated

mortgage debt in the pre-pandemic levelsamount of about 3.5%. The COVID-19 pandemic$155.8 million and the actions taken by individuals, businesses and government authoritiescorresponding swap breakage fees of approximately $213,000 related to reduce its spread have caused substantial lost business revenue, changesthe early termination of the interest rate swap contracts on the Damascus Property loan, payment of loans (including interest) to each of the equity owners in consumer behavior and large reductions in liquidity and fair value of many assets.

Despite the COVID-19 pandemic and preventive measures taken to mitigate the spread, our residential properties continued to generate cash flow. The average annual occupancy rate for the residential properties (including the Pierre TIC) has increased from approximately 93.7% for the fiscal year ended October 31, 2020 to approximately 96.1% for the fiscal year ended October 31, 2021. The tenants at these properties, for the most part, continue to pay their rent.

At our commercial properties, with the exception of grocery stores and other "essential" businesses, many of our retail tenants have been adversely affected by the previously mandated shut downs and the continued lingering impact to consumer sentiment and preferences for safety amid the reemergence of other COVID-19 variants. While the overall average cash realization of monthly billings as compared to monthly cash collections for the commercial properties for the year ended October 31, 2021 has resumed to pre-pandemic levels, the average annual occupancy rate has declined from approximately 79.7% for the fiscal year ended October 31, 2020 to approximately 76.3% for the fiscal year ended October 31, 2021. During the first quarter of Fiscal 2021, Pet Valu, Inc., a pet store tenant, vacated several stores located in shopping centers owned by FREIT Maryland affiliates (Wayne PSC, Damascus Centre and Grande Rotunda) and terminated the related leases early paying an aggregate lease termination feeRotunda in the amount of approximately $260,000$31 million and certain transactional expenses and transfer taxes including brokerage fees due to Hekemian & Co. of approximately $6.2 million. As of October 31, 2022, approximately $1,946,000 of the Maryland Purchaser Escrow Payment has been released from escrow to the Maryland Sellers. The escrow and related gain on sale were reduced by approximately $1.2 million due to a change in estimate in the second quarter of Fiscal 2022 related to a change in the timing of anticipated rent commencement dates for certain tenants, which will reduce the escrowed funds available to be released to Grande Rotunda. Approximately $6.3 million of remaining funds are held in a post-closing escrow for rents anticipated to be fully released in Fiscal 2023 and are included in “Funds held in post-closing escrow” on the accompanying consolidated balance sheet as of October 31, 2022. The sale of the Maryland Properties resulted in a net gain of approximately $68.8 million (as adjusted) (with a consolidated impact to FREIT Maryland of approximately $140,000)$45.6 million) which includes approximately $8.2 million of proceeds released and anticipated to be released from funds held in escrow, a write-off of the straight-line rent receivable of approximately $2.9 million and a write-off of unamortized lease commissions of approximately $1.7 million.

On August 4, 2022, the FREIT Board of Directors (“Board”) declared a special, extraordinary, non-recurring cash distribution of approximately $51.5 million, or $7.50 per share, which was paid on August 30, 2022, to stockholders of record on August 16, 2022 (with an ex-dividend date of August 31, 2022). The properties owned by Grande Rotunda and Damascus Centre were sold on December 30, 2021 and January 10, 2022, respectively. This distribution represented most of the net proceeds of FREIT’s sale of its portfolio of Maryland Properties.

See Note 172 to FREIT Maryland’sFREIT’s consolidated financial statements for additional details. The Company is closely monitoring changes indetails on the collectability assessment of its tenant receivables as a result of certain tenants suffering adverse financial consequences related to the COVID-19 pandemic. For the fiscal years ended October 31, 2021 and 2020, rental revenue deemed uncollectible of approximately $1.3 million and $1.4 million (with a consolidated impact to FREIT Maryland of approximately $0.8 million and $0.9 million), respectively, was classified as a reduction in rental revenue based on our assessmentsale of the probability of collecting substantially all of the remaining rents for certain tenants. During the period beginning March 2020 through October 31, 2021, FREIT Maryland has applied, net of amounts subsequently paid back by tenants, an aggregate of approximately $397,000 of security deposits from its commercial tenants to outstanding receivables due. On a case by case basis, FREIT has offered some commercial tenants deferrals of rent over a specified time period totaling approximately $132,000Properties.

The economic and $206,000 (with a consolidated impact to FREIT Maryland of approximately $81,000 and $192,000) and rent abatements totaling approximately $239,000 and $238,000 (with a consolidated impact to FREIT Maryland of approximately $158,000 and $156,000) for the fiscal years ended October 31, 2021 and 2020, respectively. FREIT Maryland currently remains in active discussions and negotiations with these impacted retail tenants.

Cobb Theatre, an anchor tenant movie theatre at the Rotunda retail property filed for bankruptcy and rejected its lease at the Rotunda property as of June 30, 2020. As a result of the rejection of this lease, uncollected rents in the amount of approximately $0.3 million and a straight-line rent receivable of approximately $0.4 million were reversed against revenue, and unamortized leasing commissions in the amount of approximately $0.2 million were written off and fully expensed in Fiscal 2020 resulting in a net impact to net income of approximately $0.9 million (with a consolidated impact to FREIT Maryland of approximately $0.5 million) for the year ended October 31, 2020. Tenant improvements related to the Cobb Theatre with a net book value of approximately $7.3 million (with a consolidated impact to FREIT Maryland of approximately $4.4 million) as of October 31, 2020 were deemed to be impaired, written off and charged to operations in the consolidated statement of income for the fiscal year ended October 31, 2020. On December 30, 2021, the property owned by Grande Rotunda was sold. (See Notes 16 and 17 to FREIT Maryland’s consolidated financial statements for additional details.)

As a result of the negative impact of the COVID-19 pandemic at our commercial properties, in Fiscal 2020 we were granted debt payment relief from certain of our lenders on such properties in the form of deferral of principal and/or interest payments for a three-month period, resulting in total deferred payments of approximately $1,013,000, which will become due at the maturity of the loans.environment: As of October 31, 20212022, the annual inflation rate is 7.7%, which is primarily being driven by soaring food prices and 2020, approximately $162,000energy costs, labor shortages and supply disruptions while the U.S. unemployment rate increased slightly to 3.7%. Though inflation is still running near a 40-year high, it may be showing signs of this amountslowing down since the actual rate for the month of October 2022 came in lower than the prior month, which was at 8.2%. While the Federal Reserve has been repaid, there will be no further deferrals of principal and/orcontinuing to raise interest payments on these loans andrates in an effort to lower inflation, the balance due has been included in mortgages payable on the consolidated balance sheets as of October 31, 2021 and 2020. (See Note 5 to FREIT Maryland’s consolidated financial statements for additional details).

For the fiscal year ended October 31, 2021, we have experienced a positive cash flow from operations with cash provided by operations of approximately $12.2 million. This could change based on the duration of the pandemic,pace at which is uncertain. We believe that our cash balance as of October 31, 2021 of approximately $35.9 million coupled with a $13 million available line of credit (available through October 31, 2023, see Note 5) and the additional $7.5 million in funds available to draw on the Boulders loan (See Note 17 for additional details) will provide us with sufficient liquidity for at least the next twelve months from the filing of this Form 10-K.

The extent of the effects of COVID-19 on our business, results of operations, cash flows, value of our real estate assets and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty. (See “Item 1A. Risk Factors” for additional details.) FREIT Maryland willit may continue to actively monitor the effects of the pandemic, including governmental directivesdo so is uncertain leading to uncertainties in the jurisdictions in which we operatefinancing market and the recommendations of publica volatile economy.

health authorities, and will, as needed, take further measures to adapt our business in the best interests of our stockholders and personnel. (See Note 16 to FREIT Maryland’s consolidated financial statements for further details.)

Residential Properties: While ourOur residential properties continue to generate positive cash flow while average rents on turned units (apartments which were vacated and then re-leased to new tenants) from 2021 to 2022 has increased across the portfolio. Additionally, the rate of increase on renewals for existing tenants has also been robust over the past year with slight signs of this robustness starting to soften. These increases should meaningfully contribute to FREIT’s income over time but it is uncertain what impact COVID-19the significant rise in inflation and rising interest rates may have on these properties over the next year is uncertain and will depend on the duration of the pandemic and the recovery of the economy.year.

Commercial Properties: There continues to be uncertainty in theWhile our retail environment that couldproperties have an adverse impact on FREIT Maryland’s retail tenants, which could have an adverse impact on FREIT Maryland. Asstabilized from the impact of the COVID-19 pandemic, evolves,certain of our properties still have not attained pre-pandemic operating levels despite some recovery in brick and mortar retail. Additionally, the significant rise in inflation and rising interest rates could have an impact COVID-19 may have on the operating and financial performance of our commercial properties is currently uncertain and will depend on certain developments, including, among others, the impact of COVID-19 on our tenants and the magnitude and duration of the pandemic, including its impact on store closing and social distancing rules which may impact a tenant’s ability to generate sales at sufficient levels to cover operating costs, including rent and the continued rollout of the vaccinations to the population.properties.

On May 4, 2021, Burlington Coat Factory Warehouse (“Burlington”) amended its lease at the Westridge Square Shopping Center (owned by WestFREIT) extending the term of the lease for a period of one (1) year and ninety (90) days commencing on December 1, 2021 and expiring on February 28, 2023 (“Fourth Extension Period”). The fixed rent during this Fourth Extension Period was reduced from $59,120 per month to $35,830 per month. Additionally, Burlington has the right to terminate the lease at any time prior to the last day of the Fourth Extension Period by providing at least twelve (12) months prior written notice of such termination (the “Termination Notice”). In the event that Burlington delivers the Termination Notice, the term of the lease shall automatically end on the last day of the twelfth (12th) full calendar month immediately following receipt of the Termination Notice. On January 7, 2022 the property owned by WestFREIT was sold. (See Note 17 to FREIT Maryland’s consolidated financial statements for additional details.)

Reincorporation: On July 1, 2021, First Real Estate Investment Trust of New Jersey (“FREIT”) completed the change of its form of organization from a New Jersey real estate investment trust to a Maryland corporation (the “Reincorporation”) which was approved by its shareholders at the annual meeting of shareholders held on May 6, 2021. The Reincorporation changes the law applicable to FREIT’s affairs from New Jersey law to Maryland law and was accomplished by the merger of FREIT with and into its wholly owned subsidiary, First Real Estate Investment Trust of New Jersey, Inc. (“FREIT Maryland”, “Trust”, “us”, “we”, “our” or the “Company”), a Maryland corporation. As a result of the Reincorporation, the separate existence of FREIT has ceased and FREIT Maryland has succeeded to all the business, properties, assets and liabilities of FREIT. Holders of shares of beneficial interest in FREIT have received one newly issued share of common stock of FREIT Maryland for each share of FREIT that they own, without any action of stockholders required and all treasury stock held by FREIT was retired.

FREIT Maryland is organized and will continue to operate in such a manner as to qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, and its stock is traded on the over-the counter market under the trading symbol FREVS. (See Note 1 to FREIT Maryland’s consolidated financial statements for further details.)

Debt Financing Availability: Financing has been available to FREIT Maryland and its affiliates. The lis pendens filed in connection with the legal proceeding between FREIT Maryland and certain of its affiliates and Sinatra Properties, LLC may adversely affect FREIT Maryland’s ability to refinance certain of its residential properties. In accordance with certain loan agreements, FREIT Maryland may be required to meet or maintain certain financial covenants throughout the term of the loan. As a result of COVID-19 pandemic rent losses and the planning(See Note 5 to FREIT’s consolidated financial statements for a potential redevelopment ofadditional details.)

On December 30, 2021, FREIT refinanced its shopping center, as of October 31, 2021, Wayne PSC was not, and currently is not,$14.4 million loan (which would have matured on February 1, 2022) on its Boulders property located in complianceRockaway, New Jersey with a look back debt service coverage rationew loan covenant contained in the mortgage loan agreement held by People’s UnitedConnectOne Bank in the amount of $7,500,000, with additional funding available to be drawn upon in the amount of $7,500,000 for corporate needs. This loan is interest-only and has a maturity date of January 1, 2024 with the option of FREIT to extend for one year from the maturity date, subject to certain provisions of the loan agreement. This refinancing will provide annual debt service savings of approximately $22.6$1,173,000 as a result of the reduction in the principal amount, a reduction in the annual interest rate from a fixed rate of 5.37% to a fixed rate of 2.85% and interest-only payments being required under this new loan. (See Note 5 to FREIT’s consolidated financial statements for additional details.)

On July 22, 2022, Wayne PSC, LLC (“Wayne PSC”) refinanced its $22.1 million loan (inclusive of deferred interest of approximately $136,000), which would have matured on October 1, 2026, on its Preakness Shopping center located in Wayne, New Jersey with a new loan held by ConnectOne Bank in the amount of $25,000,000. This loan is interest-only based on a fixed interest rate of 5% and has a term of three years with a maturity date of August 1, 2025. Additionally, an interest reserve escrow was established at closing representing twelve months of interest of $1,250,000, which can be used to pay monthly interest on this loan with a requirement to replenish the escrow account back to $1,250,000 when the balance in the escrow account is reduced to three months of interest. This refinancing resulted in (i) annual debt service savings of approximately $340,000 due to interest-only payments; (ii) an increase in the interest rate from a fixed interest rate of 3.625% to a fixed interest rate of 5%; and (iii) net refinancing proceeds of approximately $1.1 million which can be used for capital expenditures and general corporate purposes. As part of the refinancing, Wayne PSC terminated the interest rate swap contract on the underlying loan resulting in a realized gain on the swap breakage of approximately $1.4 million, which has been recorded as a realized gain on the

accompanying consolidated statement of income for the year ended October 31, 2021. Although the Company continues2022. (See Notes 5 and 6 to makeFREIT’s consolidated financial statements for additional details.)

On August 19, 2022, Westwood Hills, LLC exercised its required debt service payments in accordance withright, pursuant to the loan agreement, it is unable to comply with this covenant. As such,extend the bank could exerciseterm of its remedies under$25 million loan on its property located in Westwood, New Jersey, for an additional six (6) months from an initial maturity date of October 1, 2022 to a new maturity date of April 1, 2023. This loan was extended on the same terms and conditions as stated in the loan agreement including, among other things, requiring a partial or full repayment of the loan. The Company is currently working with the lenderand has one remaining six (6) month extension. (See Note 5 to remediate this covenant default. As of the date of the filing of this Form 10K report, the bank has not declared this loan to be in default. Until such time as a definitive agreement is entered into, there can be no assurance the loan covenant will be amended and the bank will not declare this loan to be in default.FREIT’s consolidated financial statements for additional details.)

Operating Cash Flow: FREIT Maryland expects that cash provided by operating activities and cash reserves will be adequate to cover mandatory debt service payments (including payments of interest, but excluding balloon payments, which are expected to be refinanced and/or extended), real estate taxes, recurring capital improvements at its properties and other needs to maintain its status as a REIT for at least a period of one year from the date of filing of this annual report on Form 10K report.10-K.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Pursuant to the SEC disclosure guidance for "Critical Accounting Policies," the SEC defines Critical Accounting Policies as those that require the application of management's most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, the preparation of which takes into account estimates based on judgments and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from these estimates. The accounting policies and estimates used, which are outlined in Note 1 to our Consolidated Financial Statements which is presented elsewhere in this Form 10-K, have been applied consistently as of October 31, 20212022 and 2020,2021, and for the years ended October 31, 2022, 2021 2020 and 2019.2020. We believe that the following accounting policies or estimates require the application of management's most difficult, subjective, or complex judgments:judgments.

Revenue Recognition: Base rents, additional rents based on tenants' sales volume and reimbursement of the tenants' share of certain operating expenses are generally recognized when due from tenants. The straight-line basis is used to recognize base rents under leases if they provide for varying rents over the lease terms. Straight-line rents represent unbilled rents receivable to the extent straight-line rents exceed current rents billed in accordance with lease agreements. Before FREIT Maryland can recognize revenue, it is required to assess, among other things, its collectability.

Valuation of Long-Lived Assets: FREIT Maryland assesses the carrying value of long-lived assets periodically, or whenever events or changes in circumstances indicate that the carrying amounts of certain assets may not be recoverable. When FREIT Maryland determines that the carrying value of long-lived assets may be impaired, the measurement of any impairment is based on a projected discounted cash flow method determined by FREIT Maryland'sFREIT's management. While we believe that our discounted cash flow methods are reasonable, different assumptions regarding such cash flows may significantly affect the measurement of impairment.

Real Estate Development Costs: It is FREIT Maryland’sFREIT’s policy to capitalize pre-development costs, which generally include legal and professional fees and other directly related third-party costs. Real estate taxes and interest costs incurred during the development and construction phases are also capitalized. FREIT Maryland ceases capitalization of these costs when the project or portion thereof becomes operational, or when construction has been postponed. In the event of postponement, capitalization of these costs will recommence once construction on the project resumes.

See Note 1 to FREIT Maryland’sFREIT’s consolidated financial statements for recently issued accounting standards.

Results of Operations:

Fiscal Years Ended October 31, 20212022 and 20202021

Summary revenues and net income for the fiscal years ended October 31, 2022 (“Fiscal 2022”) and October 31, 2021 (“Fiscal 2021”) are as follows: