

Part I:Financial Information	Page
Item 1:Unaudited Condensed Consolidated Financial Statements
a.)Condensed Consolidated Balance Sheets as of July 31, ~~2021~~2022 and October 31, ~~2020;~~2021;	3
b.)Condensed Consolidated Statements of ~~Operations~~Income for the Nine and Three Months Ended July 31, ~~July 31, 2021~~2022 and ~~2020;~~2021;	4
c.)Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Nine and Three Months ~~Months~~ Ended July 31, ~~2021~~2022 and ~~2020;~~2021;	5
d.)Condensed Consolidated Statements of Equity for the Nine and Three Months Ended July 31, ~~2021~~2022 and ~~2020;~~2021;	6-7
e.)Condensed Consolidated Statements of Cash Flows for the Nine Months Ended July 31, ~~2021~~2022 and ~~2020;~~2021;	8
f.)Notes to Condensed Consolidated Financial Statements.	9

							July 31, 2022			October 31, 2021
							(In Thousands, Except Share and Per Share Amounts)
ASSETS
Real estate, at cost, net of accumulated depreciation	$	272,362		$	278,150		$	95,986		$	270,634
Construction in progress		642			566			687			665
Cash and cash equivalents		36,359			36,860			98,307			35,891
Investment in tenancy-in-common		19,433			20,101			18,927			19,383
Tenants' security accounts		1,343			1,408			1,038			1,340
Receivables arising from straight-lining of rents		3,752			3,977			747			3,747
Accounts receivable, net of allowance for doubtful accounts of $891 and $804 as of July 31, 2021 and October 31, 2020, respectively		1,366			1,811
Secured loans receivable		5,268			5,194
Accounts receivable, net of allowance for doubtful accounts of $1,148 and $966 as of July 31, 2022 and October 31, 2021, respectively								571			1,622
Secured loans receivable (related party)								-			5,292
Funds held in post-closing escrow								6,251			-
Prepaid expenses and other assets		5,525			4,985			3,960			5,493
Deferred charges, net		2,096			2,163			213			2,038
Interest rate swap contract								116			-
Total Assets	$	348,146		$	355,215		$	226,803		$	346,105


LIABILITIES AND EQUITY

Liabilities:
Mortgages payable, including deferred interest of $358 and $360 as of July 31, 2021 and October 31, 2020, respectively	$	302,774		$	307,240
Mortgages payable, including deferred interest of $222 and $358 as of July 31, 2022 and October 31, 2021, respectively							$	139,604		$	301,276
Less unamortized debt issuance costs		1,612			1,810			1,304			1,400
Mortgages payable, net		301,162			305,430			138,300			299,876

Due to affiliate		3,229			5,921			-			3,252
Deferred director compensation payable		2,475			2,633			2,317			2,475
Accounts payable and accrued expenses		2,813			2,277			1,534			2,375
Dividends payable		343			0-			-			686
Tenants' security deposits		2,030			2,124			1,294			2,039
Deferred revenue		895			1,043			373			1,143
Interest rate cap and swap contracts		3,483			4,924			16			2,308
Total Liabilities	$	316,430		$	324,352			143,834			314,154

Commitments and contingencies


Common Equity:
Shares of beneficial interest without par value:
0 shares authorized and issued at July 31, 2021; 8,000,000 shares authorized and 6,993,152 shares issued plus 152,144 vested share units granted to Directors at October 31, 2020		0-			27,960
Treasury stock, at cost: 0 and 136,501 shares at July 31, 2021 and October 31, 2020, respectively		0-			(2,863	)
Shares of common stock with par value of $0.01 per share:
20,000,000 and 0 shares authorized at July 31, 2021 and October 31, 2020, respectively; 6,860,048 and 0 shares issued plus 169,075 and 0 vested share units granted to Directors at July 31, 2021 and October 31, 2020, respectively		71			0-
Shares of preferred stock with par value of $0.01 per share:
5,000,000 and 0 shares authorized and issued, respectively, at July 31, 2021; 0 shares authorized and issued, respectively, at October 31, 2020		0-			0-
Additional Paid-In-Capital		25,417			0-
Preferred stock with par value of $0.01 per share:
5,000,000 and 0 shares authorized and issued, respectively, at July 31, 2022 and October 31, 2021								-			-
Common stock with par value of $0.01 per share:
20,000,000 shares authorized at July 31, 2022 and October 31, 2021; 6,863,744 and 6,860,048 shares issued plus 177,390 and 175,923 vested share units granted to Directors at July 31, 2022 and October 31, 2021, respectively								71			71
Additional paid-in-capital								25,697			25,556
Retained earnings		13,516			13,791			58,102			12,963
Accumulated other comprehensive loss		(2,885	)		(3,986	)
Accumulated other comprehensive income (loss)								99			(2,017	)
Total Common Equity		36,119			34,902			83,969			36,573
Noncontrolling interests in subsidiaries		(4,403	)		(4,039	)		(1,000	)		(4,622	)
Total Equity		31,716			30,863			82,969			31,951
Total Liabilities and Equity	$	348,146		$	355,215		$	226,803		$	346,105


	Nine Months Ended July 31,						Three Months Ended July 31,						Nine Months Ended July 31,						Three Months Ended July 31,
	2021			2020			2021			2020			2022			2021			2022			2021
	(In Thousands Except Per Share Amounts)						(In Thousands Except Per Share Amounts)						(In Thousands Except Per Share Amounts)						(In Thousands Except Per Share Amounts)
Revenue:
Rental income	$	32,871		$	36,158		$	10,956		$	10,701		$	22,095		$	32,871		$	6,317		$	10,956
Reimbursements		4,667			4,804			1,470			1,382			1,813			4,667			558			1,470
Sundry income		562			468			116			66			315			562			84			116
Total revenue		38,100			41,430			12,542			12,149			24,223			38,100			6,959			12,542

Expenses:
Operating expenses		13,078			12,620			4,193			4,293			9,185			13,078			2,489			4,193
Third party transaction costs (See Note 6)		0-			4,606			0-			87
Management fees		1,625			1,719			538			496			1,129			1,625			318			538
Real estate taxes		6,018			6,529			2,059			2,007			4,727			6,018			1,432			2,059
Depreciation		6,948			7,887			2,315			2,425			3,257			6,948			723			2,315
Total expenses		27,669			33,361			9,105			9,308			18,298			27,669			4,962			9,105

Operating income		10,431			8,069			3,437			2,841			5,925			10,431			1,997			3,437

Investment income		88			174			29			38			183			88			119			29
Gain on deconsolidation of subsidiary		0-			27,680			0-			0-
Loss on investment in tenancy-in-common		(245	)		(96	)		(100	)		(78	)
(Loss) Gain on investment in tenancy-in-common														(99	)		(245	)		57			(100	)
Net gain on sale of Maryland properties														68,771			-			-			-
Net realized gain on Wayne PSC interest rate swap termination														1,415			-			1,415			-
Interest expense including amortization of deferred financing costs		(9,242	)		(11,032	)		(3,050	)		(3,121	)		(6,229	)		(9,242	)		(1,774	)		(3,050	)
Net income (loss)		1,032			24,795			316			(320	)
Net income														69,966			1,032			1,814			316

Net (income) loss attributable to noncontrolling interests in subsidiaries		(256	)		(18	)		(107	)		139
Net income (loss) attributable to common equity	$	776		$	24,777		$	209		$	(181	)
Net income attributable to noncontrolling interests in subsidiaries														(23,420	)		(256	)		(693	)		(107	)
Net income attributable to common equity													$	46,546		$	776		$	1,121		$	209

Earnings (loss) per share:
Earnings per share:
Basic	$	0.11		$	3.55		$	0.03		$	(0.02	)	$	6.61		$	0.11		$	0.16		$	0.03
Diluted	$	0.11		$	3.54		$	0.03		$	(0.02	)	$	6.56		$	0.11		$	0.16		$	0.03

Weighted average shares outstanding:
Basic		7,016			6,989			7,022			6,998			7,038			7,016			7,040			7,022
Diluted		7,018			6,992			7,026			6,998			7,110			7,018			7,114			7,026

Common Equity
Beneficial Interest
Treasury Shares at Cost
Common Stock
Additional
Paid-In-
Retained
Accumulated
Other
Comprehensive
Total
Common
Noncontrolling
Total
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Earnings
Loss
Equity
Interests
Equity
(In Thousands, Except Per Share Amounts)

Balance at October 31, 2020
7,145
$
27,960
137
$
(2,863
)
0-
$
0-
$
0-
$
13,791
$
(3,986
)
$
34,902
$
(4,039
)
$
30,863

Stock based compensation expense
12
12
12

Vested share units granted to Directors, including $8 in dividends declared payable in share units ($0.05 per share)
7
118
118
118

Net income
558
558
221
779

Dividends declared, including $8 payable in share units ($0.05 per share)
(350
)
(350
)
(350
)

Net unrealized gain on interest rate cap and swap contracts
387
387
111
498

Balance at January 31, 2021
7,152
28,090
137
(2,863
)
0-
0-
0-
13,999
(3,599
)
35,627
(3,707
)
31,920

Stock based compensation expense
12
12
12

Vested share units granted to Directors, including $8 in dividends declared payable in share units ($0.05 per share)
7
113
113
113

Vested share units issued to retired Director*
(4
)
(72
)
(4
)
72
-
-

Distributions to noncontrolling interests
-
(510
)
(510
)

Net income (loss)
9
9
(72
)
(63
)

Dividends declared, including $8 payable in share units ($0.05 per share)
(350
)
(350
(350

Net unrealized gain on interest rate cap and swap contracts
857
857
320
1,177

Balance at April 30, 2021
7,155
28,143
133
(2,791
)
0-
0-
0-
13,658
(2,742
)
36,268
(3,969
)
32,299

Stock based compensation expense
7
4
11
11

Vested share units granted to Directors, including $8 in dividends declared payable in share units ($0.05 per share)
7
1
124
125
125

Distributions to noncontrolling interests
-
(450
)
(450
)

Net income
209
209
107
316

Dividends declared, including $8 payable in share units ($0.05 per share)
(351
)
(351
)
(351
)

Reincorporation of FREIT with and into FREIT Maryland (See Note 1)
(7,155
)
(28,150
)
(133
)
2,791
7,022
70
25,289
-
-

Net unrealized loss on interest rate cap and swap contracts
(143
)
(143
)
(91
)
(234
)

Balance at July 31, 2021
0-
$
0-
0-
$
0-
7,029
$
71
$
25,417
$
13,516
$
(2,885
)
$
36,119
$
(4,403
)
$
31,716

	Common Equity
	Common Stock									Accumulated
					Additional					Other			Total			Noncontrolling
					Paid-In-		Retained			Comprehensive			Common			Interests in
	Shares		Amount		Captital		Earnings			(Loss) Income			Equity			Subsidiaries			Total Equity
	(In Thousands of Dollars, Except Per Share Amounts)

Balance at October 31, 2021		7,036	$	71	$	25,556	$	12,963		$	(2,017	)	$	36,573		$	(4,622	)	$	31,951

Stock based compensation expense						5								5						5

Vested share units granted to Directors, including $17 in dividends declared payable in share units ($0.10 per share)		2				61								61						61

Distributions to noncontrolling interests in subsidiaries														-			(19,700	)		(19,700	)

Net income								45,777						45,777			23,376			69,153

Dividends declared, including $17 payable in share units ($0.10 per share)								(703	)					(703	)					(703	)

Net unrealized gain on interest rate swap contracts											928			928			334			1,262

Balance at January 31, 2022		7,038		71		25,622		58,037			(1,089	)		82,641			(612	)		82,029

Stock based compensation expense						5								5						5

Vested share units granted to Directors, including $18 in dividends declared payable in share units ($0.10 per share)		2				39								39						39

Distributions to noncontrolling interests in subsidiaries														-			(180	)		(180	)

Net loss								(352	)					(352	)		(649	)		(1,001	)

Dividends declared, including $18 payable in share units ($0.10 per share)								(704	)					(704	)					(704	)

Net unrealized gain on interest rate swap contracts											1,858			1,858			681			2,539

Balance at April 30, 2022		7,040		71		25,666		56,981			769			83,487			(760	)		82,727

Stock based compensation expense						5								5						5

Vested share units granted to Directors		1				26								26						26

Distributions to noncontrolling interests in subsidiaries														-			(210	)		(210	)

Net income								1,121						1,121			693			1,814

Net unrealized loss on interest rate swap contracts											(670	)		(670	)		(723	)		(1,393	)

Balance at July 31, 2022		7,041	$	71	$	25,697	$	58,102		$	99		$	83,969		$	(1,000	)	$	82,969

* Represents the issuance of treasury shares to retired Director for share units earned.

Common Equity

Retained
Accumulated
Earnings
Other
Total
Beneficial Interest
Treasury Shares at Cost
(Accumulated
Comprehensive
Common
Noncontrolling
Shares
Amount
Shares
Amount
Deficit)
Loss
Equity
Interests
Total Equity
(In Thousands, Except Per Share Amounts)

Balance at October 31, 2019
7,185
$
28,847
206
$
(4,330
)
$
(6,762
)
$
(2,040
)
$
15,715
$
333
$
16,048

Stock based compensation expense
12
12
12

Vested share units granted to Directors and consultant
10
211
211
211

Vested share units issued to consultant and retired Director*
(66
)
(1,401
)
(66
)
1,401
-
-

Distributions to noncontrolling interests
-
(583
)
(583
)

Net (loss) income
(2,262
)
(2,262
)
241
(2,021
)

Net unrealized loss on interest rate swaps
(261
)
(261
)
(129
)
(390
)

Balance at January 31, 2020
7,129
27,669
140
(2,929
)
(9,024
)
(2,301
)
13,415
(138
)
13,277

Stock based compensation expense
12
12
12

Vested share units granted to Directors
8
166
166
166

Vested share units issued to retired Director*
(3
)
(66
)
(3
)
66
-
-

Deconsolidation of subsidiary
-
3,596
3,596

Net income (loss)
27,220
27,220
(84
)
27,136

Net unrealized loss on interest rate swaps
(2,142
)
(2,142
)
(840
)
(2,982
)

Balance at April 30, 2020
7,134
27,781
137
(2,863
)
18,196
(4,443
)
38,671
2,534
41,205

Stock based compensation expense
11
11
11

Vested share units granted to Directors
5
77
77
77

Net loss
(181
)
(181
)
(139
)
(320
)

Net unrealized loss on interest rate swaps
(172
)
(172
)
(100
)
(272
)

Balance at July 31, 2020
7,139
$
27,869
137
$
(2,863
)
$
18,015
$
(4,615
)
$
38,406
$
2,295
$
40,701

	Common Equity
	Beneficial Interest						Treasury Shares at Cost					Common Stock				Additional Paid-In-		Retained			Accumulated Other Comprehensive			Total Common			Noncontrolling Interests			Total
	Shares			Amount			Shares			Amount		Shares		Amount		Capital		Earnings			Loss			Equity			Subsidiaries			Equity
	(In Thousands, Except Per Share Amounts)

Balance at October 31, 2020		7,145		$	27,960		137		$	(2,863	)	-	$	-	$	-	$	13,791		$	(3,986	)	$	34,902		$	(4,039	)	$	30,863

Stock based compensation expense					12																			12						12

Vested share units granted to Directors, including $8 in dividends declared payable in share units ($0.05 per share)		7			118																			118						118

Net income																		558						558			221			779

Dividends declared, including $8 payable in share units ($0.05 per share)																		(350	)					(350	)					(350	)

Net unrealized gain on interest rate cap and swap contracts																					387			387			111			498

Balance at January 31, 2021		7,152			28,090		137			(2,863	)	-		-		-		13,999			(3,599	)		35,627			(3,707	)		31,920

Stock based compensation expense					12																			12						12

Vested share units granted to Directors, including $8 in dividends declared payable in share units ($0.05 per share)		7			113																			113						113

Vested share units issued to retired Director*		(4	)		(72	)	(4	)		72														-						-

Distributions to noncontrolling interests																								-			(510	)		(510	)

Net income (loss)																		9						9			(72	)		(63	)

Dividends declared, including $8 payable in share units ($0.05 per share)																		(350	)					(350	)					(350	)

Net unrealized gain on interest rate cap and swap contracts																					857			857			320			1,177

Balance at April 30, 2021		7,155			28,143		133			(2,791	)	-		-		-		13,658			(2,742	)		36,268			(3,969	)		32,299

Stock based compensation expense					7											4								11						11

Vested share units granted to Directors, including $8 in dividends declared payable in share units ($0.05 per share)												7		1		124								125						125

Distributions to noncontrolling interests																								-			(450	)		(450	)

Net income																		209						209			107			316

Dividends declared, including $8 payable in share units ($0.05 per share)																		(351	)					(351	)					(351	)

Reincorporation of First Real Estate Investment Trust of New Jersey with and into FREIT (See Note 1)		(7,155	)		(28,150	)	(133	)		2,791		7,022		70		25,289								-						-

Net unrealized loss on interest rate cap and swap contracts																					(143	)		(143	)		(91	)		(234	)

Balance at July 31, 2021		-		$	-		-		$	-		7,029	$	71	$	25,417	$	13,516		$	(2,885	)	$	36,119		$	(4,403	)	$	31,716

* Represents the issuance of treasury shares to ~~consultant and~~ retired Director for share units earned.

		Nine Months Ended							Nine Months Ended
		July 31,							July 31,
		2021			2020				2022			2021
		(In Thousands of Dollars)							(In Thousands of Dollars)
Operating activities:
Net income		$	1,032		$	24,795			$	69,966		$	1,032
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Net gain on sale of Maryland properties										(68,771	)		-
Depreciation			6,948			7,887				3,257			6,948
Amortization			1,201			1,400				920			1,201
Stock based compensation expense			35			35				15			35
Director fees, consultant fee and related interest paid in stock units			332			454
Gain on deconsolidation of subsidiary			0-			(27,680	)
Director fees and related interest paid in stock units										91			332
Loss on investment in tenancy-in-common			245			96				99			245
Deferred rents - straight line rent			225			213				25			225
Deferred real estate tax appeal fees										35			192
Bad debt expense			264			921				363			264
Changes in operating assets and liabilities:
Tenants' security accounts			(84	)		(105	)			(745	)		(84	)
Accounts receivable, prepaid expenses and other assets			(402	)		(2,793	)			2,420			(402	)
Accounts payable, accrued expenses and deferred director compensation payable			441			(5,198	)			(925	)		249
Deferred revenue			(148	)		(615	)			(770	)		(148	)
Due to affiliate - accrued interest			108			171				(47	)		108
Deferred interest on mortgages			(2	)		416				(136	)		(2	)
Net cash provided by (used in) operating activities			10,195			(3	)
Net cash provided by operating activities										5,797			10,195
Investing activities:
Proceeds from sale of Maryland properties, net										245,763			-
Proceeds from payment of secured loans receivable inclusive of accrued interest										5,316			-
Capital improvements - existing properties			(1,299	)		(1,738	)			(948	)		(1,299	)
Deferred leasing costs			(104	)		(183	)			(116	)		(104	)
Distribution from investment in tenancy-in-common			423			0-				357			423
Deconsolidation of subsidiary cash and cash equivalents			0-			(1,383	)
Net cash used in investing activities			(980	)		(3,304	)
Net cash provided by (used in) investing activities										250,372			(980	)
Financing activities:
Repayment of mortgages			(4,464	)		(2,916	)			(194,036	)		(4,464	)
Proceeds from mortgage loan refinancing										32,500			-
Deferred financing costs			(640	)		0-				(692	)		(640	)
Due to affiliate - loan proceeds										300			-
Due to affiliate - loan repayment			(2,800	)		0-				(3,505	)		(2,800	)
Dividends paid			(684	)		(1,357	)			(2,058	)		(684	)
Distributions to noncontrolling interests in subsidiaries			(960	)		(583	)			(20,090	)		(960	)
Net cash used in financing activities			(9,548	)		(4,856	)			(187,581	)		(9,548	)
Net decrease in cash, cash equivalents and restricted cash			(333	)		(8,163	)
Net increase (decrease) in cash, cash equivalents and restricted cash										68,588			(333	)
Cash, cash equivalents and restricted cash, beginning of period			39,517			42,488				39,045			39,517
Cash, cash equivalents and restricted cash, end of period		$	39,184		$	34,325			$	107,633		$	39,184

Supplemental disclosure of cash flow data:
Interest paid		$	8,245		$	9,570			$	5,485		$	8,245

Supplemental schedule of non cash activities:
Operating activities:
Commercial tenant security deposits applied to accounts receivable		$	10		$	462			$	-		$	10
Investing activities:
Accrued capital expenditures, construction costs and pre-development costs		$	116		$	121			$	26		$	116
Financing activities:
Retirement of treasury stock		$	2,791		$	0-			$	-		$	2,791
Dividends declared but not paid		$	343		$	0-			$	-		$	343
Dividends paid in share units		$	24		$	0-			$	35		$	24
Vested share units issued to consultant and retired director		$	72		$	1,467			$	-		$	72

Deconsolidation of subsidiary:
Real estate, at cost, net of accumulated depreciation		$	0-		$	(36,225	)
Accounts receivable, net of allowance for doubtful accounts			0-			(55	)
Prepaid expenses and other assets			0-			(315	)
Mortgage payable			0-			48,000
Unamortized debt issuance costs			0-			(489	)
Accounts payable and accrued expenses			0-			353
Tenants' security deposits			0-			585
Deferred revenue			0-			47
Deconsolidation of subsidiary cash and cash equivalents			0-			(1,383	)
Net carrying value of assets and liabilities deconsolidated		$	0-		$	(10,518	)

Recognition of retained investment in tenancy-in-common at fair value		$	0-		$	20,758

Derecognition of noncontrolling interest in subsidiary		$	0-		$	(3,596	)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:	The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:							The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:

Cash and cash equivalents		$	36,359		$	31,034			$	98,307		$	36,359
Tenants' security accounts			1,343			1,590				1,038			1,343
Funds held in post-closing escrow										6,251			-
Mortgage escrows (included in prepaid expenses and other assets)			1,482			1,701				2,037			1,482
Total cash, cash equivalents and restricted cash		$	39,184		$	34,325			$	107,633		$	39,184

First Real Estate Investment Trust of New Jersey was organized on November 1, 1961 as a New Jersey Business Trust. 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~~stockholders at the annual meeting of ~~shareholders~~stockholders held on May 6, 2021. The Reincorporation ~~changes~~changed the law applicable to ~~FREIT’s~~First Real Estate Investment Trust of New Jersey’s affairs from New Jersey law to Maryland law and was accomplished by the merger of ~~FREIT~~First 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 has~~First 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 have~~First 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 ~~shareholders~~stockholders required and all treasury stock held by ~~FREIT~~First 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~~over-the-counter market under the trading symbol FREVS.

The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the rules of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnotes required by GAAP for complete financial statements have been omitted. It is the opinion of management that all adjustments considered necessary for a fair presentation have been included, and that all such adjustments are of a normal recurring nature.

The consolidated results of operations for the nine and three-month periods ended July 31, ~~2021~~2022 are not necessarily indicative of the results to be expected for the full year or any other period. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in ~~the~~FREIT’s Annual Report on Form 10-K for the year ended October 31, ~~2020 of FREIT.~~2021.

Certain prior year cash flow line items have been reclassified to conform to the current year presentation.

In ~~June 2016,~~March 2020 and January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. ~~2016-13 "~~2020-04 “Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Instruments – Credit Losses (Topic 326)~~Reporting"”, and ASU 2021-01 “Reference Rate Reform (ASC 848): Scope” which ~~amends~~provides temporary optional guidance to ease the potential burden in accounting for reference rate reform in contracts and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. ASU 2020-04 and ASU 2021-01 are effective for all entities as of March 12, 2020 through December 31, 2022. We currently do not anticipate the need to modify our existing debt agreements as a result of reference rate reform in the current ~~approach to estimate credit losses on certain financial assets, including trade~~year, however if any modification is executed as a result of reference rate reform, the Company will elect the optional expedient available under ASU 2020-04 and ~~other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires~~ASU 2021-01, which allows entities to ~~establish a valuation allowance~~account for the ~~expected lifetime losses~~modification as if the modification was not substantial. We will disclose the nature of ~~these certain~~and reason for electing the optional expedient in each interim and annual financial ~~assets. Subsequent changes in the valuation allowance are recorded in current earnings~~statement period if and ~~reversal of previous losses are permitted. Currently, GAAP requires entities to write down credit losses only~~ when ~~losses are probable and loss reversals are not permitted. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after~~applicable through December ~~15,~~31, 2022. ~~In November 2018, the FASB issued ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments—Credit Losses~~”, which clarifies that operating lease receivables are outside the scope of the new standard. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, “~~Leases (Topic 842)”. FREIT Maryland does not expect the adoption of this new accounting guidance to have a significant impact on its consolidated financial statements and footnote disclosures.~~

The FREIT Board of Directors (“Board”) ~~declared~~did not declare a dividend in the third quarter ~~dividend~~ of ~~$0.05 per share which will be paid on September 15, 2021 to shareholders of record on September 1, 2021. The Board will continue to evaluate the dividend on a quarterly basis.~~

Fiscal 2022. Basic earnings ~~(loss)~~ per share is calculated by dividing net income attributable to common equity (numerator) by the weighted average number of shares and vested share units (See Note ~~14 to FREIT Maryland’s condensed consolidated financial statements)~~14) outstanding during each period (denominator). The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the denominator is increased to include the number of additional shares that would have been outstanding if all potentially dilutive shares, such as those issuable upon the exercise of stock options, were issued during the period using the Treasury Stock method. Under the Treasury Stock method, the assumption is that the proceeds received upon exercise of the options, including the unrecognized stock option compensation expense attributable to future services, are used to repurchase ~~FREIT Maryland’s~~FREIT’s stock at the average market price during the period, thereby increasing the number of shares to be added in computing diluted earnings per share. For the nine and three months ended July 31, 2022, the outstanding stock options increased the average dilutive shares outstanding by approximately 72,000 and 74,000 shares, respectively, with an impact of approximately $0.05 and $0.00, respectively, on earnings per share. For the nine and three months ended July 31, 2021, the outstanding stock options increased the average dilutive shares outstanding by approximately 2,000 and 4,000 shares, respectively, with no impact on earnings per share. ~~For~~There were no anti-dilutive shares for the nine ~~months ended July 31, 2020, the outstanding stock options increased the average dilutive shares outstanding by approximately 3,000 shares with a $0.01 impact on earnings per share. For the~~and three months ended July 31, ~~2020, the outstanding~~

~~stock options were anti-dilutive with no impact on loss per share.~~2022. There were approximately 268,000 anti-dilutive shares for both the nine and three months ended July 31, ~~2021. There were approximately 268,000 and 311,000 anti-dilutive shares for the nine and three months ended July 31, 2020,~~2021, respectively. Anti-dilutive shares consist of out-of-the money stock options under the Equity Incentive ~~Plan.~~Plan (See Note 13).

In accordance with “Accounting Standards Codification Topic 815, Derivatives and Hedging ("ASC 815")”, FREIT ~~Maryland is~~has been accounting for the Damascus Centre, LLC (“Damascus Centre”), FREIT Regency, LLC (“Regency”), Wayne PSC, LLC (“Wayne PSC”) and Station Place on Monmouth (“Station Place”) interest rate swaps and the Grande Rotunda, LLC (“Grande Rotunda”) interest rate cap as cash flow hedges marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the swaps and cap in comprehensive income. On December 30, 2021, the Rotunda property owned by Grande Rotunda was sold, a portion of the proceeds from the sale was used to pay off the $116.5 million then outstanding balance of the underlying loan and the corresponding interest rate cap on this loan matured with no settlement due at maturity. On January 10, 2022, the property owned by Damascus Centre was sold and a portion of the proceeds from the sale was used to pay off the $18.2 million then outstanding balance of the underlying loan and the corresponding swap breakage fees of approximately $213,000 related to the early termination of the interest rate swap contracts on this loan which was included as interest expense on the accompanying condensed consolidated statement of income for the nine months ended July 31, 2022. (See Note 7 for further details on the sales of these properties.) On June 17, 2022, Wayne PSC terminated its interest rate swap contract on its underlying loan held with People’s United Bank, which had a maturity date of October 2026, for a settlement amount of approximately $1.4 million. People’s United Bank held the proceeds from this settlement in escrow until the underlying loan was paid off in July 2022 and has been included as a realized gain on interest rate swap termination on the accompanying condensed consolidated statements of income for the nine and three months ended July 31, 2022. (See Note 9 for further details.)

For the nine and three months ended July 31, ~~2021,~~2022, FREIT ~~Maryland~~ recorded an unrealized gain of approximately ~~$1,441,000~~$2,408,000 and unrealized loss of ~~$234,000,~~$1,393,000, respectively, in the condensed consolidated statements of comprehensive income ~~(loss)~~ representing the change in the fair value of these cash flow hedges during such ~~period.~~periods. For the nine and three months ended July 31, ~~2020,~~2021, FREIT ~~Maryland~~ recorded an unrealized gain of approximately $1,441,000 and unrealized loss of ~~approximately $3,644,000 and $272,000,~~$234,000, respectively, in the condensed consolidated statements of comprehensive income ~~(loss)~~ representing the change in the fair value of these cash flow hedges during such period. As of July 31, 2022, there was an asset of approximately $116,000 for the Regency swap and a liability of approximately $16,000 for the Station Place swap. As of October 31, 2021, there was a liability of approximately ~~$391,000~~$278,000 for the Damascus Centre swaps, ~~$802,000~~$348,000 for the Wayne PSC swap, ~~$1,030,000~~$750,000 for the Regency swap, ~~$1,260,000~~$932,000 for the Station Place swap and $0$0 for the Grande Rotunda interest rate cap. As of October 31, 2020, FREIT Maryland recorded a liability of approximately $610,000 for the Damascus Centre swaps, $1,260,000 for the Wayne PSC swap, $1,385,000 for the Regency swap, $1,669,000 for the Station Place swap and $0 for the Grande Rotunda interest rate cap.

The fair values are based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance).

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%~~65% membership interest in S&A, which owned ~~100%~~100% of the Pierre Towers property located in Hackensack, New Jersey through its ~~100%~~100% interest in Pierre Towers, LLC. Accordingly, FREIT Maryland consolidated the financial statements of S&A and its subsidiary to include 100% of the subsidiary’s assets, liabilities, operations and cash flows with the interest not owned by FREIT Maryland reflected as “noncontrolling interests in subsidiary” and all significant intercompany accounts and transactions were eliminated in consolidation.

Pursuant to the TIC agreement, FREIT ~~Maryland~~ ultimately acquired a ~~65%~~65% undivided interest in the Pierre Towers property, which was formerly owned by S&A. Based on the guidance of Accounting Standards Codification 810, “Consolidation”, ~~FREIT Maryland’s~~FREIT’s investment in the TIC is accounted for under the equity method of accounting. While ~~FREIT Maryland’s~~FREIT’s effective ownership percentage interest in the Pierre Towers property remained unchanged after the reorganization to a TIC, FREIT ~~Maryland~~ no longer had a controlling interest as the TIC ~~was~~is now under joint control. ~~Since FREIT Maryland retained a noncontrolling financial interest~~

FREIT’s investment in the TIC was approximately $18.9 million and $19.4 million at July 31, 2022 and October 31, 2021, respectively. For the ~~deconsolidation of the subsidiary (as of February 28, 2020) was not the result of a nonreciprocal transfer to owners,~~nine and three months ended July 31, 2022, FREIT ~~Maryland~~ recognized a ~~gain~~loss on investment in ~~the amount~~TIC of approximately ~~$27.7 million~~$99,000 and a gain on investment in TIC of approximately $57,000, respectively, in the accompanying condensed consolidated statements of operations for the nine months ended July 31, 2020. This gain was measured at the date of deconsolidation as the difference between the fair value of the investment in the TIC at the date the entity was deconsolidated and the carrying amount of the former subsidiary’s assets and liabilities.

~~FREIT Maryland’s investment in the TIC was approximately $19.4 million and $20.1 million at July 31, 2021 and October 31, 2020, respectively.~~income. For the nine and three months ended July 31, 2021, FREIT ~~Maryland~~ recognized a loss on investment in TIC of approximately ~~$245,000~~$245,000 and ~~$100,000,~~$100,000, respectively, in the accompanying condensed consolidated statements of operations. For the nine and three months ended July 31, 2020, FREIT Maryland recognized a loss on investment in TIC of approximately $96,000 and $78,000, respectively, in the accompanying condensed consolidated statements of operations.income.

Hekemian & Co., Inc. (“~~Hekemian”~~Hekemian & Co.”) ~~currently~~ manages the Pierre Towers property based on a management agreement between the owners of the TIC and Hekemian & Co. dated as of February 28, 2020 ~~which expires~~and will expire on February 28, ~~2022, and~~2023. The management agreement is ~~automatically renewed~~ for ~~successive periods~~a term of one year and will renew for successive one (1) year terms upon the unanimous approval of the TIC owners prior to the expiration of the then-current term unless ~~either party gives not less than~~Hekemian & Co. delivers written notice of termination of this management agreement, which notice must be delivered at least sixty (60) days prior ~~notice~~to the end of ~~non-renewal.~~ the then-current term.

The management agreement requires the payment of management fees equal to 5%5% of rents collected. Management fees charged to operations were approximately ~~$280,000~~$298,000 and ~~$93,000~~$101,000 for the nine and three months ended July 31, 2022, respectively, and $280,000 and $93,000 for the nine and three months ended July 31, 2021, ~~respectively, and $150,000 for the period from February 28, 2020 through July 31, 2020 and $88,000 for the three months ended July 31, 2020.~~respectively. The Pierre Towers property also uses the resources of the Hekemian & Co. insurance department to secure various insurance coverages for its property. Hekemian & Co. is paid a commission for these services. Such commissions were charged to operations and amounted to approximately ~~$47,000~~$40,000 for the nine and ~~$37,000~~three months ended July 31, 2022 and $47,000 and $37,000 for the nine and three months ended July 31, 2021, ~~respectively, and $22,000 for both the period from February 28, 2020 through July 31, 2020 and for the three months ended July 31, 2020.~~respectively.

The following table summarizes the balance sheets of the Pierre Towers property as of July 31, ~~2021~~2022 and October 31, ~~2020,~~2021, accounted for by the equity method:

The following table summarizes the statements of operations of the Pierre Towers property for the nine and three months ended July 31, ~~2021, for the period from February 28, 2020 through July 31, 2020~~2022 and ~~for the three months ended July 31, 2020,~~2021, accounted for by the equity method:

On January 14, 2020, FREIT Maryland and certain of its affiliates (collectively, the “Sellers”), entered into a Purchase and Sale Agreement (as subsequently amended, the “Purchase and Sale Agreement”) with Sinatra Properties LLC (the “Purchaser”), 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.

~~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)~~Monmouth County (“Court”) entered 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~~Order 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~~summary judgment motions 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~~litigation between certain affiliates of ~~the transactions contemplated by the~~FREIT (the “Sellers” or “Defendant”) and Sinatra Properties, LLC (“Sinatra” or “Plaintiff”). The litigation relates to a Purchase and Sale Agreement ~~based~~entered into on ~~the conduct of the Purchaser and its affiliates after~~January 14, 2020 (“PSA”) between the Sellers ~~terminated~~and Sinatra involving the ~~Purchase and Sale Agreement.~~sale by the Sellers of 100% of their ownership interests in six (6) real properties held by the Sellers.

~~In connection with these counterclaims and third-party claims,~~The February 4, 2022 Order provided as follows:

The Court finds that the ~~Answer seeks~~Plaintiff’s have breached 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 claimssubject contract and the ~~prosecution of the Sellers’ counterclaims against the Purchaser, as provided~~Court dismisses all claims 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 containedPlaintiff in ~~the Sellers’ original and amended Answer, and asserted affirmative defenses to the Sellers’ claims and counterclaims.~~

this suit. The ~~Sellers believe that the allegations set forth in~~Court dismissed the Complaint and ~~Answer~~dismisses the Lis Pendens.

The Court finds that the liquidated damage provision of the contract is not enforceable and the Court Orders that the $15 million held in escrow be returned to the Plaintiff.

The Court dismisses the Counterclaims and Third Party Complaint. All pleadings are dismissed.

On May 31, 2022, Sinatra filed by the Purchaser and in the Answer and Affirmative Defenses filed by the Purchaser 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 connectiona Motion for Reconsideration with the ~~“Purchaser Default” thereunder, including~~Court, requesting that the ~~Purchaser’s forfeiture of~~Court reconsider its ~~$15 million deposit to~~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 PSA, (2) the Sellers ~~as liquidated damages as provided in~~did not breach the ~~Purchase~~PSA and ~~Sale Agreement. As~~(3) the Court’s dismissal of the Complaint and Lis Pendens.

Through the quarter ended July 31, ~~2021,~~2022, the ~~$15~~$15 million deposit has not been included in income in the accompanying condensed consolidated statements of ~~operations.~~

For the nine and three months ended July 31, 2020, the Special Committee of the Board (“Special Committee”) incurred on behalf of the Company third party transaction costs for advisory, legal and other expenses primarily related to the Purchase and Sale Agreement and the Plan of Liquidation discussed in Note 7 in the amount of approximately $4,606,000 and $87,000, respectively, compared to $0 and $0, respectively, for the nine and three months ended July 31, 2021. On April 30, 2020, the Sellers delivered written notice to the Purchaser of the Sellers’ termination of the Purchase and Sale Agreement and on May 7, 2020 the Board approved the elimination of the Special Committee. No further transaction costs were incurred thereafter.income. Legal costs attributed to the legal ~~proceedings~~proceeding between FREIT ~~Maryland~~ and certain of its affiliates and Sinatra Properties, LLC have been incurred in the amount of approximately ~~$1,842,000~~$1,135,000 and ~~$733,000~~$243,000 for the nine and three months ended July 31, ~~2021,~~2022, respectively, and ~~$601,000~~$1,842,000 and ~~$601,000,~~$733,000, for the nine and three months ended July 31, ~~2020,~~2021, respectively, and are included in operating expenses on the condensed consolidated statements of ~~operations.~~income.

Note 7 – ~~Termination of Plan of Liquidation:~~Maryland property dispositions:

On ~~January 14, 2020, the Trust’s Board adopted~~November 22, 2021, certain affiliates (the “Maryland Sellers”) of FREIT entered into a Plan of Voluntary Liquidation with respect to the Trust (the “Plan of Liquidation”), which provided for the voluntary dissolution, termination and liquidation of the Trust by the sale, conveyance, transfer or delivery of all of the Trust’s remaining assets in accordance with the terms and conditions of the Plan of Liquidation and the Internal Revenue Code of 1986, as amended, and the Treasury regulations thereunder. The Plan of Liquidation provided that it would become effective upon (i) approval by a majority of the votes cast by Trust’s shareholders present in person or represented by proxy at a duly called meeting of the Trust’s shareholders at which a quorum is present and (ii) the consummation of the transactions contemplated by the Purchase and Sale Agreement.

~~While the Plan of Liquidation received shareholder approval, the Plan of Liquidation did not become effective as the Sellers terminated the~~ Purchase and Sale Agreement ~~by written notice delivered~~(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 ~~Purchaser on April 30, 2020,~~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 ~~transactions contemplated thereby~~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. Release and amounts of escrowed funds to FREIT, generally, is contingent on the success and timing of future leasing activities at the Maryland Properties.

On December 30, 2021, the sale of the Rotunda Property, which had a net book value of approximately $136.1 million, was consummated by Grande Rotunda and the Maryland Purchaser for a purchase price of $191,080,598. Grande Rotunda received net proceeds from the sale of approximately $36.5 million (inclusive of approximately $0.7 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 $116.5 million, payment of loans (including interest) to each of the partners in Grande Rotunda (FREIT with a 60% interest and Rotunda 100, LLC (“Rotunda 100”) with a 40% interest) in the amount of approximately $31 million, with FREIT receiving approximately $27.7 million, and certain transactional expenses and transfer taxes including a brokerage fee due to Hekemian & Co. of approximately $4.8 million (See Note 8). In addition, the Maryland Purchaser deposited a total of $14,026,401 of the Maryland Purchaser Escrow Payment in escrow with respect to certain leases at the Rotunda Property, which have not been executed or where the rent commencement date has not occurred or economic obligations of Grande Rotunda under certain leases remain unpaid. As of July 31, 2022, approximately $710,000 of these funds has been released from escrow to Grande Rotunda. 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 condensed consolidated balance sheet as of July 31, 2022. The net proceeds from the sale were distributed to the partners in Grande Rotunda with FREIT receiving approximately $21.4 million based on its 60% interest in Grande Rotunda. The sale of the Rotunda Property resulted in a net gain of approximately $50 million (as adjusted) which includes approximately $7 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 $1.8 million and a write-off of unamortized lease commissions of approximately $1.1 million. As of July 31, 2022, secured loans including accrued interest made by certain members in Rotunda 100 of approximately $5.3 million were repaid to FREIT.

On January 7, 2022, the sale of the Westridge Square Property, which had a net book value of approximately $11.5 million, was consummated by WestFREIT and the Maryland Purchaser for a purchase price of $20,984,604. WestFREIT received net proceeds from the sale of approximately $0.1 million (inclusive of approximately $0.8 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 approximately $21.1 million and certain transactional expenses and transfer taxes including a brokerage fee due to Hekemian & Co. of approximately $0.5 million (See Note 8). In addition, the Maryland Purchaser deposited a total of $1,015,396 of the Maryland Purchaser Escrow Payment in escrow with respect to certain leases at the Westridge Square Property, which had not been executed or where the rent commencement date had not occurred or economic obligations of WestFREIT under certain leases remained unpaid. As of July 31, 2022, approximately $821,000 of these funds have been released from escrow with no remaining funds held in post-closing escrow for rents anticipated to be released. The sale of the Westridge Square Property resulted in a net gain of approximately $8.7 million, which includes approximately $0.8 million of proceeds released from funds held in escrow, a write-off of the straight-line rent receivable of approximately $0.5 million and a write-off of unamortized lease commissions of approximately $0.3 million.

On January 10, 2022, the sale of the Damascus Property, which had a net book value of approximately $24.6 million, was consummated by Damascus Centre and the Maryland Purchaser for a purchase price of $36,685,067. Damascus Centre received net proceeds from the sale of approximately $17.3 million (inclusive of approximately $0.4 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 approximately $18.2 million and the corresponding swap breakage fees of approximately $213,000 related to the early termination of the interest rate swap contracts on this loan and certain transactional expenses and transfer taxes including a brokerage fee due to Hekemian & Co. of approximately $0.9 million (See Note 8). In addition, the Maryland Purchaser deposited a total of $484,934 of the Maryland Purchaser Escrow Payment in escrow with respect to certain leases at the Damascus Property, which had not been executed or where the rent commencement date had not occurred or economic obligations of Damascus Centre under certain leases remained unpaid. As of July 31, 2022, approximately $415,000 of these funds have been released from escrow with no remaining funds held in post-closing escrow for rents anticipated to be released. The net proceeds from the sale were distributed to the partners in Damascus Centre with FREIT receiving approximately $11.8 million based on its 70% interest in Damascus Centre. The sale of the Damascus Property resulted in a net gain of approximately $10.1 million, which includes approximately $0.4 million of proceeds released from funds held in escrow, a write-off of the straight-line rent receivable of approximately $0.6 million and a write-off of unamortized lease commissions of approximately $0.3 million.

In summary, 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 partners 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 July 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 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 condensed consolidated balance sheet as of July 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.

As the disposal of the Maryland Properties did not represent a strategic shift that would have a major impact on FREIT’s operations or financial results, the properties’ operations were not ~~consummated. Accordingly,~~reflected as discontinued operations in the Trust did not proceed with the sale, conveyance, transfer or delivery of all of the Trust’s remaining assets as contemplated by the Plan of Liquidation that was adopted by the Board on January 14, 2020.accompanying condensed consolidated financial statements.

Hekemian & Co. currently manages all the properties owned by FREIT ~~Maryland~~ and its affiliates, except for the office building at ~~The~~the Rotunda ~~located in Baltimore, Maryland,~~Property, which iswas sold on December 30, 2021 and was formerly managed by an independent third party management company. The management agreement between FREIT ~~Maryland~~ and Hekemian & Co. dated as of November 1, 2001 (“Management Agreement”) ~~has been renewed and will expire~~expires on October 31, ~~2023. The Management Agreement~~2023 and is automatically renewed for successive periods of two years unless either party gives not less than six (6) months prior notice of non-renewal.

The Management Agreement requires the payment of management fees equal to 4%4% to 5%5% of rents collected. Such fees charged to operations were approximately ~~$1,587,000~~$1,108,000 and ~~$1,682,000~~$1,587,000 for the nine months ended July 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$525,000~~$318,000 and ~~$484,000~~$525,000 for the three months ended July 31, ~~2021~~2022 and ~~2020,~~2021, respectively. In addition, the ~~management agreement~~Management Agreement provides for the payment to Hekemian & Co. of leasing commissions, as well as the reimbursement of certain operating expenses, such as payroll and insurance costs, incurred on behalf of ~~FREIT Maryland.~~FREIT. Such commissions and reimbursements amounted to approximately ~~$385,000~~$515,000 and ~~$835,000~~$385,000 for the nine months ended July 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$130,000~~$167,000 and ~~$131,000~~$130,000 for the three months ended July 31, ~~2021~~2022 and ~~2020,~~2021, respectively. FREIT ~~Maryland~~ also uses the resources of the Hekemian & Co. insurance department to secure various insurance coverages for its properties and subsidiaries. Hekemian & Co. is paid a commission for these services. Such commissions were charged to operations and amounted to approximately ~~$181,000~~$164,000 and ~~$152,000~~$181,000 for the nine months ended July 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$110,000~~$105,000 and ~~$96,000~~$110,000 for the three months ended July 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

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. Such fees incurred for the nine and three months ended July 31, 2022 were approximately $6,388,000 and $94,000, respectively. Fees incurred during Fiscal 2022 related to commissions to Hekemian & Co. for the following: $4,777,000 for the sale of the Rotunda Property; $917,000 for the sale of the Damascus Property; $525,000 for the sale of the Westridge Square Property; $94,000 for the refinancing of the loan on the Preakness Shopping Center; and $75,000 for the refinancing of the loan on the Boulders property. The commissions related to the sale of the Rotunda Property, the Damascus Property and the Westridge Square Property were charged against the gain on sale of the Maryland Properties (See Note 7) in the accompanying condensed consolidated statement of income for the nine months ended July 31, 2022. The commissions for the refinancing of the loan on the Boulders property and on the Preakness Shopping Center were deferred mortgage costs included in the unamortized debt issuance costs in the accompanying condensed consolidated balance sheet as of July 31, 2022. Such fees incurred for the nine and three months ended July 31, 2021 were approximately ~~$236,500~~$236,500 and ~~$0,~~$0, respectively. Fees incurred during Fiscal 2021 related to commissions to Hekemian & Co. for the following: ~~$150,000~~$150,000 for the extension of the Grande Rotunda ~~LLC~~ loan; ~~$54,000~~$54,000 for the extension and modification of the WestFREIT ~~Corp.~~ loan; ~~$32,500~~and $32,500 for the renewal of ~~FREIT Maryland’s~~FREIT’s line of credit. ~~There were no such fees incurred for the nine and three months ended July 31, 2020.~~

Robert S. Hekemian, Jr., Chief Executive Officer, President and a Director of ~~the Trust,~~FREIT, is the ~~President and~~ Chief ~~Operating~~Executive Officer of ~~Hekemian.~~Hekemian & Co. David B. Hekemian, a Director of ~~the Trust,~~FREIT, is the Principal/Broker – Salesperson and Director of Commercial Brokerage of Hekemian. Robert S. Hekemian, the former Chairman and Chief Executive Officer of the Trust, served as a consultant to the Trust and Chairman of the Board and Chief Executive OfficerPresident of Hekemian ~~prior to his death in December 2019.~~& Co. Allan Tubin, Chief Financial Officer and Treasurer of ~~the Trust,~~FREIT, is the Chief Financial Officer of ~~Hekemian.~~Hekemian & Co.

Director fee expense and/or executive compensation (including interest and dividends) incurred by FREIT ~~Maryland~~ for the nine months ended July 31, ~~2021~~2022 and ~~2020~~2021 was approximately $0$429,000 and ~~$21,000, respectively, for Robert S. Hekemian, $350,000 and $322,000,~~$350,000, respectively, for Robert S. Hekemian, Jr., ~~$23,000~~$30,000 and ~~$20,000,~~$23,000, respectively, for Allan Tubin and ~~$42,000~~$43,000 and ~~$40,000,~~$42,000, respectively, for David Hekemian. Director fee expense and/or executive compensation (including interest and dividends) incurred by FREIT ~~Maryland~~ for the three months ended July 31, ~~2021~~2022 and ~~2020~~2021 was approximately $0$150,000 and ~~$0, respectively, for Robert S. Hekemian, $118,000 and $86,000,~~$118,000, respectively, for Robert S. Hekemian, Jr., ~~$8,000~~$10,000 and ~~$5,000,~~$8,000, respectively, for Allan Tubin and ~~$15,000~~$13,000 and ~~$9,000,~~$15,000, respectively, for David Hekemian (See Note ~~14 to FREIT Maryland’s condensed consolidated financial statements)~~14). Such costs are included within operating expenses on the accompanying condensed consolidated statements of ~~operations.~~

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 the Trust through December 2019. The Consulting Agreement obliged Mr. Hekemian to provide advice and consultation with respect to matters pertaining to the Trust 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). The number of shares to be issued for each quarterly installment of the consulting fee was determined by dividing the dollar amount of the consulting fee by the closing price of one share on the OTC Pink Open Market as of the close of trading on the last trading day of the calendar quarter with respect to which such consulting fee was payable. For the nine and three months ended July 31, 2021, there were no consulting fee expenses for Robert S. Hekemian. For the nine and three months ended July 31, 2020, consulting fee expense for Robert S. Hekemian was approximately $8,000 and $0, respectively.income.

The equity owners of Rotunda 100, ~~LLC (“Rotunda 100”),~~ which owns a ~~40%~~40% minority equity interest in Grande Rotunda, are principally employees of ~~Hekemian.~~Hekemian & Co. To incentivize the employees of Hekemian & Co., FREIT ~~Maryland~~ advanced, only to employees of Hekemian & Co., up to ~~50%~~50% of the amount of the equity contributions that the Hekemian & Co. employees were required to invest in Rotunda 100. These advances were in the form of secured loans that bear interest at rates that float at 225 basis points over the ninety (90) day LIBOR, as adjusted each November 1, February 1, May 1 and August 1. These loans ~~are~~were secured by the Hekemian & Co. employees’ interests in Rotunda 100 and ~~are~~were full recourse loans. On December 7, 2017, the Board approved a further extension of the previously amended maturity dates of these loans to the date or dates upon which distributions of cash are made by Grande Rotunda to its members as a result of a refinancing or sale of Grande Rotunda or the Rotunda ~~property.~~

Property. The aggregate outstanding principal balance and accrued but unpaid interest of the Rotunda 100 notes was ~~$4,000,000~~approximately $4,000,000 and $1,292,000, respectively, at ~~both~~October 31, 2021. On

December 30, 2021, the Rotunda Property was sold and the net sales proceeds were distributed to the partners in Grande Rotunda. (See Note 7 for further details.) As of July 31, ~~2021 and October 31, 2020. The~~2022, approximately $5.3 million of the secured loans receivable (including accrued ~~but unpaid~~interest) were repaid to FREIT with no outstanding balance remaining of principal or interest related to ~~these notes as of July 31, 2021 and October 31, 2020 amounted to approximately $1,268,000 and $1,194,000, respectively, and is included in secured loans receivable on~~ the ~~accompanying condensed consolidated balance sheets.~~Rotunda 100 notes.

In Fiscal 2017, Grande Rotunda incurred substantial expenditures at the Rotunda ~~property~~Property related to retail tenant improvements, leasing costs and operating expenditures which, in the aggregate, exceeded revenues as the property was still in the rent up phase and the construction loan held with Wells Fargo at that time was at its maximum level, with no additional funding available to draw. Accordingly, during Fiscal 2017 the equity owners in Grande Rotunda ~~(FREIT Maryland with a 60% ownership and Rotunda 100 with a 40% ownership)~~ contributed their respective pro-rata share of any cash needs through loans to Grande ~~Rotunda, LLC.~~Rotunda. In Fiscal 2021, Grande Rotunda repaid $7$7 million to the equity owners in Grande Rotunda based on their respective pro-rata share resulting in a loan repayment to Rotunda 100 of approximately ~~$2.8~~$2.8 million. As of ~~July~~October 31, 2021, ~~and October 31, 2020,~~ Rotunda 100 ~~has~~had funded Grande Rotunda with approximately ~~$3.2 million and $5.9~~$3.3 million (including interest)~~, respectively,~~ which iswas included in “Due to affiliate” on the accompanying condensed consolidated balance ~~sheets.~~sheet. On December 30, 2021, the Rotunda Property was sold and Grande Rotunda repaid approximately $31 million to the equity owners in Grande Rotunda resulting in a loan repayment to Rotunda 100 of approximately $3.3 million. As of July 31, 2022, all loans were repaid in full to each of the partners.

FREIT owns a 40% equity interest in Wayne PSC and H-TPKE, LLC (“H-TPKE”) owns a 60% equity interest in Wayne PSC. An aggregate of approximately 73% of the membership interests in H-TPKE is controlled by: Robert S. Hekemian, Jr., the Chief Executive Officer, President and a Director of FREIT and a shareholder and officer of Hekemian & Co.; David B. Hekemian, a Director of FREIT and a shareholder and officer of Hekemian & Co.; the late Robert S. Hekemian, the former Chairman and Chief Executive Officer and consultant to FREIT and a former shareholder and former officer of Hekemian & Co.; members of the families of Robert S. Hekemian, Jr., David B. Hekemian and the late Robert S. Hekemian; and other employees of Hekemian & Co. On March 10, 2022, the equity owners in Wayne PSC, H-TPKE and FREIT, each entered into a grid promissory note for funding up to $600,000 and $400,000, respectively, based on each owner’s respective pro-rata share. During May 2022, Wayne PSC required funding by each of the partners totaling $500,000, with each owner contributing its respective pro-rata share of Wayne PSC. As such, H-TPKE funded $300,000 and FREIT funded $200,000. Wayne PSC repaid these loans in full (including accrued interest) to each of the equity owners from the net proceeds received from the refinancing of the loan on the Preakness Shopping Center in July 2022 (See Note 9).

On ~~September 30, 2020,~~August 19, 2022, Westwood Hills, LLC, (“exercised its right, pursuant to the loan agreement, to extend the term of its $25 million loan on its property located in Westwood, ~~Hills”), a consolidated subsidiary,~~New Jersey, maturing on October 1, 2022, for two (2) additional six (6) month periods on the same terms and conditions as stated in the loan agreement.

On July 22, 2022, Wayne PSC refinanced its ~~$19.2~~$22.1 million loan ~~(which~~(inclusive of deferred interest of approximately $136,000), which would have matured on ~~November~~October 1, ~~2020)~~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, with additional funding available in the amount of $250,000 for legal fees potentially incurred by the lender related to the lis pendens on this property. (See Note 6 to FREIT Maryland’s condensed consolidated financial statements for additional details in regards to the lis pendens.)$25,000,000. This loan ~~secured by an apartment building in Westwood, New Jersey,~~ is interest-only based on a ~~floating~~fixed interest rate ~~at 400 basis points over the one-month LIBOR rate~~of 5% and has a term of three years with a ~~floor~~maturity date of ~~4.15%~~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 condensed consolidated statements of income for the nine and three months ended July 31, 2022. (See Note 4 for additional details)

On December 30, 2021, FREIT refinanced its $14.4 million loan (which would have matured on February 1, 2022) on its Boulders property located in Rockaway, New Jersey with a new loan held by ConnectOne 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 ~~October~~January 1, ~~2022~~2024 with the option of ~~Westwood Hills~~FREIT to extend for ~~two (2) additional six (6)-month periods~~one year from the maturity date, subject to certain provisions of the loan agreement. This refinancing ~~resulted in: (i)~~will provide annual debt service savings of approximately $1,173,000 as a ~~change~~result of the reduction in the principal amount, a reduction in the annual interest rate from a fixed rate of ~~4.62%~~5.37% to a ~~variable~~fixed rate ~~with a floor~~ of ~~4.15%~~2.85% and (ii) net refinancing proceeds of approximately $5.6 million that were distributed to the partners in Westwood Hills with FREIT Maryland receiving approximately $2.2 million based on its 40% membership interest in Westwood Hills. As of July 31, 2021, $25,000,000 ofinterest-only payments being required under this ~~loan was drawn and outstanding and the interest rate was based on the floor of 4.15%.~~new loan.

On April 3, 2019, WestFREIT Corp. (owned 100% by FREIT Maryland) exercised its option to extend its loan secured by the Westridge Square shopping center in Frederick, Maryland, held by M&T Bank, with a then outstanding balance of approximately $22.5 million, for twelve months. Effective beginning on June 1, 2019, the extension of this loan required monthly principal payments of $47,250 plus interest based on a floating interest rate equal to 240 basis points over the one-month LIBOR and had a maturity date of May 1, 2020. This loan was extended to November 1, 2020 and further extended to January 31, 2021 under the same terms and conditions of the existing agreement. WestFREIT Corp. entered into a loan extension and modification agreement with M&T Bank, effective beginning on February 1, 2021, which requires monthly principal payments of $49,250 plus interest based on a floating interest rate equal to 255 basis points over the one-month LIBOR and has a maturity date of January 31, 2022, with the option 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-up of certain space. As of July 31, 2021, approximately $21.3 million of this loan was outstanding and the interest rate was approximately 2.68%.

On February 7, 2018, Grande Rotunda refinanced its construction loan with a new loan held by Aareal Capital Corporation in the amount of approximately $118.5 million with additional funding which was available through February 6, 2021 for retail tenant improvements and leasing costs in the amount of $3,380,000. This loan bears a floating interest rate at 285 basis points over the one-month LIBOR rate and had a maturity date of February 6, 2021 with two one-year options of Grande Rotunda to extend the maturity of this loan, subject to certain requirements as provided for in the loan agreement. Grande Rotunda had purchased an interest rate cap on LIBOR for the full amount that could have been drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan which matured on March 5, 2020. On February 28, 2020, Grande Rotunda

had purchased an interest rate cap on LIBOR, with an effective date of March 5, 2020, for the full amount that could have been drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for one year, which matured on March 5, 2021. Effective February 6, 2021, Grande Rotunda exercised the first extension option on this loan with a balance in the amount of approximately $118.5 million, extending the loan one year with a new maturity date of February 6, 2022, which may be extended further for an additional one-year term at Grande Rotunda’s option. Principal payments in the amount of $500,000 were required upon exercise of the first loan extension option and per calendar quarter thereafter. If the second loan extension option is exercised, principal payments in the amount of $750,000 will be required upon exercise of the second 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 July 31, 2021, the total amount outstanding on this loan was approximately $117 million and the interest rate was approximately 2.95%.

~~FREIT Maryland’s~~FREIT’s revolving line of credit provided by the Provident Bank was renewed for a three-year term ending on October 31, ~~2023.~~2023. Draws against the credit line can be used for working capital needs and standby letters of credit. Draws against the credit line are secured by mortgages on ~~FREIT Maryland’s~~FREIT’s Franklin Crossing Shopping Center in Franklin Lakes, New Jersey and retail space in Glen Rock, New Jersey. The total line of credit is ~~$13~~$13 million and the interest rate on the amount outstanding is based on a floating interest rate of prime minus 25 basis points with a floor of ~~3.75%~~3.75%. As of July 31, ~~2021~~2022 and October 31, ~~2020,~~2021, there was no amount outstanding and $13 million was available under the line of credit.

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. (See Note 6 to FREIT Maryland’s condensed consolidated financial statements for additional details.)

The following table shows the estimated fair value and net carrying value of ~~FREIT Maryland’s~~FREIT’s long-term debt at July 31, ~~2021~~2022 and October 31, ~~2020:~~2021:

Fair values are estimated based on market interest rates at July 31, ~~2021~~2022 and October 31, ~~2020~~2021 and on a discounted cash flow analysis. Changes in assumptions or estimation methods may significantly affect these fair value estimates. The fair value is based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance).

FREIT ~~Maryland~~ has determined that it has 2two reportable segments: commercial properties and residential properties. These reportable segments offer different types of space, have different types of tenants, and are managed separately because each requires different operating strategies and management expertise. The commercial segment is comprised of ~~eight (8)~~five (5) properties, excluding the Rotunda Property, the Westridge Square Property and the Damascus Property, which were sold on December 30, 2021, January 7, 2022 and January 10, 2022, respectively. The residential segment is comprised of ~~seven (7)~~six (6) properties, excluding the ~~Pierre Towers property~~Icon at the Rotunda Property, which was ~~converted into a TIC and deconsolidated from FREIT Maryland’s operating results as of February 28, 2020~~sold on December 30, 2021. (See Note ~~5 to FREIT Maryland’s condensed consolidated financial statements~~7 for further ~~details).~~details.)

The accounting policies of the segments are the same as those described in Note 1 in ~~FREIT Maryland’s~~FREIT’s Annual Report on Form 10-K for the fiscal year ended October 31, ~~2020.~~2021. The chief operating and decision-making group responsible for oversight and strategic decisions of ~~FREIT Maryland's~~FREIT's commercial segment, residential segment and corporate/other is comprised of ~~FREIT Maryland’s~~FREIT’s Board.

FREIT, ~~Maryland,~~ through its chief operating and decision making group, assesses and measures segment operating results based on net operating income ("NOI"). NOI, a standard used by real estate professionals, is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes: deferred rents (straight lining), depreciation, financing costs and other items. NOI is not a measure of operating results or cash flows from operating activities as measured by GAAP, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

Real estate rental revenue, operating expenses, NOI and recurring capital improvements for the reportable segments are summarized below and reconciled to condensed consolidated net income ~~(loss)~~ attributable to common equity for the nine and ~~three month~~three-month periods ended July 31, ~~2021~~2022 and ~~2020.~~2021. Asset information is not reported since FREIT ~~Maryland~~ does not use this measure to assess performance.

FREIT ~~Maryland~~ has elected to be treated as a REIT for federal income tax purposes and as such intends to distribute ~~100%~~at least 90% of its ordinary taxable income (to maintain its status as a REIT) and 100% of its capital gains to its stockholders as dividends for the fiscal year ending October 31, 2022. FREIT distributed 99% of its ordinary taxable income to its ~~shareholders~~stockholders as dividends for the fiscal year ~~ending~~ended October 31, 2021. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income ~~was~~and such gains were recorded in ~~FREIT Maryland’s~~FREIT’s condensed consolidated financial ~~statements.~~

~~There was no ordinary taxable income~~statements for the ~~fiscal year ending October~~nine and three months ended July 31, ~~2020~~2022 and no dividends were made/declared for Fiscal 2020. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income was recorded in FREIT Maryland’s condensed consolidated financial statements.2021.

As of July 31, ~~2021,~~2022, FREIT ~~Maryland~~ had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended October 31, ~~2018~~2019 remain open to examination by the major taxing jurisdictions.

~~On September 4, 2014, the Board approved the grant of an aggregate of 246,000 non-qualified share options under FREIT Maryland’s Equity~~ Incentive Plan (“the Plan”) to certain FREIT Maryland executive officers, the members of the Board and certain employees of Hekemian. The options have an exercise price of $18.45 per share, fully vested on September 3, 2019 and will expire 10 years from the date of grant, which will be September 3, 2024.

On November 10, 2016, the Board approved the grant of an aggregate of 38,000 non-qualified share options under the Plan to two members of the Board who were appointed to the Board during Fiscal 2016. The options have an exercise price of $21.00 per share, will vest in equal annual installments over a 5-year period and will expire 10 years from the date of grant, which will be November 9, 2026.

On May 3, 2018, the Board approved the grant of an aggregate of 38,000 non-qualified share options under the Plan to two members of the Board who were appointed to the Board during Fiscal 2018. The options have an exercise price of $15.50 per

~~share, will vest in equal annual installments over a 5-year period and will expire 10 years from the date of grant, which will be May 2, 2028.~~

On March 4, 2019, the Board approved the grant of an aggregate of 5,000 non-qualified share options under the Plan to the Chairman of the Board. The options have an exercise price of $15.00 per share, will vest in equal annual installments over a 5-year period and will expire 10 years from the date of grant, which will be March 3, 2029.Plan:

As of July 31, ~~2021,~~ 2022, 442,060 shares are available for issuance under the ~~Plan. As a result of the Reincorporation of~~ FREIT ~~with and into FREIT Maryland as discussed in Note 1 to the condensed consolidated financial statements, there was no impact to the~~Equity Incentive Plan ~~or options previously granted.~~(the “Plan”).

The following table summarizes stock option activity for the nine and three-month periods ended July 31, 2022 and 2021:

~~For the nine month periods ended July 31, 2021 and 2020,~~2022, compensation expense related to stock options vested amounted to approximately ~~$35,000~~$15,000 and ~~$35,000,~~$5,000, respectively. For the nine and three month periods ended July 31, 2021, ~~and 2020,~~ compensation expense related to stock options vested amounted to approximately ~~$11,000~~$35,000 and ~~$11,000,~~$11,000, respectively. At July 31, ~~2021,~~2022, there was approximately ~~$36,000~~$16,000 of unrecognized compensation cost relating to outstanding non-vested stock options to be recognized over the remaining weighted average vesting period of approximately ~~1.5~~0.9 years.

The aggregate intrinsic value of options vested and expected to vest and options exercisable at July 31, ~~2021~~2022 was approximately ~~$90,000~~$1,901,000 and ~~$53,000,~~$1,825,000, respectively.

On September 4, 2014, the Board approved amendments, effective November 1, 2014, to the FREIT ~~Maryland~~ Deferred Fee Plan for its executive officers and directors, one of which provides for the issuance of share units payable in FREIT ~~Maryland~~ shares in respect of (i) deferred amounts of all director fees on a prospective basis; (ii) interest on director fees deferred prior to November 1, 2014 (payable at a floating rate, adjusted quarterly, based on the average ~~10-year~~10-year Treasury Bond interest rate plus 150 basis points); and (iii) dividends payable in respect of share units allocated to participants in the Deferred Fee Plan as a result of deferrals described above. The number of share units credited to a participant’s account will be determined by the closing price of FREIT ~~Maryland~~ shares on the date as set forth in the Deferred Fee Plan.

~~All fees payable to directors for~~On November 4, 2021 (the “Adoption Date”), the ~~nine and three-month periods ended July 31, 2021 and 2020 were deferred under~~Board approved the termination of the Deferred Fee Plan ~~except for~~resulting in the termination of the deferral of fees ~~payable to one director, who elected to receive such~~on December 31, 2021 with any subsequent fees earned by a participant being paid in cash. ~~As a result~~Consistent with the termination of ~~the amendment to~~ the Deferred Fee Plan, ~~described above, for~~payment related to each participant’s cash account (in the form of a cash lump sum payment) and share unit account (in the form of the issuance of common stock) must be made to each participant no earlier than twelve (12) months and one day after, and no later than twenty-four (24) months, after the Adoption Date. Any interest earned on the participant’s cash account along with dividends (if any) earned on share units, will continue to accrue in share units on each participant’s account until final payment is made.

For the nine-month periods ended July 31, ~~2021~~2022 and ~~2020,~~2021, the aggregate amounts of deferred director fees together with related interest and dividends were approximately ~~$356,000~~$126,600 and ~~$444,400,~~$356,000, respectively, which have been paid through the issuance of ~~20,328~~5,163 and ~~23,302~~20,328 vested FREIT ~~Maryland~~ share units, respectively, based on the closing price of FREIT ~~Maryland~~ shares on the dates as set forth in the Deferred Fee Plan.

For the nine-month periods ended July 31, 2022 and 2021, ~~and 2020,~~ FREIT ~~Maryland~~ has charged as expense approximately ~~$332,000~~$91,300 and ~~$444,400,~~$332,000, respectively, representing deferred director fees and interest, and the balance of approximately ~~$24,000~~$35,300 and ~~$0,~~$24,000, respectively, representing dividends payable in respect of share units allocated to Plan participants, has been charged to equity.

The Deferred Fee Plan, as amended, provides that cumulative fees together with accrued interest deferred as of November 1, 2014 ~~will~~would be paid in a lump sum or in annual installments over a period not to exceed 10 years, at the election of the ~~Participant.~~participant. As of July 31, ~~2021~~2022 and October 31, ~~2020,~~2021, approximately ~~$1,454,000~~$1,366,000 and ~~$1,542,000,~~$1,454,000, respectively, of fees has been deferred together with accrued interest of approximately ~~$1,021,000~~$951,000 and ~~$1,091,000,~~$1,021,000, respectively.

Fixed lease income under our commercial operating leases generally includes fixed minimum lease consideration, which is accrued on a straight-line basis over the terms of the leases. Variable lease income includes consideration based on sales, as well as reimbursements for real estate taxes, maintenance, insurance and certain other operating expenses of the properties.

Minimum fixed lease consideration (in thousands of dollars) under non-cancelable tenant operating leases for each of the next five years and thereafter, excluding variable lease consideration and rents from tenants for which collectability is deemed to be constrained, for the years ending October 31, as of July 31, ~~2021,~~2022, is as follows:

The above amounts assume that all leases which expire are not renewed and, accordingly, neither month-to-month nor rentals from replacement tenants are included.

Minimum future rentals do not include contingent rentals, which may be received under certain leases on the basis of percentage of reported tenants' sales volume. Rental income that is contingent on future events is not included in income until the contingency is resolved. Contingent rentals included in income for the nine and three-month periods ended July 31, ~~2021~~2022 and ~~2020~~2021 were not material.

The ~~international spread of COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020. The extent~~Company continues 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, many statesmonitor changes in the U.S., including New Jersey, New York and Maryland, where our properties are located, implemented stay-at-home and shutdown orders for all "non-essential" business and activity in an aggressive effort to mitigatecollectability assessment of its tenant receivables resulting from the spread of COVID-19. These orders have continued to evolve resulting in a full or partial lifting of these restrictions at various points over the past year. Vaccinations for the COVID-19 virus have been widely distributed among the general U.S. population which has resulted in loosened restrictions previously mandated on our tenants identified as nonessential. However, the potential emergence of vaccine-resistant variants 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 has been evolving, it continues to cause uncertainty and volatility in the financial markets. The COVID-19 pandemic and the actions taken by individuals, businesses and government authorities to reduce its spread have caused substantial lost business revenue, changes in consumer behavior and large reductions in liquidity and fair value of many assets. These and other adverse conditionslingering effects that may unfold in the future are expected to continue until such time as government shutdown orders are fully lifted, and business operations and commercial activity can fully resume. The lifting of all government shutdown orders cannot be predicted with any certainty. Further, even after such orders are fully lifted, the resumption of business operations and commercial activity will depend on several factors, including prevailing sentiments among workers and consumers regarding the safety of resuming public activity, and cannot be predicted with any certainty.

~~Despite~~ the COVID-19 pandemic and preventive measures taken to mitigate the spread our residential properties have continued to generate cash flow. 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 shutdowns and the continued lingering impact to consumer sentiment and preferences for safety amid the reemergence of other variants. 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). Until the space is re-leased at each of these properties, FREIT Maryland’s operating results will be adversely impacted from the loss of base rent and additional rent of approximately $0.4 million (with a consolidated impact to FREIT Maryland of approximately $0.2 million)had on ~~an annualized basis. The Company is closely monitoring changes in the collectability assessment~~some of its ~~tenant receivables as a result of certain tenants suffering adverse financial consequences related to the COVID-19 pandemic.~~commercial tenants. For the nine and three months ended July 31, ~~2021,~~2022, rental revenue deemed uncollectible of approximately ~~$1.2~~$0.5 million and ~~$0.3~~$0.4 million (with a consolidated impact to FREIT ~~Maryland~~ of approximately ~~$0.7~~$0.3 million and ~~$0.1~~$0.1 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. ~~As of~~For the nine and three months ended July 31, 2021, rental revenue deemed uncollectible of approximately $1.2 million and $0.3 million (with a consolidated impact to FREIT ~~Maryland~~of approximately $0.7 million and $0.1 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. During the period beginning March 2020 through October 31, 2021, FREIT has applied, net of amounts subsequently paid back by tenants, an aggregate of approximately ~~$397,000~~$397,000 of security deposits from its commercial tenants to outstanding receivables due. For the nine and three months ended July 31, ~~2021, on~~2022, there were no security deposits from its commercial tenants applied to outstanding receivables due. On a case by case basis, FREIT ~~Maryland~~ has offered ~~some commercial tenants~~ rent abatements ~~over a specified time period~~ totaling approximately ~~$135,000~~$9,000 and ~~$34,000~~$0 (with a consolidated impact to FREIT ~~Maryland~~ of

approximately ~~$91,000~~$9,000 and ~~$20,000),~~$0) for the nine and three months ended July 31, 2022, respectively, and $135,000 and $34,000 (with a consolidated impact to FREIT of approximately $91,000 and $20,000) for the nine and three months ended July 31, 2021, respectively. ~~FREIT Maryland has not offered any~~There were no significant ~~new~~ deferrals of rent over a specified time period ~~during~~offered to its commercial tenants for the nine and three months ended July 31, 2022 and 2021. FREIT ~~Maryland~~ currently remains in active discussions and negotiations with these impacted retail tenants.

On August 4, 2022, FREIT’s Board declared a ~~result~~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). This distribution represents most of the ~~negative impact~~after-tax proceeds of FREIT’s extraordinary sale of its portfolio of Maryland properties. On August 4, 2022, in connection with the Board’s approval of the ~~COVID-19 pandemic at our commercial properties,~~special, extraordinary, non-recurring cash distribution (“Extraordinary Distribution”), the Compensation Committee of the Board recommended and the Board approved that (i) the option exercise price of options outstanding under the Plan be adjusted, by reason of the Extraordinary Distribution, in ~~Fiscal 2020 we were granted debt payment relief from certain~~accordance with the terms of ~~our lenders on such properties~~the Plan; and (ii) the exercise price of options outstanding under the Plan should be reduced by an amount equal to the excess, if any, of (x) the average of the closing price of FREIT’s shares, as reported by Yahoo Finance, for each business day during the period of five (5) business days prior to the ex-dividend date relating to the Extraordinary Distribution (August 31, 2022), over (y) the average of the closing price of FREIT’s shares, as reported by Yahoo Finance, for each business day during the period of five (5) business days following the ex-dividend date relating to the Extraordinary Distribution. (See Note 7 for additional details.) On September 9, 2022, the Board determined that the amount of the reduction in exercise price for options outstanding under the Plan is $7.50 per share. In addition, $18.68 per share will be used as the share price for determining the number of share units to be distributed to participants in the ~~form of deferral of principal and/or interest payments for a three-month period, resulting~~Deferred Fee Plan in ~~total deferred payments of approximately $1,013,000, which will become due at~~connection with the maturity of the loans. As of July 31, 2021 and October 31, 2020, approximately $162,000 of this amount has been repaid, there will be no further deferrals of principal and/or interest payments on these loans and the balance due has been included in mortgages payable on the condensed consolidated balance sheets as of July 31, 2021 and October 31, 2020. (See Note 9 to FREIT Maryland’s condensed consolidated financial statements for additional details).

For the nine months ended July 31, 2021, we have experienced a positive cash flow from operations with cash provided by operations of approximately $10.2 million. This could change based on the duration of the pandemic, which is uncertain. We believe that our cash balance as of July 31, 2021 of approximately $36.4 million coupled with a $13 million available line of credit (available through October 31, 2023, see Note 9) will provide us with sufficient liquidity for at least the next twelve months from the filing of this Form 10-Q.

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.Extraordinary Distribution.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

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’s~~FREIT’s revenues consist primarily of rental income and other related revenues from its residential and commercial properties and additional ~~rent in the form of expense reimbursements~~rents derived from operating commercial properties. ~~FREIT Maryland’s~~FREIT’s properties are primarily located in northern New Jersey ~~Maryland~~ and New York.

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 spread~~properties consisted of ~~COVID-19~~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 ~~declared a global pandemic~~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 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, many statesMaryland Purchaser in the ~~U.S., including New Jersey, New York~~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 ~~our properties are located, implemented stay-at-home and shutdown orders for all "non-essential" business and activity in an aggressive effort to mitigate~~ the ~~spread of COVID-19. These orders have continued to evolve resulting in a full~~rent commencement date has not occurred or partial lifting of these restrictions at various points over the past year. Vaccinations for the COVID-19 virus have been widely distributed among the general U.S. population which has resulted in loosened restrictions previously mandated on our tenants identified as nonessential. However, the potential emergence of vaccine-resistant variants 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~~economic obligations of the pandemic has been evolving, it continues to cause uncertainty and volatility in the financial markets. Many U.S. industries and businesses have been negatively affected and millions of people have 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 5.4% as of July 2021, as many businesses continue to reopen and rehire employees following manyMaryland Sellers under certain leases remain unpaid. Although there can be no assurance, a portion of the ~~COVID-19 mandated shutdown orders. However,~~$15,526,731 escrow deposit (the “Maryland Purchaser Escrow Payment”) may be paid to the ~~jobless rate remains well above~~Maryland Sellers depending upon the ~~pre-pandemic levels~~outcome of ~~about 3.5%.~~construction and leasing activities at the Maryland Properties. The ~~COVID-19 pandemic and~~Maryland Purchaser Escrow Payment Agreement provides for among other things, monthly disbursements from escrow to the ~~actions taken by individuals, businesses and government authorities~~Maryland Purchaser related to ~~reduce its spread have caused substantial lost business revenue, changes in consumer behavior and large reductions in liquidity and fair value~~the aforementioned tenant lease agreements until the earlier of ~~many assets. These and other adverse conditions that may unfold in~~(i) the ~~future are expected to~~rent commencement date of the respective tenant lease agreements or (ii) 5-years from the date of the agreement. Release

~~continue until such time as government shutdown orders are fully lifted,~~ Page 22

and ~~business operations~~amounts of escrowed funds to FREIT, generally, is contingent on the success and ~~commercial activity can fully resume.~~ timing of future leasing activities at the Maryland Properties.

The ~~lifting~~sale of ~~all government shutdown orders cannot be predicted with any certainty. Further, even after such orders are fully lifted,~~ the ~~resumption~~Maryland Properties having a total net book value of business operations and commercial activity will depend on several factors, including prevailing sentiments among workers and consumers regarding the safety of resuming public activity, and cannot be predicted with any certainty.

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 93.5% and 93.3%, respectively, for the nine and three months ended July 31, 2020 to approximately 95.6% and 95.3%, respectively, for the nine and three months ended July 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~~$172.2 million, was consummated by the ~~previously mandated shutdowns~~Maryland Sellers and the ~~continued lingering impact~~Maryland Purchaser for a purchase price of $248,750,269, after giving effect to ~~consumer sentiment and preferences for safety amid~~ the ~~reemergence~~$15,526,731 Maryland Purchaser Escrow Payment. This sale resulted in net proceeds of ~~other variants. While~~approximately $53.9 million (inclusive of approximately $1.9 million in funds released from the ~~overall average cash realization of monthly billings as compared to monthly cash collections for~~Maryland Purchaser Escrow Payment during the commercial properties for the nine months ended July 31, 2021 has resumed to pre-pandemic levels, the average annual occupancy rate has declined from approximately 80.3% and 79.1%, respectively, for the nine and three months ended July 31, 2020 to approximately 76.4% and 76%, respectively, for the nine and three months ended July 31, 2021. During the firstsecond quarter of Fiscal ~~2021, Pet Valu, Inc.~~2022), ~~a pet store tenant, vacated several stores located~~after payment of related mortgage debt in ~~shopping centers owned by FREIT Maryland affiliates (Wayne PSC,~~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 ~~Centre and~~Property loan, payment of loans (including interest) to each of the partners in Grande ~~Rotunda) and terminated the related leases early paying an aggregate lease termination fee~~Rotunda 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 July 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 condensed consolidated balance sheet as of July 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). Until~~$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 ~~space is re-leased at each of these properties, FREIT Maryland’s operating results will be adversely impacted from the loss of base~~straight-line rent ~~and additional rent~~receivable of approximately ~~$0.4~~$2.9 million ~~(with~~and a ~~consolidated impact to FREIT Maryland~~write-off of unamortized lease commissions of approximately ~~$0.2 million)~~$1.7 million.

On August 4, 2022, FREIT’s 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 ~~annualized basis. The Company is closely monitoring changes in~~ex-dividend date of August 31, 2022). This distribution represents most of the ~~collectability assessment~~after-tax proceeds of FREIT’s extraordinary sale of its ~~tenant receivables as a result~~portfolio of ~~certain tenants suffering adverse financial consequences related~~Maryland properties.

See Note 7 to the COVID-19 pandemic. For the nine and three months ended July 31, 2021, rental revenue deemed uncollectible of approximately $1.2 million and $0.3 million (with a consolidated impact to FREIT Maryland of approximately $0.7 million and $0.1 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. As of July 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. For the nine and three months ended July 31, 2021, on a case by case basis, FREIT Maryland has offered some commercial tenants rent abatements over a specified time period totaling approximately $135,000 and $34,000 (with a consolidated impact to FREIT Maryland of approximately $91,000 and $20,000), respectively. FREIT Maryland has not offered any significant new deferrals of rent over a specified time period during the nine and three months ended July 31, 2021. FREIT Maryland currently remains in active discussions and negotiations with these impacted retail tenants.

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. As of July 31, 2021 and October 31, 2020, approximately $162,000 of this amount has been repaid, there will be no further deferrals of principal and/or interest payments on these loans and the balance due has been included in mortgages payable on the condensed consolidated balance sheets as of July 31, 2021 and October 31, 2020. (See Note 9 to FREIT Maryland’sFREIT’s condensed consolidated financial statements for additional ~~details).~~

~~For the nine months ended July 31, 2021, we have experienced a positive cash flow from operations with cash provided by operations of approximately $10.2 million. This could change based~~details on the ~~duration~~sale of the ~~pandemic, which~~Maryland properties.

The economic and financial environment: The U.S. unemployment rate is ~~uncertain. We believe that our cash balance~~3.5% as of July ~~31, 2021 of approximately $36.4 million coupled with a $13 million available line of credit (available through October 31, 2023, see Note 9) will provide us with sufficient liquidity for at least~~2022, which is the ~~next twelve months from~~lowest since the ~~filing of this Form 10-Q.~~

~~The extent~~onset 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. However, we believe the actions we have taken and continue to take will help minimize interruptions to our operations and will put uspandemic in February 2020. The annual inflation rate in the ~~best position~~U.S. still remains high at 8.5% in July 2022, which is the highest since the 1980’s, which is primarily driven by soaring food prices and energy costs, labor shortages and supply disruptions. The Federal Reserve continues to ~~participate~~raise interest rates, which has led to uncertainties in the ~~economic recovery as the recovery occurs. FREIT Maryland will continue to actively monitor the effects of the pandemic, including governmental directives in the jurisdictions in which we operate~~financing market and the recommendations of public health authorities, and will, as needed, take further measures to adapt our business in the best interests of our shareholders and personnel. (See Note 16 to FREIT Maryland’s condensed consolidated financial statements for further details.)a volatile economy.

Residential Properties: ~~While our~~Our 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 continues to increase across the portfolio. Additionally, the rate of increase on renewals for existing tenants has also been robust. Should this trend continue, we believe the increase will contribute meaningfully to FREIT’s income over time. However, it is uncertain what impact ~~COVID-19~~the 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 reopening of the economy.~~

Commercial Properties: ~~There continues to be uncertainty~~While our retail properties have stabilized form the impact of the COVID-19 pandemic, certain of our properties still have not attained pre pandemic operating levels despite some recovery in brick and mortar retail. Additionally, the ~~retail environment that~~significant rise in inflation and rising interest rates could have an ~~adverse~~ impact ~~on FREIT Maryland’s retail tenants, which could have an adverse impact on FREIT Maryland. As restrictions continue to evolve, the impact COVID-19 may have~~ on the operating and financial performance of our commercial properties over the next year is currently uncertain and will depend on certain developments, including, among others, the impact of COVID-19 on our tenants, 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.

Burlington Coat Factory (“Burlington”), which does business as a retail tenant at the Westridge Square Shopping Center located in Frederick, Maryland, did not exercise its option to renew its lease which is set to expire on November 30, 2021. 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 (12^th~~) full calendar month immediately following receipt of the Termination Notice.~~

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 shareholders 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 condensed consolidated financial statements for further details.)properties.

Debt Financing Availability: Financing has been available to FREIT ~~Maryland~~ and its affiliates. ~~The lis pendens filed in connection with~~(See Note 6 to FREIT’s condensed consolidated financial statements.)

On August 19, 2022, Westwood Hills, LLC, exercised its right, pursuant to the ~~legal proceeding between FREIT Maryland and certain of its affiliates and Sinatra Properties, LLC may adversely affect FREIT Maryland’s ability~~loan agreement, 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~~extend the term of its $25 million loan on its property located in Westwood, New Jersey, maturing on October 1, 2022, for two (2) additional six (6) month periods on the same terms and conditions as stated in the loan agreement.

On July 22, 2022, Wayne PSC, LLC 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 condensed consolidated statements of income for the nine and three months ended July 31, 2022. (See Note 4 to FREIT’s condensed 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 quarterly report on Form 10-Q.

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 included in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2020,~~2021, have been applied consistently as of July 31, ~~2021,~~2022, and for the nine and three months ended July 31, ~~2021~~2022 and ~~2020.~~2021. We believe that the following accounting policies or estimates require the application of management's most difficult, subjective, or complex 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 receivable 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's~~FREIT's management. While FREIT ~~Maryland~~ believes 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’s~~FREIT’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 2 to ~~the~~FREIT’s condensed consolidated financial statements for recently issued accounting standards.

Real estate revenue for the nine months ended July 31, 2022 (“Current Nine Months”) decreased 36.4% to $24,223,000, compared to $38,100,000 for the nine months ended July 31, 2021 (“Prior Year’s Nine Months”). For the three months ended July 31, 2022 (“Current Quarter”) real estate revenue decreased 44.5% to $6,959,000, compared to $12,542,000 for the three months ended July 31, 2021 (“Prior Year’s Quarter”).

The decrease in revenue for the Current Nine Months was primarily attributable to the following: (a) a decrease of approximately $14.5 million attributed to the Maryland Properties sold; (b) a decrease from the commercial segment of approximately $0.3 million, excluding the Maryland Properties sold, primarily attributed to approximately $0.2 million in rental revenue being deemed uncollectible and classified as a reduction in rental revenue in the Current Nine Months and a $0.1 million decrease resulting from a decline in the average occupancy rate to 67.1% from 69.1% in the Prior Year’s Nine Months; offset by (c) an increase from the residential segment of approximately $0.9 million, excluding the Icon at the Rotunda Property sold, driven by an increase in base rents across all properties and an increase in the average occupancy rate to 98.4% from 97.2% in the Prior Year’s Nine Months.

The decrease in revenue for the Current Quarter was primarily attributable to the following: (a) a decrease of approximately $6 million attributed to the Maryland Properties sold; offset by (b) an increase from the residential segment of approximately $0.3 million, excluding the Icon at the Rotunda Property sold, primarily driven by an increase in base rents across all properties and an increase in the average occupancy rate to 97.8% from 97.3% in the Prior Year’s Quarter; and (c) an increase from the commercial segment of approximately $0.1 million, excluding the Maryland Properties sold, primarily attributed to the recognition of revenue due to collections from a constrained tenant.

Net income attributable to common equity (“net income-common equity”) for the Current Nine Months and Current Quarter was net income of $46,546,000 ($6.61 per share basic and $6.56 per share diluted) and $1,121,000 ($0.16 per share basic and diluted), compared to net income of $776,000 ($0.11 per share basic and diluted) and $209,000 ($0.03 per share basic and diluted), for the Prior Year’s comparable periods, respectively.

The schedule below provides a detailed analysis of the major changes that impacted net ~~income (loss)-common~~income-common equity for the nine and three months ended July 31, ~~2021~~2022 and ~~2020:~~2021:

The condensed consolidated results of operations for the ~~nine months ended July 31, 2021 (“~~Current Nine ~~Months”)~~Months and ~~for the three months ended July 31, 2021 (“~~Current ~~Quarter”)~~Quarter are not necessarily indicative of the results to be expected for the full year or any other period. The table above includes income from real estate operations, which is a non-GAAP financial measure and is not a measure of operating results or cash flow as measured by GAAP, and is not necessarily indicative of cash available to fund cash needs.

Real estate revenue for the Current Nine Months decreased 8.0% to $38,100,000, compared to $41,430,000 for the nine months ended July 31, 2020 (“Prior Year’s Nine Months”). Real estate revenue for the Current Quarter increased 3.2% to $12,542,000, compared to $12,149,000 for the three months ended July 31, 2020 (“Prior Year’s Quarter”).

The decline in revenue for the Current Nine Months was primarily attributable to the following: (a) a decline in revenue of approximately $2.7 million resulting from the deconsolidation of the operating results of the Pierre Towers property from FREIT Maryland’s operating results due to the conversion to a tenancy-in-common form of ownership (“TIC”) as of February 28, 2020;

(b) a reversal of rental revenue in the amount of approximately $1.2 million in the Current Year’s Nine Months deemed uncollectible and attributable to commercial tenants suffering adverse financial consequences as a result of the COVID-19 pandemic; (c) a decline in revenue from the commercial segment of approximately $0.2 million, (net of lease termination payments received from PetValu in the amount of approximately $0.3 million and a settlement payment in the amount of approximately $0.2 million received from Cobb Theatre at the Rotunda retail property), primarily driven by a decline in the average occupancy rate to 76.4% from 80.3% in the Prior Year’s Nine Months; offset by (d) an increase in revenue from the residential segment of approximately $0.7 million primarily driven by an increase in the average occupancy rate to 96.0% from 93.8% in the Prior Year’s Nine Months and an increase in base rents across most properties.

The increase in revenue for the Current Quarter was primarily attributable to the following: (a) an increase in revenue of approximately $0.5 million resulting from the write-off in the Prior Year’s Quarter of the straight-line rent receivable and uncollectible revenue for the Cobb Theatre at the Rotunda retail property due to the lease being rejected in the bankruptcy court proceedings; (b) an increase in revenue from the residential segment of approximately $0.3 million primarily driven by an increase in the average occupancy rate to 95.5% from 93.5% in the Prior Year’s Quarter and an increase in base rents across most properties; offset by (c) a reversal of rental revenue in the amount of approximately $0.3 million in the Current Year’s Quarter deemed uncollectible and attributable to commercial tenants suffering adverse financial consequences as a result of the COVID-19 pandemic; and (d) a decrease in revenue in the commercial segment of approximately $0.1 million resulting from the decline in the average occupancy rate to 76.0% from 79.1% in the Prior Year’s Quarter.

~~Net~~Adjusted net (loss) income ~~(loss) attributable to common equity (“net income (loss)-common equity”)~~ for the Current Nine Months and Current Quarter was net ~~income~~loss of ~~$776,000 ($0.11~~$220,000 (($0.03) per share basic and diluted) and ~~$209,000~~net income of $399,000 ($~~0.03~~0.06 per share basic and diluted), compared to ~~$24,777,000 ($3.55 per share basic and $3.54 per share diluted) and net loss of $181,000 (($0.02) per share basic and diluted), for the Prior Year’s comparable periods, respectively.~~

~~Adjusted net income (loss) for the Current Nine Months and Current Quarter was~~ net income of $1,032,000 ($0.15 per share basic and diluted) and $316,000 ($0.05 per share basic and diluted), ~~compared to net loss of $2,885,000 (($0.41) per share basic and diluted) and $320,000 (($0.05) per share basic and diluted),~~ for the Prior Year’s comparable ~~periods, respectively.~~periods. Adjusted net (loss) income ~~(loss)~~ is a non-GAAP measure, which management believes is a useful and meaningful gauge to investors of our operating performance, since it excludes the impact of unusual and infrequent items specifically: a gain on ~~deconsolidation~~sale of ~~the Pierre Towers property~~Maryland properties in Fiscal ~~2020.~~2022; a realized gain on the Wayne PSC interest rate swap contract termination in Fiscal 2022.

The ~~increase~~decrease in adjusted net income for the Current Nine Months was primarily driven by the following: (a) a decrease of approximately $3.5 million (with a consolidated impact to FREIT of approximately $2.5 million) attributed to the Maryland Properties sold; offset by (b) a decrease in ~~third party transaction costs~~general and administrative expenses (“G&A”) of approximately $1 million primarily driven by reincorporation expenses of approximately $0.5 million incurred in the Prior Year’s Nine Months ~~of approximately $4.6 million; (b)~~and a ~~decrease~~decline in ~~net financing~~legal costs of approximately $1.1 million (with a consolidated impact to FREIT Maryland of approximately $0.8 million), (excluding the impact of the deconsolidation of the operating results of the Pierre Towers from FREIT Maryland’s operating results of approximately $0.6 million ~~in interest expense),~~ primarily driven by a decline in interest rates on variable mortgage loans; (c) a decline in expense for the reserve of uncollectible rents for commercial tenants of approximately $0.7 million (with a consolidated impact to FREIT Maryland of approximately $0.5 million); (d) a decline in depreciation expense of approximately $0.5 million (with a consolidated impact to FREIT Maryland of approximately $0.2 million), (excluding the impact of the deconsolidation of the operating results of the Pierre Towers from FREIT Maryland’s operating results of approximately $0.5 million in depreciation expense), primarily driven by the tenant improvements written off in Fiscal 2020; offset by (e) an increase in general & administrative (“G&A”) expenses of approximately $1.1 million primarily driven by an increase in legal costs attributed to the legal ~~proceedings~~proceeding between FREIT ~~Maryland~~ and certain of its affiliates and Sinatra Properties, LLC; ~~(f)~~(c) an increase in ~~snow removal costs due to a harsher winter in Fiscal 2021~~revenue of approximately ~~$0.5~~$0.6 million (with a consolidated impact to FREIT ~~Maryland~~ of approximately ~~$0.4~~$0.7 million)~~; (g)~~, excluding the Maryland Properties sold; (d) a decrease in interest expense of approximately $0.3 million attributed to the refinancing of the loan on the Boulders property in the Current Nine Months resulting in a reduction in ~~revenue, excluding~~ the ~~impact~~interest rate and principal balance of the ~~conversion of the Pierre Towers property to~~loan; (e) a ~~TIC,~~decrease in the ~~amount~~reserve for uncollectible rents of approximately ~~$0.7~~$0.3 million (with a consolidated impact to FREIT Maryland of approximately $0.2 million) as explained above; (h) a decrease in adjusted net income with an impact of approximately $0.4 million attributed to the Pierre Towers deconsolidation from FREIT Maryland’s operating results in the Prior Year’s Nine Months (with a consolidated impact to FREIT Maryland of approximately $0.3 million); and (i) an increase in repairs and maintenance expense of approximately $0.4 million (with a consolidated impact to FREIT Maryland of approximately $0.2 million), ~~(excluding~~excluding the ~~impact of~~Maryland Properties sold, primarily due to rental revenue being deemed uncollectible and classified as a reduction in rental revenue in the ~~deconsolidation of the operating results of the Pierre Towers from FREIT Maryland’s operating results~~Current Nine Months; and (f) a decrease in loss on investment in tenancy-in-common of approximately $0.2 ~~million in repairs and maintenance expense).~~million.

The increase in adjusted net income for the Current Quarter was primarily driven by the following: (a) ~~an increase~~a decrease in ~~revenue in the amount~~G&A of approximately ~~$0.4~~$0.5 million ~~(with~~primarily driven by a ~~consolidated impact~~decline in legal costs attributed to the legal proceeding between FREIT ~~Maryland~~and certain of ~~approximately $0.3 million) as explained above;~~its affiliates and Sinatra Properties, LLC; (b) a decrease in ~~third party transaction costs incurred~~loss on investment in ~~the Prior Year’s Quarter~~tenancy-in-common of approximately ~~$0.1~~$0.2 million; (c) a decrease in ~~depreciation expense~~repairs and maintenance of approximately $0.1 million (with a consolidated impact to FREIT ~~Maryland~~ of approximately $0.1 million) ~~primarily~~; (d) a decrease in interest expense of approximately $0.1 million attributed to ~~tenant improvements written off~~the refinancing of the loan on the Boulders property resulting in a reduction in the interest rate and principal balance of the loan; and (e) an increase in investment income of approximately $0.1 million resulting from a higher interest rate and cash balance in Fiscal ~~2020; (d)~~2022 due to the sale of the Maryland Properties; offset by (f) a ~~decline in expense for the reserve of uncollectible rents~~decrease of approximately ~~$0.3~~$1 million (with a consolidated impact to FREIT ~~Maryland~~ of approximately ~~$0.2~~$0.8 million); offset by (e) an increase in G&A expenses of approximately $0.2 million primarily driven by an increase in corporate expenses; and (f) an increase in repairs and maintenance expense of approximately $0.2 million (with a consolidated impact attributed to ~~FREIT~~the Maryland ~~of approximately $0.2 million).~~Properties sold. (Refer to the segment disclosure below for a more detailed discussion of the financial performance of ~~FREIT Maryland’s~~FREIT’s commercial and residential segments.)

The following tables set forth comparative net operating income ~~(“NOI”~~("NOI") data for ~~FREIT Maryland’s~~FREIT’s real estate segments and reconciles the NOI to condensed consolidated net ~~income (loss)-common~~income-common equity for the Current Nine Months and Current Quarter as compared to the Prior Year’s comparable periods (see below for definition of NOI):

NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), depreciation, financing costs and other items. FREIT ~~Maryland~~ assesses and measures segment operating results based on NOI.

Same Property NOI: FREIT ~~Maryland~~ considers same property net operating income (“Same Property NOI”) to be a useful supplemental non-GAAP measure of its operating performance. FREIT ~~Maryland~~ defines same property within both the commercial and residential segments to be those properties that FREIT ~~Maryland~~ has owned and operated for both the current and prior periods presented, excluding those properties that FREIT ~~Maryland~~ acquired, sold or redeveloped during those periods. Any newly acquired property that has been in operation for less than

a year, any property that is undergoing a major redevelopment but may still be in operation at less than full capacity, and/or any property that has been sold is not considered same property.

NOI and Same Property NOI are non-GAAP financial measures and are not measures of operating results or cash flow as measured by GAAP, and are not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

The commercial segment contains ~~eight (8)~~five (5) separate ~~properties. Seven~~properties, excluding the Rotunda Property, the Westridge Square Property and the Damascus Property, which were sold on December 30, 2021, January 7, 2022 and January 10, 2022, respectively. Three of these properties are multi-tenanted retail ~~or office~~ centers, one is a single tenanted retail center located in Glen Rock, New Jersey and one is single tenanted on land located in Rockaway, New Jersey owned by FREIT ~~Maryland~~ from which it receives monthly rental income from a tenant who has built and operates a bank branch on the land. (See Note 7 to FREIT’s condensed consolidated financial statements for additional details on the sale of the Maryland properties.)

As indicated in the tables above under the caption Segment Information, total revenue from ~~FREIT Maryland’s~~FREIT’s commercial segment for the Current Nine Months and Current Quarter decreased by ~~6.8%~~53.8% and ~~3.4%~~63%, respectively, and NOI decreased by ~~8.1%~~66.9% and ~~increased by 5.5%~~71.6%, respectively, as compared to the Prior Year’s comparable periods. Average occupancy for all commercial properties, excluding the Maryland properties sold, for the Current Nine Months and Current Quarter decreased by ~~3.9%~~2% and ~~3.1%~~2.4%, respectively, as compared to the Prior Year’s comparable periods.

The decline in revenue for the Current Nine Months was primarily attributable to the following: (a) a ~~reversal~~decrease of approximately $9.5 million (excluding an increase in the straight-line rent receivable of approximately $0.1 million) attributed to the Maryland Properties sold; and (b) a decrease of approximately $0.4 million, excluding the Maryland Properties sold, primarily attributed to rental revenue being deemed uncollectible and classified as a reduction in rental revenue in the ~~amount of approximately $1 million (excluding the straight-line rent receivable write-off of approximately $0.2 million) deemed uncollectible~~Current Nine Months and attributable to commercial tenants suffering adverse financial consequences as a result of the COVID-19 pandemic; (b) a decline in revenue of approximately $0.3 million, (net of lease termination payments received from PetValu in the amount of approximately $0.3 million and a settlement payment in the amount of approximately $0.2 million received from Cobb Theatre at the Rotunda retail property), primarily driven by a decline in the average occupancy ~~rate; and (c) a~~rate to 67.1% from 69.1% in the Prior Year’s Nine Months. The decrease ~~in revenue of approximately $0.1 million attributed to commercial rent abatements resulting from the COVID-19 pandemic. The decline~~ in NOI for the Current Nine Months was primarily attributable to the following: (a) a decrease of approximately $6.6 million attributed to the Maryland Properties sold; (b) a decline in revenue of approximately ~~$1.3~~$0.4 million, ~~as described above; (b) an increase in snow removal costs due to a harsher winter in Fiscal 2021 of approximately $0.4 million;~~excluding the Maryland Properties sold; offset by (c) a decline in ~~expense for~~snow removal costs of approximately $0.1 million, excluding the Maryland Properties sold; and (d) a decrease in the reserve offor uncollectible rents of approximately ~~$0.7 million.~~$0.1 million, excluding the Maryland Properties sold, primarily due to rental revenue being deemed uncollectible and classified as a reduction in rental revenue in the Current Nine Months.

The decline in revenue for the Current Quarter was primarily attributable to the following: (a) a reversal of rental revenue in the amount of approximately $0.3 million deemed uncollectible and attributable to commercial tenants suffering adverse financial consequences as a result of the COVID-19 pandemic; offset by (b) an increase in revenue of approximately $0.1 million (excluding the straight-line rent receivable write-off of approximately $0.4 million) resulting from the write-off in the Prior Year’s Quarter of uncollectible revenue for the Cobb Theatre at the Rotunda retail property due to the lease being rejected in the bankruptcy court proceedings.Maryland Properties sold. The ~~increase~~decrease in NOI for the Current Quarter was primarily attributable to the following: (a) a ~~decline~~decrease of approximately $2.5 million attributed to the Maryland Properties sold; (b) an increase in ~~expense for~~ the reserve offor uncollectible rents of approximately ~~$0.3 million;~~$0.1 million, excluding the Maryland Properties sold; offset by ~~(b)~~(c) a decline in ~~revenue~~repairs and maintenance costs of approximately ~~$0.2~~$0.1 million, ~~as described above.~~excluding the Maryland Properties sold.

Same Property Operating Results: ~~FREIT Maryland’s~~FREIT’s commercial segment currently contains ~~eight (8)~~five (5) same properties. (See definition of same property under Segment Information above.) ~~Since~~The Rotunda property, the Westridge Square Property and the Damascus Property were excluded from same property results for all ~~of FREIT Maryland’s commercial~~periods presented because these properties ~~are considered same properties~~were sold in the Current Nine Months. Same property revenue for the Current Nine Months and Current Quarter ~~refer~~decreased by 5.4% and increased by 2.4%, respectively, and same property NOI decreased by 2.2% and increased by 6.6%, respectively, as compared to the Prior Year’s comparable periods. The changes resulted from the factors discussed in the immediately preceding ~~paragraph for discussion of changes in same property results.~~paragraph.

Leasing: The following ~~tables reflect~~table reflects leasing activity at ~~FREIT Maryland’s~~FREIT’s commercial properties for comparable leases (leases executed for spaces in which there was a tenant at some point during the previous twelve-month period) and non-comparable leases for the Current Nine ~~Months:~~Months (excluding any leases executed for the Rotunda Property, the Westridge Square Property and the Damascus Property, which were sold in the Current Nine Months):

(a) These leasing costs are presented as annualized costs per square foot and are allocated uniformly over the ~~first quarter~~initial lease term.

(b) This includes new tenant leases and/or modifications/extensions/renewals of ~~Fiscal 2021, Pet Valu, Inc., a pet store~~existing 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). Until the space is re-leased at each of these properties, FREIT Maryland’s operating results will be adversely impacted from the loss of base rent and additional rent of approximately $0.4 million (with a consolidated impact to FREIT Maryland of approximately $0.2 million) on an annualized basis.leases.

Burlington, which does business as a retail tenant at the Westridge Square Shopping Center located in Frederick, Maryland, did not exercise its option to renew its lease which is set to expire on November 30, 2021. 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 FebruaryPage 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 (12^th~~) full calendar month immediately following receipt of the Termination Notice.~~

On April 26, 2020, CB Theatre Experience, LLC filed for protection under Chapter 11 of the bankruptcy code as disclosed in the bankruptcy filings. The CB Theatre Experience, LLC (known as “Cobb Theatre”) at the Rotunda retail property in Baltimore, Maryland has been closed since April 2020 due to the mandated shutdown related to the COVID-19 pandemic and on July 14, 2020 rejected its lease at this property as of June 30, 2020. Until this space is re-leased, FREIT Maryland’s operating results will be adversely impacted from loss of base rent and additional rent of approximately $1.1 million (with a consolidated impact to FREIT Maryland of approximately $0.7 million) on an annualized basis. 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). The Company is currently exploring all possible options for the re-leasing of this space.

FREIT ~~Maryland~~ currently operates ~~seven (7)~~six (6) multi-family apartment buildings or complexes totaling ~~1,171~~792 apartment ~~units. On February 28, 2020, FREIT Maryland reorganized its subsidiary S~~units, excluding the Icon at the Rotunda Property, which was sold on December 30, 2021 (see Note 7 to FREIT’s condensed consolidated financial statements) and A Commercial Associates Limited Partnership (“S&A”) from a partnership into a TIC. Prior to this reorganization, FREIT Maryland owned a 65% membership 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. Accordingly, FREIT Maryland consolidated the financial statements of S&A and its subsidiary to include 100% of the subsidiary’s assets, liabilities, operations and cash flows with the interest not owned by FREIT Maryland reflected as “noncontrolling interests in subsidiary” and all significant intercompany accounts and transactions were eliminated in consolidation.

~~Pursuant to the TIC agreement, FREIT Maryland ultimately acquired a 65% undivided interest in~~ the Pierre Towers property, which was ~~formerly owned by S&A. Based on the guidance of Accounting Standards Codification 810, “~~~~Consolidation~~”, FREIT Maryland’s investment in the TIC is accounted for under the equity method of accounting. While FREIT Maryland’s effective ownership percentage interest in the Pierre Towers property remains unchanged after the reorganizationconverted to a TIC ~~FREIT Maryland no longer has a controlling interest as the TIC is now under joint control. (See~~(see Note 5 to ~~FREIT Maryland’s~~FREIT’s condensed consolidated financial ~~statements for further details.)~~statements).

As indicated in the tables above under the caption Segment Information, total revenue from ~~FREIT Maryland’s~~FREIT’s residential segment for the Current Nine Months and Current Quarter decreased by 9%21.1% and ~~increased by 4.3%~~28.9%, respectively, and NOI decreased by ~~9.3%~~23.6% and ~~increased by 2.2%~~30.9%, respectively, as compared to the Prior Year’s comparable periods. Average occupancy for all residential properties, except the Icon property sold, for the Current Nine Months and Current Quarter increased by ~~2.2%~~1.2% and 2%0.5%, respectively, as compared to the Prior Year’s comparable periods.

The ~~decline~~decrease in revenue for the Current Nine Months was primarily attributable to the following: (a) a ~~deconsolidation~~decrease of ~~the operating results of the Pierre Towers property from FREIT Maryland’s operating results due~~approximately $5.1 million attributed to the ~~conversion to a TIC as of February 28, 2020 resulting in a decline in revenue of approximately $2.7 million;~~Icon at the Rotunda Property sold; offset by (b) an increase ~~in revenue~~ of approximately ~~$0.7~~$0.9 million, excluding the Icon at the Rotunda Property sold, primarily driven by an increase in base rents across all properties and an increase in the average occupancy rate ~~by approximately 2.2% over~~to 98.4% from 97.2% in the Prior Year’s Nine ~~Months and an increase in base rent across most properties.~~Months. The ~~decline~~decrease in NOI for the Current Nine Months was primarily attributable to the following: (a) a ~~deconsolidation~~decrease of ~~the operating results of the Pierre Towers property from FREIT Maryland’s operating results due~~approximately $3.6 million attributed to the conversion to a TIC as of February 28, 2020 resulting in a decline in NOI of approximately $1.3 million; (b) an increase in repairs and maintenance expense of approximately $0.3 million; and (c) an increase in operating expenses of approximately $0.2 million partially driven by an increase in snow removal costs due to a harsher winter in Fiscal 2021;Icon at the Rotunda Property sold; offset by ~~(d)~~(b) an increase in revenue of approximately ~~$0.7~~$0.9 million, ~~as explained above.~~excluding the Icon at the Rotunda Property; and (c) a decrease in the reserve for uncollectible rents of approximately $0.2 million, excluding the Maryland Properties sold.

The ~~increase~~decrease in revenue for the Current Quarter was primarily attributable to the following: (a) a decrease of approximately $2.2 million attributed to the Icon at the Rotunda Property sold; offset by (b) an increase of approximately $0.3 million, excluding the Icon at the Rotunda Property sold, primarily driven by an increase in base rents across all properties and an increase in the average occupancy rate ~~by approximately 2% over~~to 97.8% from 97.3% in the Prior Year’s ~~Quarter and an increase in base rents across most properties.~~Quarter. The ~~increase~~decrease in NOI for the Current Quarter was primarily attributable to the following: (a) a decrease of approximately $1.5 million attributed to the Icon at the Rotunda Property sold; (b) an increase in ~~revenue~~the reserve for uncollectible rents of approximately $0.1 million, excluding the Maryland Properties sold; offset by (c) an increase of approximately $0.3 million ~~as explained above; offset by (b) an increase~~ in ~~repairs and maintenance expense of approximately $0.2 million.~~revenue, excluding the Icon at the Rotunda Property sold.

Same Property Operating Results: ~~FREIT Maryland’s~~FREIT’s residential segment currently contains ~~seven (7)~~six (6) same properties. (See definition of same property under Segment Information above.) The ~~Pierre Towers~~Icon at the Rotunda property was excluded from same property results for all periods presented because this property was ~~deconsolidated and converted to a TIC as of February 28, 2020.~~sold in the Current Nine Months. Same property revenue for the Current Nine Months and Current Quarter increased by ~~3.5%~~7.1% and ~~4.3%~~6.8%, respectively, and same property NOI increased by ~~0.9%~~11.2% and ~~2.2%~~12.7%, respectively, as compared to the Prior Year’s comparable periods. The changes resulted from the factors discussed in the immediately preceding paragraph.

~~FREIT Maryland’s~~FREIT’s residential revenue is principally composed of monthly apartment rental income. Total rental income is a factor of occupancy and monthly apartment rents. Monthly average residential rents, (excluding from both periods presented for comparability purposes the Icon at the Rotunda property, which was sold in the Current Nine Months), at the end of the Current Quarter and the Prior Year’s Quarter were ~~$1,971~~$2,006 and ~~$1,886,~~$1,913, respectively. A 1% decline in annual average occupancy, or a 1% decline in average rents from current levels, results in an annual revenue decline of approximately ~~$277,000~~$191,000 and ~~$264,000,~~$184,000, respectively.

Capital expenditures: Since all of ~~FREIT Maryland’s~~FREIT’s apartment communities, with the exception of the Boulders, Regency ~~Icon~~ and Station Place properties, were constructed more than 25 years ago, FREIT ~~Maryland~~ tends to spend more in any given year on maintenance and capital improvements than may be spent on newer properties. ~~As a result of the COVID-19 global pandemic, only capital improvements deemed essential are being made at this time.~~ Funds for these capital projects ~~will be~~are available from cash flow from the property's operations and cash reserves.

(a) Includes the effect of interest rate swap contracts which effectively convert the floating interest rate to a fixed interest rate over the term of the loan.

Total financing costs for the Current Nine Months decreased by approximately ~~$1,790,000~~$3,013,000, or ~~16.2%~~32.6%, compared to the Prior Year’s Nine Months which iswas primarily attributable to the following: (a) a decline ~~in interest~~of approximately $3,137,000 attributed to the pay-down of the loans outstanding on the ~~variable mortgage loans for~~Maryland Properties sold in the ~~Rotunda and WestFREIT properties~~Current Nine Months; (b) a decrease of approximately ~~$1,104,000 resulting from lower interest rates; and (b)~~$278,000 attributed to the ~~deconsolidation~~refinancing of the ~~Pierre Towers~~loan on the Boulders property ~~from FREIT Maryland’s operating results due to~~in the ~~conversion to a TIC as of February 28, 2020~~Current Nine Months resulting in a ~~decrease~~reduction in ~~net financing costs~~the interest rate from 5.37% to 2.85% and in the principal balance from approximately $14.4 million to $7.5 million; offset by (c) an increase of approximately ~~$645,000.~~ $213,000 attributed to a breakage fee on the early termination of the interest rate swap contracts relating to the underlying loan on the Damascus property, which was repaid from the net proceeds of the sale of the Damascus property in the Current Nine Months; and (d) an increase of approximately $148,000 related to the write-off of deferred mortgage costs on the Wayne PSC mortgage loan previously held with People’s United Bank which was refinanced with a new lender in July of 2022.

Total financing costs for the Current Quarter decreased by approximately ~~$71,000~~$1,276,000, or ~~2.3%~~41.8%, compared to the Prior Year’s Quarter which iswas primarily attributable to the following: (a) a decline ~~in interest~~of approximately $1,377,000 attributed to the pay-down of the loans outstanding on the ~~variable~~Maryland Properties sold; offset by (b) an increase of approximately $148,000 related to the write-off of deferred mortgage ~~loans for~~costs on the ~~Rotunda and WestFREIT properties resulting from lower interest rates. (See~~Wayne PSC mortgage loan previously held with People’s United Bank which was refinanced with a new lender in July of 2022.

(See Note 57 to ~~FREIT Maryland’s~~FREIT’s condensed consolidated financial statements for ~~further~~additional details on the ~~deconsolidation~~sale of the ~~Pierre Towers property.~~Maryland properties.)

G&A ~~expense~~ for the Current Nine Months and Current Quarter was approximately ~~$4,143,000~~$3,107,000 and ~~$1,413,000,~~$911,000, respectively, compared to ~~$3,061,000~~$4,143,000 and ~~$1,233,000,~~$1,413,000, respectively, for the Prior Year’s comparable periods. The primary components of G&A are ~~accounting/auditing fees,~~ legal and professional fees, directors’ fees, corporate expenses and ~~consultant fees and corporate expenses.~~accounting/auditing fees. The ~~increase~~decrease in G&A ~~costs~~ for the Current Nine Months was primarily driven by reincorporation expenses of approximately $0.5 million incurred in the ~~following: (a) an increase~~Prior Year’s Nine Months and a decline in legal costs of approximately ~~$1,253,000 resulting from~~$0.6 million primarily attributed to the legal ~~proceedings~~proceeding between FREIT ~~Maryland~~ and certain of its affiliates and Sinatra Properties, LLC; (b) an increase in corporate expenses of approximately $284,000 primarily attributed to reincorporation expenses incurred in the Current Nine Months of approximately $475,000 to reincorporate in the state of Maryland offset by costs incurred in the Prior Year’s Nine Months for the formation and transfer of the Pierre subsidiary to a TIC of approximately $293,000; offset by (c) a decline in directors’ and consultant fees of approximately $322,000.LLC. The ~~increase~~decrease in G&A ~~costs~~ for the Current Quarter was primarily driven by ~~an increase~~a decline in ~~corporate expenses~~legal costs attributed to the ~~reincorporation~~legal proceeding between FREIT and certain of ~~FREIT in the state of Maryland.~~

~~The Special Committee of the Board (“Special Committee”) incurred on behalf of the Company third party transaction costs for advisory, legal~~its affiliates and other expenses primarily related to the Purchase and Sale Agreement and the Plan of Liquidation (See Notes 6 and 7 for additional details) in the amount of approximately $0 and $0, respectively, for the Current Nine Months and Current Quarter, compared to approximately $4,606,000 and $87,000, respectively, for the Prior Year’s comparable periods. On April 30, 2020, the Sellers delivered written notice to the Purchaser of the Sellers’ termination of the Purchase and Sale Agreement (SeeSinatra Properties, LLC.

~~Note 6 for details) and on May 7, 2020, the Board approved the elimination of the Special Committee. No further transaction costs were incurred thereafter.~~

Depreciation expense for the Current Nine Months and Current Quarter was approximately ~~$6,948,000~~$3,257,000 and ~~$2,315,000,~~$723,000, respectively, compared to ~~$7,887,000~~$6,948,000 and ~~$2,425,000,~~$2,315,000, respectively, for the Prior Year’s comparable periods. The decline in depreciation expense for the Current Nine Months was primarily attributable to the following: (a) a decline in the amount of approximately $460,000 resulting from the deconsolidation of the operating results of the Pierre Towers property from FREIT Maryland’s operating results as of February 28, 2020; and ~~(b) the remainder of the decline is primarily related to tenant improvements written off in Fiscal 2020. The decline in depreciation expense for the~~ Current Quarter was primarily attributable ~~to tenant improvements written off in Fiscal 2020.~~the sale of the Maryland Properties. (See Note 57 to ~~FREIT Maryland’s~~FREIT’s condensed consolidated financial statements for ~~further~~additional details on the ~~deconsolidation~~sale of the ~~Pierre Towers property.~~Maryland properties.)

Net cash provided by operating activities was approximately ~~$10.2~~$5.8 million for the Current Nine Months compared to net cash provided by operating activities of approximately $0$10.2 million for the Prior Year’s Nine Months. 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, dividends, 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 quarterly report on Form 10-Q.

As of July 31, ~~2021,~~2022, FREIT ~~Maryland~~ had cash, cash equivalents and restricted cash totaling ~~$39.2~~$107.6 million, compared to ~~$39.5~~$39 million at October 31, ~~2020.~~2021. The ~~decrease~~increase in cash in the Current Nine Months iswas primarily attributable to approximately ~~$10.2~~$250.4 million in net cash provided by investing activities including capital expenditures and $5.8 million in net cash provided by operating activities offset by approximately ~~$9.5~~$187.6 million in net cash used in financing ~~activities and~~activities. The increase in cash of approximately ~~$1.0~~$68.6 million inwas primarily attributed to the following: (a) a distribution of net ~~cash used in investing activities including capital expenditures.~~

~~In Fiscal 2017, Grande Rotunda incurred substantial expenditures at~~proceeds received from the sale of the Rotunda property related to retail tenant improvements, leasing costs and operating expenditures which, in the aggregate, exceeded revenues as the property was still in the rent up phase and the construction loan held with Wells Fargo at that time was at its maximum level, with no additional funding available to draw. Accordingly, during Fiscal 2017 the equity owners in Grande Rotunda (FREIT Maryland with a 60% ownership and Rotunda 100 with a 40% ownership) contributed their respective pro-rata shareProperty of ~~any cash needs through loans to Grande Rotunda, LLC. In Fiscal 2021, Grande Rotunda repaid $7~~approximately $54.4 million ~~to the equity owners in Grande Rotunda based on their respective pro-rata share resulting in~~(inclusive of a loan repayment tofrom Grande Rotunda of approximately $27.7 million and repayment of secured loans receivable including accrued interest by certain members in Rotunda 100 of approximately ~~$2.8 million. As~~$5.3 million); (b) a distribution of ~~July 31, 2021 and October 31, 2020, Rotunda 100 has funded Grande Rotunda with~~net proceeds received from the sale of the Damascus Property of approximately ~~$3.2~~$11.8 million; (c) net proceeds received from the sale of the Westridge Square Property of approximately $0.1 million; (d) anticipated funds to be released of approximately $6.3 million and ~~$5.9~~funds released of approximately $1.9 million ~~(including interest), respectively, which is included~~from the funds held in ~~“Due~~post-closing escrow for rents related to ~~affiliate”~~the sale of the Maryland Properties; (e) net proceeds received from the refinancing of the Wayne PSC loan of approximately $2.5 million; offset by (f) a loan pay-down including closing costs of approximately $7.6 million attributed to the refinancing of the loan on the ~~accompanying~~Boulders property; and (g) dividends paid in the Current Nine Months the amount of approximately $2.1 million. (See Note 7 to FREIT’s condensed consolidated ~~balance sheets.~~financial statements for additional details on the sale of the Maryland properties.)

Credit Line: ~~FREIT Maryland’s~~FREIT’s revolving line of credit provided by ~~the~~ Provident Bank was renewed for a three-year term ending on October 31, 2023. Draws against the credit line can be used for working capital needs and standby letters of credit. Draws against the credit line are secured by mortgages on ~~FREIT Maryland’s~~FREIT’s Franklin Crossing Shopping Center in Franklin Lakes, New Jersey and retail space in Glen

Rock, New Jersey. The total line of credit is $13 million and the interest rate on the amount outstanding is based on a floating interest rate of prime minus 25 basis points with a floor of 3.75%. As of July 31, ~~2021~~2022 and October 31, ~~2020,~~2021, there was no amount outstanding and $13 million was available under the line of credit.

Dividend: The FREIT Board of Directors (“Board”) declared dividends of approximately $1,407,000 ($0.20 per share) to stockholders of record during Fiscal 2022. The Board did not declare a dividend in the third quarter of Fiscal 2022. On August 4, 2022, FREIT’s 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). (See Note 7 to FREIT’s condensed consolidated financial statements for additional details.) The Board will continue to evaluate the dividend on a quarterly basis.

As atof July 31, ~~2021, FREIT Maryland’s~~2022, FREIT’s aggregate outstanding mortgage debt was ~~$302.8~~$139.6 million, which bears a weighted average interest rate of ~~3.56%~~4.28% and an average life of approximately 2.7 years. ~~FREIT Maryland’s fixed rate~~FREIT’s mortgages are subject to amortization schedules that are longer than the terms of the mortgages. As such, balloon payments (unpaid principal amounts at the mortgage due date) for all mortgage debt will be required as follows:

The following table shows the estimated fair value and net carrying value of ~~FREIT Maryland’s~~FREIT’s long-term debt at July 31, ~~2021~~2022 and October 31, ~~2020:~~2021:

FREIT ~~Maryland~~ expects to refinance the individual mortgages with new mortgages or exercise extension options when their terms expire. To this extent, FREIT ~~Maryland~~ has exposure to 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 mortgage debt being retired. For example, at July 31, ~~2021,~~2022, a 1% interest rate increase would reduce the fair value of ~~FREIT Maryland’s~~FREIT’s debt by ~~$4.8~~$3.4 million, and a 1% decrease would increase the fair value by $5$3.6 million.

FREIT ~~Maryland~~ continually reviews its debt levels to determine if additional debt can prudently be utilized for property acquisitions for its real estate portfolio that will increase income and cash flow to ~~shareholders.~~stockholders.

On ~~February 7, 2018, Grande Rotunda~~August 19, 2022, Westwood Hills, LLC, exercised its right, pursuant to the loan agreement, to extend the term of its $25 million loan on its property located in Westwood, New Jersey, maturing on October 1, 2022, for two (2) additional six (6) month periods on the same terms and conditions as stated in the loan agreement.

On July 22, 2022, 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 condensed consolidated statements of income for the nine and three months ended July 31, 2022.

Interest rate swap contracts: To reduce interest rate volatility, FREIT uses a “pay fixed, receive floating” interest rate swap to convert floating interest rates to fixed interest rates over the term of a certain loan. FREIT enters into these swap contracts with a counterparty that is usually a high-quality commercial bank. In essence, FREIT agrees to pay its counterparties a fixed rate of interest on a dollar amount of notional principal (which generally corresponds to FREIT’s mortgage debt) over a term equal to the term of the mortgage notes. FREIT’s counterparties, in return, agree to pay FREIT a short-term rate of interest - generally LIBOR - on that same notional amount over the same term as the mortgage notes.

FREIT has variable interest rate loans secured by its Damascus Centre, Regency, Wayne PSC and Station Place properties. To reduce interest rate fluctuations, FREIT entered into interest rate swap contracts for each of these loans. These interest rate swap contracts effectively converted variable interest rate payments to fixed interest rate payments. The contracts were based on a notional amount of approximately $16,200,000 ($14,671,000 at July 31, 2022) for the Regency swap and a notional amount of approximately $12,350,000 ($11,806,000 at July 31, 2022) for the Station Place swap. On January 10, 2022, the property owned by Damascus Centre was sold and a portion of the proceeds from the sale was used to pay off the $18.2 million then outstanding balance of the underlying loan and the corresponding swap breakage fees of approximately $213,000 related to the early termination of the interest rate swap contracts on this loan which was included as interest expense on the accompanying condensed consolidated statement of income for the nine months ended July 31, 2022. (See Note 7 to FREIT’s condensed consolidated financial statements for further details on the sale of this property.) On June 17, 2022, Wayne PSC terminated its interest rate swap contract on its underlying loan held with People’s United Bank, which had a maturity date of October 2026, for a settlement amount of approximately $1.4 million. People’s United Bank held the proceeds from this settlement in escrow until the underlying loan was paid off in July 2022 and has been included as a realized gain on interest rate swap termination on the accompanying condensed consolidated statements of income for the nine and three months ended July 31, 2022. (See Note 9 to FREIT’s condensed consolidated financial statements for further details.)

Interest rate cap contract: To limit exposure on interest rate volatility, FREIT uses an interest rate cap contract to cap a floating interest rate at a set pre-determined rate. FREIT enters into cap contracts with a counterparty that is usually a high-quality commercial bank. In essence, so long as the floating interest rate is below the cap rate, FREIT agrees to pay its counterparties a variable rate of interest on a dollar amount of notional principal (which generally corresponds to FREIT’s mortgage debt). Once the floating interest rate rises above the cap rate, FREIT’s counterparties, in return, agree to pay FREIT a short-term rate of interest above the cap on that same notional amount.

FREIT had a variable interest rate loan secured by its Rotunda Property. As part of the refinancing of Grande Rotunda’s construction loan with a new loan ~~held by~~from Aareal Capital Corporation, in the amount of approximately $118.5 million with additional funding which was available through February 6, 2021 for retail tenant improvements and leasing costs in the amount of $3,380,000. This loan bears a floating interest rate at 285 basis points over the one-month LIBOR rate and had a maturity date of February 6, 2021 with two one-year options of Grande Rotunda to extend the maturity of this loan, subject to certain requirements as provided for in the loan agreement. Grande Rotunda had purchased an interest rate cap contract on LIBOR for the full amount that could have been drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan which matured on March 5, 2020. On February 28, 2020, Grande Rotunda had purchased an interest rate cap on LIBOR, with an effective date of March 5, 2020, for the full amount that could have been drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for one year, maturing on March 5, 2021. Effective February 6, 2021, Grande Rotunda exercised the first extension option on this loan with a balance ~~in the amount~~ of approximately $118.5 million, extending the loan one year with a new maturity date of February 6, 2022, which may be extended further for an additional one-year term at Grande Rotunda’s option. Principal payments in the amount of $500,000 were required upon exercise of the first loan extension option and per calendar quarter thereafter. If the second loan extension option is exercised, principal payments in the amount of $750,000 will be required upon exercise of the second loan extension option and per calendar quarter thereafter.2022. Additionally, Grande Rotunda purchased an interest rate cap contract 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 July 31,~~On December 30, 2021, the ~~total amount~~Rotunda Property owned by Grande Rotunda was sold, a portion of the proceeds from the sale was used to pay off the $116.5 million then outstanding balance of the underlying loan and the corresponding interest rate cap on this loan ~~was approximately $117 million and the interest rate was approximately 2.95%.~~

~~On September 30, 2020, Westwood Hills refinanced its $19.2 million loan (which would have~~ matured ~~on November 1, 2020)~~ with a new loan held by ConnectOne Bank in the amount of $25,000,000, with additional funding available in the amount of $250,000 for legal fees potentially incurred by the lender related to the lis pendens on this property.no settlement due at maturity. (See Note 67 to ~~FREIT Maryland’s~~FREIT’s condensed consolidated financial statements for additional details in regards to the lis pendens.) This loan, secured by an apartment building in Westwood, New Jersey, is interest-only based on a floating rate at 400 basis points over the one-month LIBOR rate with a floor of 4.15% and has a maturity date of October 1, 2022 with the option of Westwood Hills to extend for two (2) additional six (6)-month periods from the maturity date, subject to certain provisions of the loan agreement. This refinancing resulted in: (i) a change in the annual interest rate from a fixed rate of 4.62% to a variable rate with a floor of 4.15% and (ii) net refinancing proceeds of approximately $5.6 million that were distributed to the partners in Westwood Hills with FREIT Maryland receiving approximately $2.2 million based on its 40% membership interest in Westwood Hills. As of July 31, 2021, $25,000,000 of this loan was drawn and outstanding and the interest rate was based on the floor of 4.15%.

On April 3, 2019, WestFREIT Corp. exercised its option to extend its loan secured by the Westridge Square shopping center in Frederick, Maryland, held by M&T Bank, with a then outstanding balance of approximately $22.5 million, for twelve months. Effective beginning on June 1, 2019, the extension of this loan required monthly principal payments of $47,250 plus interest based on a floating interest rate equal to 240 basis points over the one-month LIBOR and had a maturity date of May 1, 2020. This loan was extended to November 1, 2020 and further extended to January 31, 2021 under the same terms and conditions of the existing agreement. WestFREIT Corp. entered into a loan extension and modification agreement with M&T Bank, effective beginning on February 1, 2021, which requires monthly principal payments of $49,250 plus interest based on a floating interest rate equal to 255 basis points over the one-month LIBOR and has a maturity date of January 31, 2022, with the option 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-up of certain space. As of July 31, 2021, approximately $21.3 million of this loan was outstanding and the interest rate was approximately 2.68%.

Interest rate swap contracts: To reduce interest rate volatility, FREIT Maryland uses a “pay fixed, receive floating” interest rate swap to convert floating interest rates to fixed interest rates over the term of a certain loan. FREIT Maryland enters into these swap contracts with a counterparty that is usually a high-quality commercial bank. In essence, FREIT Maryland agrees to pay its counterparties a fixed rate of interest on a dollar amount of notional principal (which generally corresponds to FREIT Maryland’s mortgage debt) over a term equal to the term of the mortgage notes. FREIT Maryland’s counterparties, in return, agree to pay FREIT Maryland a short-term rate of interest - generally LIBOR - on that same notional amount over the same term as the mortgage notes.

FREIT Maryland has variable interest rate loans secured by its Damascus Centre, Regency, Wayne PSC and Station Place properties. To reduce interest rate fluctuations, FREIT Maryland entered into interest rate swap contracts for each of these loans. These interest rate swap contracts effectively converted variable interest rate payments to fixed interest rate payments. The contracts were based on a notional amount of approximately $22,320,000 ($18,457,000 at July 31, 2021) for the Damascus Centre swaps, a notional amount of approximately $16,200,000 ($15,004,000 at July 31, 2021) for the Regency swap, a notional amount of approximately $25,800,000 ($22,520,000 at July 31, 2021) for the Wayne PSC swap and a notional amount of approximately $12,350,000 ($12,024,000 at July 31, 2021) for the Station Place swap.

Interest rate cap contract: To limit exposure on interest rate volatility, FREIT Maryland uses an interest rate cap contract to cap a floating interest rate at a set pre-determined rate. FREIT Maryland enters into cap contracts with a counterparty that is usually a high-quality commercial bank. In essence, so long as the floating interest rate is below the cap rate, FREIT Maryland agrees to pay its counterparties a variable rate of interest on a dollar amount of notional principal (which generally corresponds to FREIT Maryland’s mortgage debt). Once the floating interest rate rises above the cap rate, FREIT Maryland’s counterparties, in return, agree to pay FREIT Maryland a short-term rate of interest above the cap on that same notional amount.

FREIT Maryland has a variable interest rate loan secured by its Rotunda property. As part of the refinancing of Grande Rotunda’s construction loan with a new loan from Aareal Capital Corporation, Grande Rotunda had purchased an interest rate cap on LIBOR for the full amount that could have been drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan which matured on March 5, 2020. On February 28, 2020, Grande Rotunda had purchased an interest rate cap on LIBOR, with an effective date of March 5, 2020, for the full amount that could have been drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for one year, maturing on March 5, 2021. Effective February 6, 2021, Grande Rotunda exercised the first extension option on this loan with a balance in the amount of approximately $118.5 million, extending the loan one year with a new maturity date of February 6, 2022. 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. The cap contract was based on a notional amount of approximately $118,520,000 ($118,520,000 at July 31, 2021).details.)

In accordance with ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities to Accounting Standards Codification Topic 815, Derivatives and Hedging ("ASC 815")”, FREIT ~~Maryland~~ marks-to-market its interest rate swap and cap contracts. As the floating interest rate varies from time-to-time over the term of the contract, the value of the contract will change upward or downward. If the floating rate is higher than the fixed rate, the value of the contract goes up and there is a gain and an asset. If the floating rate is less than the fixed rate, there is a loss and a liability. The interest rate swaps and cap are accounted for as cash flow hedges with the corresponding gains or losses on these contracts not affecting ~~FREIT Maryland’s~~FREIT’s condensed consolidated statement of ~~income;~~operations; changes in the fair value of these cash flow hedges will be reported in other comprehensive income and appear in the equity section of the condensed consolidated balance sheet. This gain or loss represents the economic consequence of liquidating fixed rate swaps or the cap contract and replacing them with like-duration funding at current market rates, something we would likely never do. Periodic cash settlements of these contracts will be accounted for as an adjustment to interest expense.

FREIT ~~Maryland~~ has the following derivative-related risks with its interest rate swap and cap contracts (“contract”): 1) early termination risk, and 2) counterparty credit risk.

Early Termination Risk: If FREIT ~~Maryland~~ wants to terminate its contract before maturity, it would be bought out or terminated at market value; i.e., the difference in the present value of the anticipated net cash flows from each of the contract’s parties. If current variable interest rates are significantly below ~~FREIT Maryland’s~~FREIT’s fixed interest rate payments, this could be costly. Conversely, if interest rates rise above ~~FREIT Maryland’s~~FREIT’s fixed interest payments and FREIT ~~Maryland~~ elected early termination, FREIT ~~Maryland~~ would realize a gain on termination. At July 31, ~~2021,~~2022, the ~~swap contracts~~contract for ~~Damascus Centre,~~ Regency was in FREIT’s favor and the contract for Station Place ~~and Wayne PSC were~~was in the counterparties’ favor. If FREIT ~~Maryland~~ had terminated these contracts at that date, it would have realized ~~losses~~a gain of approximately ~~$0 for the Grande Rotunda cap, $391,000 for the Damascus Centre swaps, $1,030,000~~$116,000 for the Regency swap ~~$1,260,000~~and a loss of $16,000 for the Station Place ~~swap and $802,000 for the Wayne PSC~~ swap all of which have been included ~~as a liability~~ in ~~FREIT Maryland’s~~FREIT’s condensed consolidated balance sheet as at July 31, ~~2021.~~2022. The change in the fair value for the contract (gain or loss) during such period has been included in comprehensive income (loss) and for the nine and three months ended July 31, 2022, FREIT recorded an unrealized gain of approximately $2,408,000 and unrealized loss of $1,393,000, respectively, in the condensed consolidated statements of comprehensive income. For the nine and three months ended July 31, 2021, FREIT ~~Maryland~~ recorded an unrealized gain of approximately $1,441,000 and unrealized loss of $234,000, respectively, in the condensed consolidated statements of comprehensive income (loss). For the nine and three months ended July 31, 2020, FREIT Maryland recorded an unrealized loss of approximately $3,644,000 and $272,000, respectively, in the condensed consolidated statements of comprehensive income (loss).income.

Counterparty Credit Risk: Each party to a contract bears the risk that its counterparty will default on its obligation to make a periodic payment. FREIT ~~Maryland~~ reduces this risk by entering into a contract only with major financial institutions that are experienced market makers in the derivatives market.

Dividend: After careful consideration of FREIT Maryland’s projected operating results and cash needs, the Board of Directors (“Board”) declared a third quarter dividend of $0.05 per share which will be paid on September 15, 2021 to shareholders of record on September 1, 2021. The Board will continue to evaluate the dividend on a quarterly basis.

Funds From Operations (“FFO”) is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”). FREIT ~~Maryland~~ does not include ~~sources or~~ distributions from equity/~~debt~~debt/capital gain sources in its computation of FFO. Although many consider FFO as the standard measurement of a REIT’s performance, FREIT ~~Maryland~~ modified the NAREIT computation of FFO to include other adjustments to GAAP net income that are not considered by management to be the primary drivers of its decision making process. These adjustments to GAAP net income are straight-line rents and recurring capital improvements on ~~FREIT Maryland’s~~FREIT’s residential apartments. The modified FFO computation is referred to as Adjusted Funds From Operations (“AFFO”). FREIT ~~Maryland~~ believes that AFFO is a superior measure of its operating performance. FREIT ~~Maryland~~ computes FFO and AFFO as follows:

FFO and AFFO do not represent cash generated from operating activities in accordance with GAAP, and therefore should not be considered a substitute for net income as a measure of results of operations or for cash flow from operations as a measure of liquidity. Additionally, the application and calculation of FFO and AFFO by certain other REITs may vary materially from that of FREIT, ~~Maryland,~~ and therefore ~~FREIT Maryland’s~~FREIT’s FFO and AFFO may not be directly comparable to those of other REITs.

Inflation can impact the financial performance of FREIT ~~Maryland~~ in various ways. ~~FREIT Maryland’s~~FREIT’s commercial tenant leases normally provide that the tenants bear all or a portion of most operating expenses, which can reduce the impact of inflationary increases on ~~FREIT Maryland.~~FREIT. Apartment leases are normally for a one-year term, which may allow FREIT ~~Maryland~~ to seek increased rents as leases renew or when new tenants are obtained, subject to prevailing market conditions.

See “Commercial Segment”, “Residential Segment” and “Liquidity and Capital Resources” under Item 2 above for a detailed discussion of ~~FREIT Maryland’s~~FREIT’s quantitative and qualitative market risk disclosures.

At the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of ~~FREIT Maryland’s~~FREIT’s disclosure controls and procedures. This evaluation was carried out under the supervision and with participation of ~~FREIT Maryland’s~~FREIT’s management, including ~~FREIT Maryland’s~~FREIT’s Chief Executive Officer and Chief Financial Officer, who concluded that ~~FREIT Maryland’s~~FREIT’s disclosure controls and procedures are effective as of July 31, ~~2021.~~2022. There has been no change in ~~FREIT Maryland’s~~FREIT’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, ~~FREIT Maryland’s~~FREIT’s internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in ~~FREIT Maryland’s~~FREIT’s reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in ~~FREIT Maryland’s~~FREIT’s reports filed under the Exchange Act is accumulated and communicated to management, including ~~FREIT Maryland’s~~FREIT’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

~~On May 6, 2020, the Purchaser filed a complaint (the “Complaint”) against the Sellers in~~February 4, 2022, the Superior Court of New Jersey, 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)Monmouth County (“Court”) entered 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.

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~~litigation between certain affiliates of ~~the transactions contemplated by the~~FREIT (the “Sellers” or “Defendant”) and Sinatra Properties, LLC (“Sinatra” or “Plaintiff”). The litigation relates to a Purchase and Sale Agreement ~~based~~entered into on January 14, 2020 (“PSA”) between the ~~conduct~~Sellers and Sinatra involving the sale by the Sellers of 100% of their ownership interests in six (6) real properties held by the Sellers.

(1) The Court finds that the Plaintiff’s have breached the subject contract and the Court dismisses all claims for relief filed by the Plaintiff in this suit. The Court dismissed the Complaint and dismisses the Lis Pendens.

(2) The Court finds that the liquidated damage provision 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 claimscontract is not enforceable and the ~~prosecution of the Sellers’ counterclaims against the Purchaser, as provided for in the Purchase and Sale Agreement; (d) judgment declaring~~Court Orders 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~~held in escrow be returned to the ~~Sellers; (f) an order enjoining~~Plaintiff.

(3) The Court dismisses the ~~Purchaser~~Counterclaims and Third Party Complaint. All pleadings are dismissed.

On May 31, 2022, Sinatra filed a Motion for Reconsideration with the Court, requesting that the Court reconsider its ~~affiliates from engaging in further breaches~~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 PSA, (2) the Sellers did not breach the PSA and (3) the Court’s dismissal of the ~~Purchase~~Complaint 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~~On July 8, 2022, 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.~~Sinatra’s Motion for Reconsideration.

The Sellers have been evaluating the February 4, 2022 Order and their rights and remedies with respect thereto. The Sellers continue to believe that the allegations set forth in the Complaint ~~and Answer~~ filed by ~~the Purchaser~~Sinatra and in the Answer to Counterclaims and Third-Party Complaint and Affirmative Defenses filed by ~~the Purchaser~~Sinatra 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 6 to FREIT Maryland’s condensed consolidated financial statements for further details.)merit.

There were no material changes in any risk factors previously disclosed in FREIT’s Annual Report on Form 10-K for the year ended October 31, ~~2020,~~2021, that was filed with the Securities and Exchange Commission on January ~~29, 2021.~~28, 2022.

Exhibit 101 - The following materials from ~~FREIT Maryland’s~~FREIT’s quarterly report on Form 10-Q for the period ended July 31, ~~2021,~~2022, are formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of ~~operations;~~income; (iii) condensed consolidated statements of comprehensive ~~income (loss);~~income; (iv) condensed consolidated statements of equity; (v) condensed consolidated statements of cash flows; and (vi) notes to condensed consolidated financial statements.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 31, ~~2021~~2022
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________________ to ____________________
	Commission File No. 000-25043

FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, INC.
(Exact name of registrant as specified in its charter)
Maryland	22-1697095
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
505 Main Street, Hackensack, New Jersey	07601
(Address of principal executive offices)	(Zip Code)
~~201-488-6400~~201-488-6400
(~~Registrant's~~Registrant’s telephone number, including area code)
~~FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY~~
(Former name, former address and former fiscal year, if changed since last report)

	Title of each class		Trading Symbol(s)		Name of each exchange on which registered
	Common stock, par value $0.01 per share		FREVS		OTC Pink Market

Large Accelerated Filer ☐	Accelerated Filer ☐	Non-Accelerated Filer ☒	Smaller Reporting Company ☒
Emerging growth company ☐


Item 2:Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021

Item 3:Quantitative and Qualitative Disclosures About Market Risk	33

Item 4:Controls and Procedures	33


Part II:Other Information

Item 1:Legal Proceedings	34

Item 1A:Risk Factors	35

Item 6:Exhibits	35

Signatures	35

		July 31,		October 31,		July 31,		October 31,
		2021		2020		2022		2021
		(In Thousands of Dollars)				(In Thousands of Dollars)

Real estate, net	$	78,533	$	80,041	$	76,525	$	78,023
Cash and cash equivalents		911		754		1,801		1,338
Tenants' security accounts		494		523		456		484
Receivables and other assets		545		468		640		510
Total assets	$	80,483	$	81,786	$	79,422	$	80,355

Mortgages payable, net of unamortized debt issuance costs	$	49,757	$	49,956	$	49,492	$	49,691
Accounts payable and accrued expenses		241		314		221		261
Tenants' security deposits		495		535		461		484
Deferred revenue		93		56		129		99
Equity		29,897		30,925		29,119		29,820
Total liabilities & equity	$	80,483	$	81,786	$	79,422	$	80,355

FREIT's investment in TIC (65% interest)	$	19,433	$	20,101	$	18,927	$	19,383

			For the period from
	Nine Months Ended		February 28, 2020		Three Months Ended		Three Months Ended		Nine Months Ended July 31,				Three Months Ended July 31,
	July 31, 2021		through July 31, 2020		July 31, 2021		July 31, 2020		2022		2021		2022		2021
		(In Thousands of Dollars)				(In Thousands of Dollars)				(In Thousands of Dollars)				(In Thousands of Dollars)

Revenue	$	5,674	$	3,106	$	1,900	$	1,864	$	5,990	$	5,674	$	2,067	$	1,900
Operating expenses		3,225		1,689		1,111		1,046		3,307		3,225		1,032		1,111
Depreciation		1,623		895		542		537		1,634		1,623		547		542
Operating income		826		522		247		281		1,049		826		488		247

Interest expense including amortization of deferred financing costs		1,203		669		401		401		1,201		1,203		400		401

Net loss	$	(377)	$	(147)	$	(154)	$	(120)
Net (loss) income									$	(152)	$	(377)	$	88	$	(154)

FREIT's loss on investment in TIC (65% interest)	$	(245)	$	(96)	$	(100)	$	(78)
FREIT's (loss) income on investment in TIC (65% interest)									$	(99)	$	(245)	$	57	$	(100)

($ in Millions)	July 31, 2021	October 31, 2020	July 31, 2022	October 31, 2021

Fair Value	$304.2	$311.4	$136.8	$301.6

Carrying Value, Net	$301.2	$305.4	$138.3	$299.9


Recurring capital improvements - residential	$	(438	)	$	(353	)	$	(258	)	$	(127	)


Recurring capital improvements - residential	$	(401	)	$	(438	)	$	(195	)	$	(258	)


Reconciliation to condensed consolidated net income (loss) attributable to common equity:
Segment NOI	$	21,747		$	23,836		$	7,177		$	6,920
Deferred rents - straight lining		(225	)		(213	)		(12	)		(334	)
Investment income		88			174			29			38
General and administrative expenses		(4,143	)		(3,061	)		(1,413	)		(1,233	)
Third party transaction costs		0-			(4,606	)		0-			(87	)
Gain on deconsolidation of subsidiary		0-			27,680			0-			0-
Loss on investment in tenancy-in-common		(245	)		(96	)		(100	)		(78	)
Depreciation		(6,948	)		(7,887	)		(2,315	)		(2,425	)
Financing costs		(9,242	)		(11,032	)		(3,050	)		(3,121	)
Net income (loss)		1,032			24,795			316			(320	)
Net (income) loss attributable to noncontrolling interests in subsidiaries		(256	)		(18	)		(107	)		139
Net income (loss) attributable to common equity	$	776		$	24,777		$	209		$	(181	)


Reconciliation to condensed consolidated net income attributable to common equity:
Segment NOI	$	12,314		$	21,747		$	3,595		$	7,177
Deferred rents - straight lining		(25	)		(225	)		36			(12	)
Investment income		183			88			119			29
General and administrative expenses		(3,107	)		(4,143	)		(911	)		(1,413	)
(Loss) Gain on investment in tenancy-in-common		(99	)		(245	)		57			(100	)
Depreciation		(3,257	)		(6,948	)		(723	)		(2,315	)
Net gain on sale of Maryland properties		68,771			-			-			-
Net realized gain on Wayne PSC interest rate swap termination		1,415			-			1,415			-
Financing costs		(6,229	)		(9,242	)		(1,774	)		(3,050	)
Net income		69,966			1,032			1,814			316
Net income attributable to noncontrolling interests in subsidiaries		(23,420	)		(256	)		(693	)		(107	)
Net income attributable to common equity	$	46,546		$	776		$	1,121		$	209

	Nine and Three Months Ended July 31, 2022				Nine and Three Months Ended July 31, 2021
	No. of Options		Weighted Average		No. of Options		Weighted Average
	Outstanding		Price		Outstanding		Price
Options outstanding at beginning of period		310,740	$	18.35		310,740	$	18.35
Options granted during period		-		-		-		-
Options forfeited/cancelled during period		-		-		-		-
Options outstanding at end of period		310,740	$	18.35		310,740	$	18.35
Options vested and expected to vest		309,450				308,310
Options exercisable at end of period		301,140				284,940

	Nine Months Ended July 31, 2021				Nine Months Ended July 31, 2020
	No. of Options		Exercise		No. of Options		Exercise
	Outstanding		Price		Outstanding		Price
Options outstanding at beginning of period		310,740	$	18.35		310,740	$	18.35
Options granted during period		0-		0-		0-		0-
Options forfeited/cancelled during period		0-		0-		0-		0-
Options outstanding at end of period		310,740	$	18.35		310,740	$	18.35
Options vested and expected to vest		308,310				308,310
Options exercisable at end of period		284,940				268,740

Year Ending October 31,	Amount		Amount
2021*	$	17,294
2022		15,985
2022*			$	5,723
2023		13,674		5,608
2024		11,229		4,556
2025		9,077		3,850
2026				3,081
Thereafter		27,749		4,583
Total	$	95,008	$	27,401

*Amount represents full fiscal year


	Commercial									Residential									Combined
	Nine Months Ended									Nine Months Ended									Nine Months Ended
	July 31,				Increase (Decrease)					July 31,				Increase (Decrease)					July 31,
	2022		2021		$			%		2022		2021		$			%		2022		2021
	(In Thousands)									(In Thousands)									(In Thousands)
Rental income	$	6,624	$	13,410	$	(6,786	)		-50.6%	$	15,496	$	19,686	$	(4,190	)		-21.3%	$	22,120	$	33,096
Reimbursements		1,793		4,544		(2,751	)		-60.5%		20		123		(103	)		-83.7%		1,813		4,667
Other		28		345		(317	)		-91.9%		287		217		70			32.3%		315		562
Total revenue		8,445		18,299		(9,854	)		-53.8%		15,803		20,026		(4,223	)		-21.1%		24,248		38,325
Operating expenses		5,146		8,346		(3,200	)		-38.3%		6,788		8,232		(1,444	)		-17.5%		11,934		16,578
Net operating income	$	3,299	$	9,953	$	(6,654	)		-66.9%	$	9,015	$	11,794	$	(2,779	)		-23.6%		12,314		21,747

Average Occupancy % *		67.1%		69.1%					-2.0%		98.4%		97.2%					1.2%

	Commercial									Residential										Combined
	Three Months Ended									Three Months Ended										Three Months Ended
	July 31,				Increase (Decrease)					July 31,					Increase (Decrease)					July 31,
	2022		2021		$			%		2022			2021		$			%		2022		2021
	(In Thousands)									(In Thousands)										(In Thousands)
Rental income	$	1,618	$	4,423	$	(2,805	)		-63.4%	$	4,663		$	6,545	$	(1,882	)		-28.8%	$	6,281	$	10,968
Reimbursements		561		1,425		(864	)		-60.6%		(3	)		45		(48	)		-106.7%		558		1,470
Other		—		37		(37	)		-100.0%		84			79		5			6.3%		84		116
Total revenue		2,179		5,885		(3,706	)		-63.0%		4,744			6,669		(1,925	)		-28.9%		6,923		12,554
Operating expenses		1,227		2,535		(1,308	)		-51.6%		2,101			2,842		(741	)		-26.1%		3,328		5,377
Net operating income	$	952	$	3,350	$	(2,398	)		-71.6%	$	2,643		$	3,827	$	(1,184	)		-30.9%		3,595		7,177

Average Occupancy % *		65.9%		68.3%					-2.4%		97.8%			97.3%					0.5%

RETAIL:	Number of Leases		Lease Area (Sq. Ft.)		Weighted Average Lease Rate (per Sq. Ft.)		Weighted Average Prior Lease Rate (per Sq. Ft.)		% Increase (Decrease)		Tenant Improvement Allowance (per Sq. Ft.) (a)		Lease Commissions (per Sq. Ft.) (a)

Comparable leases (b)		16		132,909	$	12.60	$	15.81		-20.3%	$	-	$	0.16

Non-comparable leases		4		6,631	$	38.63		N/A		N/A	$	2.40	$	1.92

Total leasing activity		20		139,540

OFFICE:	Number of Leases		Lease Area (Sq. Ft.)		Weighted Average Lease Rate (per Sq. Ft.)		Weighted Average Prior Lease Rate (per Sq. Ft.)		% Increase (Decrease)		Tenant Improvement Allowance (per Sq. Ft.) (a)		Lease Commissions (per Sq. Ft.) (a)

Comparable leases (b)		12		29,800	$	33.15	$	32.13		3.2%	$	-	$	0.32

Non-comparable leases		2		4,053	$	23.72		N/A		N/A	$	-	$	1.34

Total leasing activity		14		33,853


NON-GAAP NET INCOME COMPONENTS	Nine Months Ended									Three Months Ended
	July 31,									July 31,
	2022			2021			Change			2022			2021			Change
	(In Thousands of Dollars)									(In Thousands of Dollars)
Income from real estate operations:
Commercial properties	$	3,274		$	9,728		$	(6,454	)	$	988		$	3,338		$	(2,350	)
Residential properties		9,015			11,794			(2,779	)		2,643			3,827			(1,184	)
Total income from real estate operations		12,289			21,522			(9,233	)		3,631			7,165			(3,534	)

Financing costs:
Fixed rate mortgages		(3,545	)		(4,348	)		803			(1,114	)		(1,445	)		331
Floating rate mortgages		(1,550	)		(3,873	)		2,323			(333	)		(1,292	)		959
Interest rate swap contracts breakage fee		(213	)		—			(213	)		—			—			—
Other - Corporate interest		(108	)		(183	)		75			(28	)		(43	)		15
Mortgage cost amortization		(813	)		(838	)		25			(299	)		(270	)		(29	)
Total financing costs		(6,229	)		(9,242	)		3,013			(1,774	)		(3,050	)		1,276

Investment income		183			88			95			119			29			90

General & administrative expenses:
Accounting fees		(367	)		(374	)		7			(116	)		(110	)		(6	)
Legal and professional fees		(1,322	)		(1,929	)		607			(312	)		(752	)		440
Directors fees		(792	)		(710	)		(82	)		(259	)		(245	)		(14	)
Stock option expense		(15	)		(35	)		20			(5	)		(11	)		6
Corporate expenses		(611	)		(1,095	)		484			(219	)		(295	)		76
Total general & administrative expenses		(3,107	)		(4,143	)		1,036			(911	)		(1,413	)		502

Depreciation		(3,257	)		(6,948	)		3,691			(723	)		(2,315	)		1,592
(Loss) Gain on investment in tenancy-in-common		(99	)		(245	)		146			57			(100	)		157
Adjusted net (loss) income		(220	)		1,032			(1,252	)		399			316			83

Net gain on sale of Maryland properties		68,771			—			68,771			—			—			—
Net realized gain on Wayne PSC interest rate swap termination		1,415			—			1,415			1,415			—			1,415
Net income		69,966			1,032			68,934			1,814			316			1,498

Net income attributable to noncontrolling interests in subsidiaries		(23,420	)		(256	)		(23,164	)		(693	)		(107	)		(586	)

Net income attributable to common equity	$	46,546		$	776		$	45,770		$	1,121		$	209		$	912

NET INCOME (LOSS) COMPONENTS	Nine Months Ended			Three Months Ended
	July 31,			July 31,
	2021	2020	Change	2021	2020	Change
	(In Thousands of Dollars)			(In Thousands of Dollars)
Income from real estate operations:
Commercial properties	$ 9,728	$ 10,615	$ (887)	$ 3,338	$ 2,842	$ 496
Residential properties	11,794	13,008	(1,214)	3,827	3,744	83
Total income from real estate operations	21,522	23,623	(2,101)	7,165	6,586	579

Financing costs:
Fixed rate mortgages	(4,348)	(5,773)	1,425	(1,445)	(1,718)	273
Floating rate mortgages	(3,873)	(4,190)	317	(1,292)	(1,092)	(200)
Other - Corporate interest	(183)	(270)	87	(43)	(60)	17
Mortgage cost amortization	(838)	(799)	(39)	(270)	(251)	(19)
Total financing costs	(9,242)	(11,032)	1,790	(3,050)	(3,121)	71

Investment income	88	174	(86)	29	38	(9)

General & administrative expenses:
Accounting fees	(374)	(507)	133	(110)	(181)	71
Legal and professional fees	(1,929)	(676)	(1,253)	(752)	(641)	(111)
Directors and consultant fees	(710)	(1,032)	322	(245)	(318)	73
Stock option expense	(35)	(35)	-	(11)	(11)	-
Corporate expenses	(1,095)	(811)	(284)	(295)	(82)	(213)
Total general & administrative expenses	(4,143)	(3,061)	(1,082)	(1,413)	(1,233)	(180)

Third party transaction costs	-	(4,606)	4,606	-	(87)	87
Depreciation	(6,948)	(7,887)	939	(2,315)	(2,425)	110
Loss on investment in tenancy-in-common	(245)	(96)	(149)	(100)	(78)	(22)
Adjusted net income (loss)	1,032	(2,885)	3,917	316	(320)	636
Gain on deconsolidation of subsidiary	-	27,680	(27,680)	-	-	-
Net income (loss)	1,032	24,795	(23,763)	316	(320)	636

Net (income) loss attributable to noncontrolling interests in subsidiaries	(256)	(18)	(238)	(107)	139	(246)

Net income (loss) attributable to common equity	$ 776	$ 24,777	$ (24,001)	$ 209	$ (181)	$ 390

Fiscal Year	2021	2022	2023	2024	2025	2026	2027	2028	2029
($ in millions)
Mortgage "Balloon" Payments	$0.0	$176.5 (A)	$34.8	$9.0	$13.9	$18.6	$0.0	$10.5	$26.0

(A) Includes the loan on the Rotunda property located in Baltimore, Maryland with a balloon payment in the amount of approximately $116 million due on February 6, 2022, which may be extended further for an additional one-year term at Grande Rotunda’s option.

	For the Nine Months Ended July 31,						For the Three Months Ended July 31,						For the Nine Months Ended July 31,						For the Three Months Ended July 31,
	2021			2020			2021			2020			2022			2021			2022			2021
	(In Thousands, Except Per Share)						(In Thousands, Except Per Share)						(In Thousands, Except Per Share)						(In Thousands, Except Per Share)
Funds From Operations ("FFO") (a)
Net income (loss)	$	1,032		$	24,795		$	316		$	(320	)
Net income													$	69,966		$	1,032		$	1,814		$	316
Depreciation of consolidated properties		6,948			7,887			2,315			2,425			3,257			6,948			723			2,315
Amortization of deferred leasing costs		363			601			131			363			107			363			19			131
Distributions to non-controlling interests		(960	)		(583	)		(450	)		-			(735	)		(960	)		(210	)		(450	)
Gain on deconsolidation of subsidiary		-			(27,680	)		-			-
Adjustment to loss in investment in tenancy-in-common for depreciation		1,055			582			352			349
Net gain on sale of Maryland properties														(68,771	)		—			—			—
Adjustment to loss on investment in tenancy-in-common for depreciation														1,062			1,055			355			352
Net realized gain on Wayne PSC interest rate swap termination														(1,415	)		—			(1,415	)		—
FFO	$	8,438		$	5,602		$	2,664		$	2,817		$	3,471		$	8,438		$	1,286		$	2,664

Per Share - Basic and Diluted	$	1.20		$	0.80		$	0.38		$	0.40		$	0.49		$	1.20		$	0.18		$	0.38

(a) As prescribed by NAREIT.

Adjusted Funds From Operations ("AFFO")
FFO	$	8,438		$	5,602		$	2,664		$	2,817		$	3,471		$	8,438		$	1,286		$	2,664
Deferred rents (Straight lining)		225			213			12			334			25			225			(36	)		12
Capital Improvements - Apartments		(438	)		(353	)		(258	)		(127	)		(401	)		(438	)		(195	)		(258	)
AFFO	$	8,225		$	5,462		$	2,418		$	3,024		$	3,095		$	8,225		$	1,055		$	2,418

Per Share - Basic and Diluted	$	1.17		$	0.78		$	0.34		$	0.43		$	0.44		$	1.17		$	0.15		$	0.34

Weighted Average Shares Outstanding:
*Basic*		7,016			6,989			7,022			6,998			7,038			7,016			7,040			7,022
*Diluted*		7,018			6,992			7,026			6,998			7,110			7,018			7,114			7,026

	FIRST REAL ESTATE INVESTMENT
		TRUST OF NEW JERSEY, INC.
		(Registrant)

Date: September 14, ~~2021~~2022
	/s/ Robert S. Hekemian, Jr.
		(Signature)
	Robert S. Hekemian, Jr.
	President and Chief Executive Officer
	(Principal Executive Officer)


	/s/ Allan Tubin
		(Signature)
	Allan Tubin
	Chief Financial Officer and Treasurer
	(Principal Financial/Accounting Officer)