Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jan. 31, 2014 | Mar. 12, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY | ' |
Entity Central Index Key | '0000036840 | ' |
Document Type | '10-Q | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Period End Date | 31-Jan-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--10-31 | ' |
Entity a Well-known Seasoned Issuer | 'No | ' |
Entity a Voluntary Filer | 'No | ' |
Entitys Reporting Status Current | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 6,921,743 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Real estate, at cost, net of accumulated depreciation | $203,877 | $205,451 |
Construction in progress | 14,986 | 12,092 |
Cash and cash equivalents | 25,088 | 7,801 |
Tenants' security accounts | 1,420 | 1,435 |
Receivables arising from straight-lining of rents | 4,213 | 4,259 |
Accounts receivable, net of allowance for doubtful accounts | 2,673 | 2,602 |
Secured loans receivable | 3,323 | 3,323 |
Prepaid expenses and other assets | 3,056 | 3,366 |
Escrow deposit - 1031 exchange | 9,761 | ' |
Acquired over market leases and in-place lease costs | 19 | 27 |
Deferred charges, net | 5,565 | 2,915 |
Interest rate swap contract | 1,050 | 980 |
Total Assets | 275,031 | 244,251 |
Liabilities: | ' | ' |
Mortgages payable | 225,897 | 199,423 |
Deferred trustee compensation plan | 8,107 | 7,813 |
Accounts payable and accrued expenses | 4,991 | 5,656 |
Dividends payable | 2,077 | 4,582 |
Tenants' security deposits | 2,113 | 2,118 |
Deferred revenue | 842 | 854 |
Total Liabilities | 244,027 | 220,446 |
Commitments and contingencies | ' | ' |
Common equity: | ' | ' |
Shares of beneficial interest without par value: 8,000,000 shares authorized; 6,993,152 shares issued | 24,969 | 24,969 |
Treasury stock, at cost: 71,409 shares @ January 31, 2014; 51,009 @ October 31, 2013 | -1,492 | -1,135 |
Dividends in excess of net income | -2,103 | -9,651 |
Accumulated other comprehensive income | 735 | 686 |
Total common equity | 22,109 | 14,869 |
Noncontrolling interests in subsidiaries | 8,895 | 8,936 |
Total equity | 31,004 | 23,805 |
Total Liabilities and Equity | $275,031 | $244,251 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Shares of benefical interest, no par value (in dollars per share) | ' | ' |
Shares of benefical interest, authorized | 8,000,000 | 8,000,000 |
Shares of benefical interest, issued | 6,993,152 | 6,993,152 |
Treasury stock at cost, shares | 71,409 | 51,009 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Revenue: | ' | ' |
Rental income | $8,992 | $8,890 |
Reimbursements | 1,283 | 1,392 |
Sundry income | 297 | 105 |
Revenue, Total | 10,572 | 10,387 |
Expenses: | ' | ' |
Operating expenses | 2,668 | 2,576 |
Management fees | 468 | 491 |
Real estate taxes | 1,864 | 1,870 |
Depreciation | 1,520 | 1,512 |
Expenses, Total | 6,520 | 6,449 |
Operating income | 4,052 | 3,938 |
Investment income | 42 | 50 |
Interest expense including amortization of deferred financing costs | -2,976 | -3,019 |
Income from continuing operations | 1,118 | 969 |
Income from discontinued operations | 7 | 731 |
Gain on sale of discontinued operations | 8,693 | ' |
Net income | 9,818 | 1,700 |
Net income attributable to noncontrolling interests in subsidiaries | -193 | -229 |
Net income attributable to common equity | 9,625 | 1,471 |
Earnings per share - basic: | ' | ' |
Continuing operations | $0.13 | $0.10 |
Discontinued operations | $1.26 | $0.11 |
Net income attributable to common equity | $1.39 | $0.21 |
Weighted average shares outstanding-basic | 6,932,000 | 6,942,000 |
Amounts attributable to common equity: | ' | ' |
Income from continuing operations | 925 | 740 |
Income from discontinued operations | 8,700 | 731 |
Net income attributable to common equity | $9,625 | $1,471 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net income | $9,818 | $1,700 |
Other comprehensive income: | ' | ' |
Unrealized gain (loss) on interest rate swap contract before reclassifications | -9 | 246 |
Amount reclassed from accumulated other comprehensive income to interest expense | 79 | 31 |
Net unrealized gain on interest rate swap contract | 70 | 277 |
Comprehensive income | 9,888 | 1,977 |
Net income attributable to noncontrolling interests | -193 | -229 |
Other comprehensive income: | ' | ' |
Unrealized gain on interest rate swap contract attributable to noncontrolling interests | -21 | -83 |
Comprehensive income attributable to noncontrolling interests | -214 | -312 |
Comprehensive income attributable to common equity | $9,674 | $1,665 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (USD $) | Shares of Beneficial Interest | Treasury Stock | Dividends in Excess of Net Income | Accumulated Other Comprehensive Income (Loss) | Total Common Equity | Noncontrolling Interests | Total |
In Thousands, unless otherwise specified | |||||||
Balance, beginning at Oct. 31, 2013 | $24,969 | ($1,135) | ($9,651) | $686 | $14,869 | $8,936 | $23,805 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' |
Treasury shares | ' | -357 | ' | ' | -357 | ' | -357 |
Distributions to noncontrolling interests | ' | ' | ' | ' | ' | -255 | -255 |
Net income | ' | ' | 9,625 | ' | 9,625 | 193 | 9,818 |
Dividends declared | ' | ' | -2,077 | ' | -2,077 | ' | -2,077 |
Net unrealized gain on interest rate swap | ' | ' | ' | 49 | 49 | 21 | -9 |
Balance, ending at Jan. 31, 2014 | $24,969 | ($1,492) | ($2,103) | $735 | $22,109 | $8,895 | $31,004 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) (USD $) | 3 Months Ended |
Jan. 31, 2014 | |
Statement of Stockholders' Equity [Abstract] | ' |
Dividends declared, per share | $0.30 |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Operating activities: | ' | ' |
Net income | $9,818 | $1,700 |
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations): | ' | ' |
Depreciation | 1,520 | 1,515 |
Amortization | 154 | 149 |
Net amortization of acquired leases | 5 | 6 |
Gain on sale of discontinued operation | -8,693 | ' |
Income tax adjustment on gain on sale of discontinued operation | ' | -720 |
Changes in operating assets and liabilities: | ' | ' |
Tenants' security accounts | 15 | 39 |
Accounts and straight-line rents receivable, prepaid expenses and other assets | 64 | 431 |
Accounts payable, accrued expenses and deferred trustee compensation | 448 | -853 |
Tenants' security deposits | -5 | -58 |
Deferred revenue | -12 | 162 |
Net cash provided by operating activities | 3,314 | 2,371 |
Investing activities: | ' | ' |
Capital improvements - existing properties | -2,055 | -261 |
Construction and pre-development costs | -2,679 | -1,610 |
Net cash used in investing activities | -4,734 | -1,871 |
Financing activities: | ' | ' |
Repayment of mortgages and construction loan | -12,226 | -23,851 |
Proceeds from mortgage loan refinancings | 19,700 | 42,750 |
Proceeds from construction loan | 19,000 | ' |
Deferred financing costs | -2,573 | -947 |
Dividends paid | -4,582 | -1,389 |
Repurchase of Company stock-Treasury shares | -357 | ' |
Distributions to noncontrolling interests | -255 | -278 |
Net cash provided by financing activities | 18,707 | 16,285 |
Net increase in cash and cash equivalents | 17,287 | 16,785 |
Cash and cash equivalents, beginning of period | 7,801 | 10,610 |
Cash and cash equivalents, end of period | 25,088 | 27,395 |
Supplemental disclosure of cash flow data: | ' | ' |
Interest paid | 2,680 | 2,779 |
Income taxes paid | ' | 1,245 |
Investing activities: | ' | ' |
Proceeds from sale of discontinued operation, held in escrow pending 1031 exchange | 9,770 | ' |
Accrued capital expenditures, construction costs, pre-development costs and interest | 2,043 | 1,210 |
Financing activities: | ' | ' |
Dividends declared but not paid | $2,077 | $2,083 |
Basis_of_presentation
Basis of presentation | 3 Months Ended |
Jan. 31, 2014 | |
Basis Of Presentation | ' |
Basis of presentation | ' |
Note 1 - Basis of presentation: | |
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 three-month period ended January 31, 2014 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 Annual Report on Form 10-K for the year ended October 31, 2013 of First Real Estate Investment Trust of New Jersey (“FREIT”). | |
Reclassifications: Certain revenue and expense accounts in the prior periods’ condensed consolidated financial statements and footnotes have been reclassified to conform to the current presentation. (See Note 5.) |
Adoption_of_recently_issued_ac
Adoption of recently issued accounting standards | 3 Months Ended |
Jan. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Adoption of recently issued accounting standards | ' |
Note 2 - Adoption of recently issued accounting standards: | |
In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update stated that the specific requirement in ASU 2011-05 to present items that are reclassified from other comprehensive income to net income alongside their respective components of net income and other comprehensive income will be deferred. In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. This update requires companies to present the effects on the line items of net income of significant reclassifications out of accumulated other comprehensive income if the amount being reclassified is required under U.S. generally accepted accounting principles to be reclassified in its entirety to net income in the same reporting period. ASU 2013-02 is effective prospectively for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2012 with early adoption permitted. The Company has adopted this guidance effective with its 1st quarter ended January 31, 2014. |
Earnings_per_share
Earnings per share | 3 Months Ended |
Jan. 31, 2014 | |
Earnings Per Share [Abstract] | ' |
Earnings per share | ' |
Note 3 - Earnings per share: | |
Basic earnings per share is calculated by dividing net income attributable to common equity (numerator) by the weighted average number of shares 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 and warrants, were issued during the period. Since FREIT does not have any outstanding dilutive securities, only basic earnings per share is presented. |
Interest_rate_swap_contract
Interest rate swap contract | 3 Months Ended |
Jan. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' |
Interest rate swap contract | ' |
Note 4 - Interest rate swap contract: | |
On December 26, 2012, Damascus Centre, LLC refinanced its $15 million construction loan with a variable rate $25 million mortgage loan of which $20 million has been drawn as of January 31, 2014. The new loan will mature on January 3, 2023. In connection therewith, on December 26, 2012, FREIT entered into an interest rate swap contract to reduce the impact of interest rate fluctuations on the LIBOR based variable rate mortgage. At January 31, 2014, the derivative financial instrument has a notional amount of approximately $19,638,000 and a current maturity date of January 2023. The contract effectively converts the LIBOR based variable rate to a fixed rate of 3.81%. In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, FREIT is accounting for this interest rate swap as a cash flow hedge and marks to market its fixed pay interest rate swap, taking into account present interest rates compared to the contracted fixed rate over the life of the contract. As of January 31, 2014, FREIT has recorded an asset of $1,050,000 representing the fair value of the swap, along with a corresponding increase to accumulated other comprehensive income of $735,000 and an increase to non-controlling interest of $315,000. The fair value is based on observable inputs (level 2 in the fair value hierarchy). |
Discontinued_operations
Discontinued operations | 3 Months Ended |
Jan. 31, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | ' |
Discontinued operations | ' |
Note 5 – Discontinued operations: | |
On May 2, 2012, FREIT’s Board authorized management to pursue the sale of its South Brunswick, NJ property, which consists of vacant land. The decision to sell this property was based on the Board’s desire to re-deploy the net proceeds arising from the sale to real estate assets in other areas of FREIT’s operations. A contract for the sale of the South Brunswick property was entered into, subject to the completion of the due diligence review, and the resolution of certain environmental issues. The due diligence period concluded in December 2013. On December 20, 2013, the South Brunswick property was sold for $11 million resulting in a capital gain of approximately $8.7 million net of sales fees and commissions. FREIT has structured this sale in a manner that qualifies it as a like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code. Such a transaction, if completed, will result in a deferral for income tax purposes of the $8.7 million capital gain, which is included in discontinued operations. The Company has identified replacement property related to this exchange and has until June 18, 2014 to complete an acquisition. | |
On August 29, 2012, FREIT sold its Heights Manor Apartments in Spring Lake Heights, NJ. In connection with the Heights Manor sale, FREIT recognized a capital gain of approximately $9.5 million of which it distributed approximately $5 million to its shareholders during the fiscal year ended October 31, 2012. As FREIT did not intend to distribute to its shareholders the remaining $4.5 million of capital gain, FREIT provided approximately $1.5 million federal and $400,000 state income taxes on such undistributed gain, which was charged to discontinued operations. In the quarter ended January 31, 2013, FREIT elected, under Section 858 of the Internal Revenue Code, to treat the $1.4 million dividend paid during such period as a distribution of the prior year’s capital gain and, accordingly, reversed $720,000 of the income tax liability, which has been credited to income from discontinued operations for the three-month period ended January 31, 2013. | |
On April 26, 2013, FREIT sold its Palisades Manor Apartments in Palisades Park, New Jersey for $1.6 million and recognized a capital gain of approximately $1.4 million from the sale. On August 13, 2013, FREIT sold its Grandview Apartments in Hasbrouck Heights, New Jersey for $2.5 million and recognized a capital gain of approximately $2.2 million from the sale of this property. | |
The gain from the sale of the South Brunswick property described above, as well as the related results of operations for the other three properties described above, have been classified as discontinued operations in the accompanying statements of income for all periods presented. Revenue attributable to discontinued operations for the three-month period ended January 31, 2014 and January 31, 2013 was $0 and $114,000, respectively. |
Management_agreement_fees_and_
Management agreement, fees and transactions with related party | 3 Months Ended |
Jan. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Management agreement, fees and transactions with related party | ' |
Note 6 - Management agreement, fees and transactions with related party: | |
Hekemian & Co., Inc. (“Hekemian”) currently manages all the properties owned by FREIT and its affiliates, except for The Rotunda, a mixed-use office and retail facility located in Baltimore, Maryland, which is managed by an independent third party management company. The management agreement with Hekemian, effective November 1, 2001, requires the payment of management fees equal to a percentage of rents collected. Such fees were approximately $444,000 and $468,000 for the three-month periods ended January 31, 2014 and 2013, respectively. In addition, the management agreement provides for the payment to Hekemian of leasing commissions, as well as the reimbursement of operating expenses incurred on behalf of FREIT. Such items amounted to approximately $69,000 and $128,000 for the three-months ended January 31, 2014 and 2013, respectively. The management agreement expires on October 31, 2015, and is automatically renewed for periods of two years unless either party gives notice of non-renewal. | |
FREIT also uses the resources of the Hekemian insurance department to secure various insurance coverages for its properties and subsidiaries. Hekemian is paid a commission for these services. Such commissions amounted to approximately $30,000 and $30,000 for the three-months ended January 31, 2014 and 2013, respectively. | |
From time to time, FREIT engages Hekemian to provide certain additional services, such as consulting services related to development, property sales and financing activities of FREIT. Separate fee arrangements are negotiated between Hekemian and FREIT with respect to such additional services. In connection with the development activities at the Rotunda, which is owned and operated by Grande Rotunda, LLC, a definitive agreement for the development services to be provided by Hekemian Development Resources LLC (“Resources”), a wholly owned subsidiary of Hekemian, has been approved and executed. Such fees incurred to Hekemian and Resources during the three-months ended January 31, 2014 and 2013 were $429,000 and $239,000, respectively. Fees paid in the current three-month period relate to $330,000 in commissions paid to Hekemian relative to the South Brunswick sale and $99,000 related to services performed with regard to the Hammel Gardens and Steuben Arms mortgage loan refinancings. Fees paid in the prior year’s three-month period relate to services performed relative to the Westwood Plaza and Damascus shopping center mortgage loan refinancings. | |
Mr. Robert S. Hekemian, Chairman of the Board, Chief Executive Officer and a Trustee of FREIT, is the Chairman of the Board and Chief Executive Officer of Hekemian. Mr. Robert S. Hekemian, Jr, a Trustee of FREIT, is the President of Hekemian. Trustee fee expense (including interest) incurred by FREIT for the three-months ended January 31, 2014 and 2013 was approximately $156,000 and $143,000, respectively, for Mr. Robert S. Hekemian, and $11,000 and $9,000, respectively, for Mr. Robert S. Hekemian, Jr. |
Segment_information
Segment information | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Segment information | ' | ||||||||
Note 7 - Segment information: | |||||||||
FREIT has determined that it has two reportable segments: commercial properties and residential properties. These reportable segments offer different types of space, have different types of tenants, and are managed separately because each requires different operating strategies and management expertise. The commercial segment contains ten (10) separate properties and the residential segment contains six (6) properties. The accounting policies of the segments are the same as those described in Note 1 in FREIT’s Annual Report on Form 10-K for the fiscal year ended October 31, 2013. | |||||||||
The chief operating and decision-making group of FREIT's commercial segment, residential segment and corporate/other is comprised of FREIT’s Board of Trustees (“Board”). | |||||||||
FREIT assesses and measures segment operating results based on net operating income ("NOI"). NOI, a standard used by real estate professionals, is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), lease amortization, 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. | |||||||||
Continuing 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-common equity for the three-month period ended January 31, 2014 and 2013. Asset information is not reported since FREIT does not use this measure to assess performance. | |||||||||
Three Months Ended | |||||||||
January 31, | |||||||||
2014 | 2013 | ||||||||
(In Thousands) | |||||||||
Real estate rental revenue: | |||||||||
Commercial | $ | 5,707 | $ | 5,861 | |||||
Residential | 4,916 | 4,588 | |||||||
Total real estate revenue | 10,623 | 10,449 | |||||||
Real estate operating expenses: | |||||||||
Commercial | 2,324 | 2,225 | |||||||
Residential | 2,274 | 2,289 | |||||||
Total real estate operating expenses | 4,598 | 4,514 | |||||||
Net operating income: | |||||||||
Commercial | 3,383 | 3,636 | |||||||
Residential | 2,642 | 2,299 | |||||||
Total net operating income | $ | 6,025 | $ | 5,935 | |||||
Recurring capital improvements-residential | $ | (104 | ) | $ | (57 | ) | |||
Reconciliation to consolidated net income: | |||||||||
Segment NOI | $ | 6,025 | $ | 5,935 | |||||
Deferred rents - straight lining | (46 | ) | (56 | ) | |||||
Amortization of acquired leases | (5 | ) | (6 | ) | |||||
Investment income | 42 | 50 | |||||||
General and administrative expenses | (402 | ) | (423 | ) | |||||
Depreciation | (1,520 | ) | (1,512 | ) | |||||
Financing costs | (2,976 | ) | (3,019 | ) | |||||
Income from continuing operations | 1,118 | 969 | |||||||
Income from discontinued operations | 7 | 731 | |||||||
Gain on sale of discontinued operation | 8,693 | — | |||||||
Net income | 9,818 | 1,700 | |||||||
Net income attributable to noncontrolling | |||||||||
interests | (193 | ) | (229 | ) | |||||
Net income attributable to common equity | $ | 9,625 | $ | 1,471 |
Mortgages_Refinancing
Mortgages Refinancing | 3 Months Ended |
Jan. 31, 2014 | |
Debt Disclosure [Abstract] | ' |
Mortgage Refinancing | ' |
Note 8 – Mortgage refinancings: | |
On January 14, 2013, FREIT refinanced its Westwood Plaza mortgage loan in the amount of $8.0 million, with a new mortgage loan in the amount of $22,750,000. The new loan is at a fixed interest rate of 4.75%, and matures in January 2023. Excess funds from this refinancing will be used to fund tenant fit-up costs at our retail shopping centers, as well as other operational and financing cash flow needs. | |
On May 28, 2013, the balance of the Grande Rotunda LLC acquisition loan amounting to $19 million was purchased from the bank by FREIT. The due date of the loan was May 1, 2013. While the bank agreed to an additional extension of ninety-days (90) from May 1, 2013, FREIT elected to purchase the Rotunda loan from the bank and have all the bank’s rights assigned to FREIT. It was FREIT’s intention to sell this loan to the lender providing the construction financing for the expansion of the Rotunda project. On December 9, 2013, FREIT’s 60% owned affiliate, Grande Rotunda, LLC, closed with Wells Fargo Bank on a construction loan of up to $120 million to be used to reconfigure and expand its Rotunda property in Baltimore, MD. The construction loan is for a term of four (4) years, with one 12-month extension, at a rate of 225 basis points over the monthly LIBOR. As of January 31, 2014, $19 million of this loan was drawn down, and the funds used to pay off the loan to FREIT. | |
On November 19, 2013, FREIT refinanced the mortgages on its Hammel Gardens and Steuben Arms properties that were scheduled to mature on December 1, 2013. The mortgages, aggregating $9.4 million, were refinanced for $19.7 million. The new mortgage amounts reflect, in part, the appreciated value of those assets. This refinancing resulted in: (i) a reduction of annual interest costs from 6.4% to 4.54%, and (ii) net refinancing proceeds of approximately $10 million that are available for capital expenditures and general corporate purposes. |
Fair_value_of_longterm_debt
Fair value of long-term debt | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||
Fair value of long-term debt | ' | ||||||||
Note 9 – Fair value of long-term debt: | |||||||||
The following table shows the estimated fair value and carrying value of FREIT’s long-term debt at January 31, 2014 and October 31, 2013: | |||||||||
January 31, | October 31, | ||||||||
($ In Millions) | 2014 | 2013 | |||||||
Fair Value | $ | 227.1 | $ | 201.9 | |||||
Carrying Value | $ | 225.9 | $ | 199.4 | |||||
Fair values are estimated based on market interest rates at January 31, 2014 and October 31, 2013 and on discounted cash flow analysis. Changes in assumptions or estimation methods may significantly affect these fair value estimates. The fair value, which is based on observable inputs, has been characterized as level 2 in the fair value hierarchy as provided by authoritative guidance. |
Income_taxes
Income taxes | 3 Months Ended |
Jan. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income taxes | ' |
Note 10 – Income taxes: | |
FREIT distributed as dividends to its shareholders 100% of its ordinary taxable income for the fiscal year end October 31, 2013 and intends to distribute as dividends 100% of its ordinary taxable income for the fiscal year ending October 31, 2014. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income was recorded on the Company’s financial statements. As described in Note 5, FREIT intends to complete a like-kind exchange with respect to the sale of the South Brunswick, NJ property, which was sold on December 20, 2013 at a gain of approximately $8.7 million. Accordingly, no provision for federal or state income taxes related to such gain was recorded in the Company’s financial statements. In Fiscal 2012, FREIT distributed $5 million of the $9.5 million capital gain realized from the sale of its Heights Manor Apartments (see Note 5). However, since FREIT did not intend to distribute to its shareholders the remaining $4.5 million of capital gain realized on the Heights Manor sale, FREIT provided approximately $1.5 million federal and $400,000 state income taxes on such undistributed gain, which was charged to discontinued operations in Fiscal 2012. In the quarter ended January 31, 2013, FREIT decided to elect, under Section 858 of the Internal Revenue Code, to treat the $1.4 million dividend paid during such period as a distribution of the prior year’s capital gain and, accordingly, reversed $720,000 of the income tax liability, which has been credited to income from discontinued operations for the three-month period ended January 31, 2013. | |
As of January 31, 2014, the Company had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended October 31, 2010 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
Share_repurchases
Share repurchases | 3 Months Ended |
Jan. 31, 2014 | |
Equity [Abstract] | ' |
Share repurchases | ' |
Note 11 – Share repurchases: | |
On December 4, 2013, FREIT’s Board of Trustees authorized the repurchase of up to 24,400 FREIT shares. On December 17, 2013, FREIT repurchased 20,400 shares in a privately-negotiated transaction with an unaffiliated party for an aggregate purchase price of $357,000, or $17.50 per share. |
Segment_information_Tables
Segment information (Tables) | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Schedule of segment and related information | ' | ||||||||
Continuing 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-common equity for the three-month period ended January 31, 2014 and 2013. Asset information is not reported since FREIT does not use this measure to assess performance. | |||||||||
Three Months Ended | |||||||||
January 31, | |||||||||
2014 | 2013 | ||||||||
(In Thousands) | |||||||||
Real estate rental revenue: | |||||||||
Commercial | $ | 5,707 | $ | 5,861 | |||||
Residential | 4,916 | 4,588 | |||||||
Total real estate revenue | 10,623 | 10,449 | |||||||
Real estate operating expenses: | |||||||||
Commercial | 2,324 | 2,225 | |||||||
Residential | 2,274 | 2,289 | |||||||
Total real estate operating expenses | 4,598 | 4,514 | |||||||
Net operating income: | |||||||||
Commercial | 3,383 | 3,636 | |||||||
Residential | 2,642 | 2,299 | |||||||
Total net operating income | $ | 6,025 | $ | 5,935 | |||||
Recurring capital improvements-residential | $ | (104 | ) | $ | (57 | ) | |||
Reconciliation to consolidated net income | ' | ||||||||
Reconciliation to consolidated net income: | |||||||||
Segment NOI | $ | 6,025 | $ | 5,935 | |||||
Deferred rents - straight lining | (46 | ) | (56 | ) | |||||
Amortization of acquired leases | (5 | ) | (6 | ) | |||||
Investment income | 42 | 50 | |||||||
General and administrative expenses | (402 | ) | (423 | ) | |||||
Depreciation | (1,520 | ) | (1,512 | ) | |||||
Financing costs | (2,976 | ) | (3,019 | ) | |||||
Income from continuing operations | 1,118 | 969 | |||||||
Income from discontinued operations | 7 | 731 | |||||||
Gain on sale of discontinued operation | 8,693 | — | |||||||
Net income | 9,818 | 1,700 | |||||||
Net income attributable to noncontrolling | |||||||||
interests | (193 | ) | (229 | ) | |||||
Net income attributable to common equity | $ | 9,625 | $ | 1,471 |
Fair_value_of_longterm_debt_Ta
Fair value of long-term debt (Tables) | 3 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||
Schedule of estimated fair value and carrying value of long-term debt | ' | ||||||||
The following table shows the estimated fair value and carrying value of FREIT’s long-term debt at January 31, 2014 and October 31, 2013: | |||||||||
January 31, | October 31, | ||||||||
($ In Millions) | 2014 | 2013 | |||||||
Fair Value | $ | 227.1 | $ | 201.9 | |||||
Carrying Value | $ | 225.9 | $ | 199.4 |
Interest_rate_swap_contract_De
Interest rate swap contract (Details Narrative) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Oct. 31, 2013 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' |
Notional amount of interest rate swap | $19,638 | ' |
Maturity date | 3-Jan-23 | ' |
Description of swap | 'The contract effectively converts the LIBOR based variable rate to a fixed rate of 3.81%. | ' |
Fixed interest rate | 3.81% | ' |
Increase to non-controlling interest | 315,000 | ' |
Interest rate swap contract | 1,050 | 980 |
Accumulated other comprehensive income | $735 | $686 |
Discontinued_operations_Detail
Discontinued operations (Details Narrative) (USD $) | 3 Months Ended | 3 Months Ended | |||||||
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 |
Heights Manor Apartments | Palisades Manor Apartments | Palisades Manor Apartments | Grandview Apartments | South Brunswick property | Federal | State | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Description of discontinued operations | ' | ' | 'The gains from the sales of the three discontinued properties described above, as well as the related results of operations, have been classified as discontinued operations in the accompanying statements of income for all periods presented. | 'The gains from the sales of the three discontinued properties described above, as well as the related results of operations, have been classified as discontinued operations in the accompanying statements of income for all periods presented. | ' | 'The gains from the sales of the three discontinued properties described above, as well as the related results of operations, have been classified as discontinued operations in the accompanying statements of income for all periods presented. | 'The gains from the sales of the three discontinued properties described above, as well as the related results of operations, have been classified as discontinued operations in the accompanying statements of income for all periods presented. | ' | ' |
Status of disposal | ' | ' | 'On August 29, 2012, FREIT sold its Heights Manor Apartments in Spring Lake Heights, NJ. | 'On April 26, 2013, FREIT sold its Palisades Manor Apartments in Palisades Park, New Jersey. | ' | 'On August 13, 2013, FREIT sold its Grandview Apartments in Hasbrouck Heights, New Jersey. | 'On May 2, 2012, FREIT's Board authorized management to pursue the sale of its South Brunswick, NJ property, which consist of vacant land. | ' | ' |
Sale of property | ' | ' | ' | $1,600 | ' | $2,500 | $11,000 | ' | ' |
Capital gain on sale of apartments | ' | ' | 9,500 | 1,400 | ' | 2,200 | 8,700 | ' | ' |
Deferred gain, if sale structured as like-kind exchange | ' | ' | ' | ' | 1,400 | ' | 8,700 | ' | ' |
Distributions to shareholders | ' | ' | 1,400 | ' | ' | ' | ' | ' | ' |
Income taxes on undistributed gains | ' | ' | ' | ' | ' | ' | ' | 1,500 | 400 |
Income tax adjustment on gain on sale of discontinued operation | ' | -720 | -720 | ' | ' | ' | ' | ' | ' |
Revenue from discontinued operations | $0 | $114 | ' | ' | ' | ' | ' | ' | ' |
Management_agreement_fees_and_1
Management agreement, fees and transactions with related party (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | |||||||||
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Oct. 31, 2012 | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2013 |
Managing Agent "Hekemian" | Managing Agent "Hekemian" | Managing Agent "Hekemian" | Managing Agent "Hekemian" | Resources - Rotunda Redevelopment Project | Resources - Rotunda Redevelopment Project | Robert S. Hekemian | Robert S. Hekemian | Robert S. Hekemian, Jr. | Robert S. Hekemian, Jr. | |||
Hammel Gardens and Steuben Arms | South Brunswick property | |||||||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Asset management fees | $468 | $491 | $444 | $468 | ' | ' | ' | ' | ' | ' | ' | ' |
Leasing commissions and reimbursement of operating expenses | ' | ' | 69 | 128 | ' | ' | ' | ' | ' | ' | ' | ' |
Insurance commissions | ' | ' | 30 | 30 | ' | ' | ' | ' | ' | ' | ' | ' |
Automatic renewed periods for management agreement which expires on October 31, 2013 (in years) | ' | ' | 2 | 2 | ' | ' | ' | ' | ' | ' | ' | ' |
Consulting services expense | ' | ' | ' | ' | ' | ' | 429 | 239 | ' | ' | ' | ' |
Sales commissions | ' | ' | ' | ' | ' | 330 | ' | ' | ' | ' | ' | ' |
Other fees - refinancing | ' | ' | ' | ' | 99 | ' | ' | ' | ' | ' | ' | ' |
Trustee fee expense | ' | ' | ' | ' | ' | ' | ' | ' | $156 | $143 | $11 | $9 |
Segment_information_Details
Segment information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Reportable Segments | ' | ' |
Real estate rental revenue | $8,992 | $8,890 |
Real estate operating expenses | 6,520 | 6,449 |
Operating income | 4,052 | 3,938 |
Commercial | ' | ' |
Reportable Segments | ' | ' |
Real estate rental revenue | 5,707 | 5,861 |
Real estate operating expenses | 2,324 | 2,225 |
Operating income | 3,383 | 3,636 |
Number of properties | 10 | ' |
Residential | ' | ' |
Reportable Segments | ' | ' |
Real estate rental revenue | 4,916 | 4,588 |
Real estate operating expenses | 2,274 | 2,289 |
Operating income | 2,642 | 2,299 |
Recurring capital improvements | -104 | -57 |
Number of properties | 6 | ' |
Total Reportable Segments | ' | ' |
Reportable Segments | ' | ' |
Real estate rental revenue | 10,623 | 10,449 |
Real estate operating expenses | 4,598 | 4,514 |
Operating income | $6,025 | $5,935 |
Segment_information_Details_1
Segment information (Details 1) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Jan. 31, 2014 | Jan. 31, 2013 |
Reconciliation to consolidated net income: | ' | ' |
Segment NOI | $6,025 | $5,935 |
Deferred rents - straight lining | -46 | -56 |
Amortization of acquired leases | -5 | -6 |
Investment income | 42 | 50 |
General and administrative expenses | -402 | -423 |
Depreciation | -1,520 | -1,512 |
Financing costs | -2,976 | -3,019 |
Income from continuing operations | 1,118 | 969 |
Income from discontinued operations | 7 | 731 |
Gain on sale of discontinued operations, net of tax | 8,693 | ' |
Net income | 9,818 | 1,700 |
Net income attributable to noncontrolling interests | -193 | -229 |
Net income attributable to common equity | $9,625 | $1,471 |
Mortgage_refinancing_Details_N
Mortgage refinancing (Details Narrative) (USD $) | 28-May-13 | Jan. 31, 2014 | Jan. 31, 2014 | Sep. 30, 2013 | Jan. 31, 2014 |
In Thousands, unless otherwise specified | Westwood Plaza Mortgage Loan | Construction Loan - Rotunda Project | Construction Loan - Rotunda Project | Hammel Gardens and Steuben Arms Mortgage Loans | |
Original loan amount - refinanced | ' | $8,000 | ' | ' | $9,400 |
Amount of new loan | ' | 22,750 | ' | 120,000 | 19,700 |
Fixed interest rate | ' | 4.75% | ' | ' | ' |
End date of loan | ' | 3-Jan-23 | ' | ' | ' |
Repurchase amount of acquisition loan | 19,000 | ' | ' | ' | ' |
Start date of loan | ' | ' | 30-Sep-13 | ' | 1-Dec-13 |
Description of variable interest rate | ' | ' | 'A rate of 225 basis points over the monthly LIBOR | ' | ' |
Basis points, interest rate | ' | ' | 2.25% | ' | ' |
Amount drawn on loan | ' | ' | 19,000 | ' | ' |
Term of the loan | ' | ' | '4 years | ' | ' |
Description of refinance arrangement | ' | ' | ' | ' | 'This refinancing resulted in: (i) a reduction of annual interest costs from 6.4% to 4.54%. |
Net proceeds from refinancing of debt | ' | ' | ' | ' | $10,000 |
Fair_value_of_longterm_debt_De
Fair value of long-term debt (Details) (USD $) | Jan. 31, 2014 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value Disclosures [Abstract] | ' | ' |
Fair value of long-term debt | $227,100 | $201,900 |
Carrying value of long-term debt | $225,897 | $199,423 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) | 3 Months Ended | |
Jan. 31, 2014 | Jan. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Ordinary taxable income distributed as dividends (percentage) | 100.00% | 100.00% |
Share_repurchases_Details_Narr
Share repurchases (Details Narrative) (USD $) | 0 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 17, 2013 | Dec. 04, 2013 |
Equity [Abstract] | ' | ' |
Number of shares authorized to repurchase | ' | 24,400 |
Number of shares repurchased | 20,400 | ' |
Shares repurchased, value | $357 | ' |
Stock repurchased price (per share) | $17.50 | ' |