Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2019 | Mar. 11, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY | |
Entity Central Index Key | 0000036840 | |
Document Type | 10-Q | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Period End Date | Jan. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 6,758,554 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
ASSETS | ||
Real estate, at cost, net of accumulated depreciation | $ 336,531 | $ 344,532 |
Real estate held for sale, at cost, net of accumulated depreciation (Note 13) | 6,212 | |
Construction in progress | 259 | 159 |
Cash and cash equivalents | 23,633 | 21,747 |
Tenants' security accounts | 2,212 | 2,212 |
Receivables arising from straight-lining of rents | 4,031 | 3,964 |
Accounts receivable, net of allowance for doubtful accounts of $259 and $276 as of January 31, 2019 and October 31, 2018, respectively | 2,045 | 2,298 |
Secured loans receivable | 4,000 | 4,000 |
Prepaid expenses and other assets | 5,672 | 6,034 |
Deferred charges, net | 2,653 | 2,693 |
Interest rate cap and swap contracts | 2,076 | 4,434 |
Total Assets | 389,324 | 392,073 |
Liabilities: | ||
Mortgages payable | 349,417 | 350,504 |
Less unamortized debt issuance costs | 3,204 | 3,498 |
Mortgages payable, net | 346,213 | 347,006 |
Due to affiliate | 5,488 | 5,417 |
Deferred trustee compensation payable | 8,457 | 8,457 |
Accounts payable and accrued expenses | 2,216 | 1,910 |
Dividends payable | 1,014 | 338 |
Tenants' security deposits | 3,303 | 3,232 |
Deferred revenue | 1,104 | 1,369 |
Interest rate swap contracts | 160 | |
Total Liabilities | 367,955 | 367,729 |
Commitments and contingencies | ||
Common equity: | ||
Shares of beneficial interest without par value: 8,000,000 shares authorized; 6,993,152 shares issued plus 172,599 and 157,395 vested share units granted to Trustees at January 31, 2019 and October 31, 2018, respectively | 28,556 | 28,288 |
Treasury stock, at cost: 234,598 and 235,536 shares at January 31, 2019 and October 31, 2018, respectively | (4,921) | (4,941) |
Dividends in excess of net income | (4,957) | (4,376) |
Accumulated other comprehensive income | 819 | 2,517 |
Total Common Equity | 19,497 | 21,488 |
Noncontrolling interests in subsidiaries | 1,872 | 2,856 |
Total Equity | 21,369 | 24,344 |
Total Liabilities and Equity | $ 389,324 | $ 392,073 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 259 | $ 276 |
Shares of benefical interest, no par value | ||
Shares of benefical interest, authorized | 8,000,000 | 8,000,000 |
Shares of benefical interest, issued | 6,993,152 | 6,993,152 |
Vested share units to trustees, issued | 172,599 | 157,395 |
Treasury stock at cost, shares | 234,598 | 235,536 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Revenue: | ||
Rental income | $ 13,161 | $ 12,390 |
Reimbursements | 1,658 | 1,576 |
Sundry income | 109 | 228 |
Total revenue | 14,928 | 14,194 |
Expenses: | ||
Operating expenses | 3,867 | 4,142 |
Management fees | 637 | 611 |
Real estate taxes | 2,430 | 2,553 |
Depreciation | 2,824 | 2,711 |
Total expenses | 9,758 | 10,017 |
Operating income | 5,170 | 4,177 |
Investment income | 71 | 55 |
Unrealized loss on interest rate cap contract | (154) | |
Interest expense including amortization of deferred financing costs | (4,652) | (5,152) |
Net income (loss) | 435 | (920) |
Net loss attributable to noncontrolling interests in subsidiaries | 24 | 563 |
Net income (loss) attributable to common equity | $ 459 | $ (357) |
Earnings (Loss) per share - basic and diluted | $ 0.07 | $ (0.05) |
Weighted average shares outstanding: | ||
Basic and Diluted | 6,915 | 6,862 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 435,000 | $ (920,000) |
Other comprehensive (loss) income: | ||
Unrealized (loss) gain on interest rate swap contracts before reclassifications | (2,276,000) | 1,547,000 |
Amount reclassified from accumulated other comprehensive income to interest expense | (88,000) | 84,000 |
Net unrealized (loss) gain on interest rate swap contracts | (2,364,000) | 1,631,000 |
Comprehensive (loss) income | (1,929,000) | 711,000 |
Net loss attributable to noncontrolling interests | 24,000 | 563,000 |
Other comprehensive loss: | ||
Unrealized loss (gain) on interest rate swap contracts attributable to noncontrolling interests | 666,000 | (533,000) |
Comprehensive loss attributable to noncontrolling interests | 690,000 | 30,000 |
Comprehensive (loss) income attributable to common equity | $ (1,239,000) | $ 741,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - USD ($) | Shares of Beneficial Interest [Member] | Treasury Shares at Cost [Member] | Dividends in Excess of Net Income [Member] | Accumulated Other Comprehensive Income [Member] | Total Common Equity [Member] | Noncontrolling Interests [Member] | Total | |
Balance at Oct. 31, 2017 | $ 27,651,000 | $ (5,273,000) | $ (4,824,000) | $ 284,000 | $ 17,838,000 | $ 10,752,000 | $ 28,590,000 | |
Stock based compensation expense | 31,000 | 31,000 | 31,000 | |||||
Vested share units granted to Trustees | 201,000 | 201,000 | 201,000 | |||||
Distributions to noncontrolling interests | (6,084,000) | (6,084,000) | ||||||
Net income (loss) | (357,000) | (357,000) | (563,000) | (920,000) | ||||
Net unrealized gain (loss) on interest rate swaps | 1,098,000 | 1,098,000 | 533,000 | 1,631,000 | ||||
Balance at Jan. 31, 2018 | 27,883,000 | (5,273,000) | (5,181,000) | 1,382,000 | 18,811,000 | 4,638,000 | 23,449,000 | |
Balance at Oct. 31, 2017 | 27,651,000 | (5,273,000) | (4,824,000) | 284,000 | 17,838,000 | 10,752,000 | 28,590,000 | |
Net unrealized gain (loss) on interest rate swaps | 3,113,000 | |||||||
Balance at Oct. 31, 2018 | 28,288,000 | (4,941,000) | (4,376,000) | 2,517,000 | 21,488,000 | 2,856,000 | 24,344,000 | |
Stock based compensation expense | 34,000 | 34,000 | 34,000 | |||||
Vested share units granted to trustees and consultant | 254,000 | 254,000 | 254,000 | |||||
Vested share units issued to consultant | [1] | (20,000) | 20,000 | |||||
Distributions to noncontrolling interests | (294,000) | (294,000) | ||||||
Net income (loss) | 459,000 | 459,000 | (24,000) | 435,000 | ||||
Dividends declared, including $26 payable in share units ($0.15 per share) | (1,040,000) | (1,040,000) | (1,040,000) | |||||
Net unrealized gain (loss) on interest rate swaps | (1,698,000) | (1,698,000) | (666,000) | (2,364,000) | ||||
Balance at Jan. 31, 2019 | $ 28,556,000 | $ (4,921,000) | $ (4,957,000) | $ 819,000 | $ 19,497,000 | $ 1,872,000 | $ 21,369,000 | |
[1] | Represents the issuance of treasury shares to consultant for share units earned. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Jan. 31, 2019USD ($)$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Stock dividends payable | $ | $ 26 |
Dividends declared, per share | $ / shares | $ 0.15 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Operating activities: | ||
Net income (loss) | $ 435 | $ (920) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 2,824 | 2,711 |
Amortization | 422 | 295 |
Unrealized loss on interest rate cap contract | 154 | |
Stock based compensation expense | 34 | 31 |
Trustee fees, consultant fee and related interest paid in stock units | 228 | 201 |
Deferred rents - straight line rent | (67) | (98) |
Bad debt expense | 56 | 130 |
Changes in operating assets and liabilities: | ||
Tenants' security deposits | 71 | 173 |
Accounts receivable, prepaid expenses and other assets | 725 | (1,086) |
Accounts payable, accrued expenses and deferred trustee compensation | (24) | 150 |
Deferred revenue | (265) | (44) |
Net cash provided by operating activities | 4,593 | 1,543 |
Investing activities: | ||
Capital improvements - existing properties | (805) | (1,153) |
Acquisition of Station Place | (19,542) | |
Net cash used in investing activities | (805) | (20,695) |
Financing activities: | ||
Repayment of mortgages | (1,087) | (30,172) |
Proceeds from mortgage loan refinancing | 48,000 | |
Proceeds from acquisition mortgage loan | 12,350 | |
Refinancing good faith deposit refund | 960 | |
Advanced funding for construction loan reserve | 506 | |
Deferred financing costs | (811) | |
Dividends paid | (338) | |
Due to affiliate | 71 | 54 |
Distributions to noncontrolling interests | (294) | (6,084) |
Net cash (used in) provided by financing activities | (1,648) | 24,803 |
Net increase in cash, cash equivalents and restricted cash | 2,140 | 5,651 |
Cash, cash equivalents and restricted cash, beginning of period | 26,394 | 21,838 |
Cash, cash equivalents and restricted cash, end of period | 28,534 | 27,489 |
Supplemental disclosure of cash flow data: | ||
Interest paid, net of amounts capitalized | 4,176 | 4,816 |
Investing activities: | ||
Accrued capital expenditures, construction costs, pre-development costs and interest | 172 | 292 |
Financing activities: | ||
Dividends declared but not paid | 1,014 | |
Dividends paid in share units | $ 26 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Reconciliation of Cash Reported in Balance Sheet) - USD ($) $ in Thousands | Jan. 31, 2019 | Jan. 31, 2018 |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheet: | ||
Cash and cash equivalents | $ 23,633 | $ 21,717 |
Tenants' security accounts | 2,212 | 2,141 |
Mortgage escrows | 2,689 | 3,631 |
Total cash, cash equivalents and restricted cash | $ 28,534 | $ 27,489 |
Basis of presentation
Basis of presentation | 3 Months Ended |
Jan. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, 2019 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, 2018 of First Real Estate Investment Trust of New Jersey (“FREIT” or the “Company”) |
Recently issued accounting stan
Recently issued accounting standards | 3 Months Ended |
Jan. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently issued accounting standards | Note 2 - Recently issued accounting standards: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers On November 1, 2018, FREIT adopted ASU No. 2014-09 using the modified retrospective approach. Since FREIT’s primary source of revenue is operating leases, which fall under the scope of “ Leases, Topic 840 Leases, Topic 842 In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) Leases (Topic 840) In June 2016, the FASB issued ASU No. 2016-13 " Financial Instruments – Credit Losses (Topic 326) In November 2016, the FASB issued ASU No. 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash In August 2017, the FASB issued ASU 2017-12, “ Targeted Improvements to Accounting for Hedging Activities to ASC Topic 815, Derivatives and Hedging ("ASC 815") The SEC's Disclosure Update and Simplification rule (Release 33-10532) amends the interim financial statement requirements to require a reconciliation of changes in stockholders' equity in the notes or as a separate statement. This analysis should reconcile the beginning balance to the ending balance of each caption in stockholders' equity for each period for which an income statement is required to be filed and comply with the remaining content requirements of Rule 3-04 of Regulation S-X. As a result, registrants will have to provide the reconciliation for both the year-to-date and quarterly periods and comparable periods in Form 10-Q but only for the year-to-date periods in registration statements. The rule does not prescribe the format of the presentation as long as the appropriate periods are provided. Per a Compliance and Disclosure Interpretation (Q 105.09, Exchange Act Forms, 10-Q), "The amendments are effective for all filings made on or after November 5, 2018. In light of the timing of effectiveness of the amendments and proximity of effectiveness to the filing date for most filers' quarterly reports, the staff would not object if the filer's first presentation of the changes in shareholders' equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments." This essentially makes the requirements effective for the Company's first quarter 2019 filing. FREIT has adopted this guidance in the first quarter of Fiscal 2019 by presenting a reconciliation of changes in stockholders’ equity for the current and prior period as a separate statement. |
Earnings (Loss) per share
Earnings (Loss) per share | 3 Months Ended |
Jan. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per share | Note 3 - Earnings (Loss) per share: Basic earnings 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 12 to FREIT’s condensed consolidated financials) 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’s stock at the average market price during the period, thereby reducing the number of shares to be added in computing diluted earnings per share. For the three months ended January 31, 2019 and 2018, the outstanding stock options were anti-dilutive with no impact on earnings (loss) per share. |
Interest rate cap and swap cont
Interest rate cap and swap contracts | 3 Months Ended |
Jan. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest rate cap and swap contracts | Note 4 - Interest rate cap and swap contracts: On February 7, 2018, Grande Rotunda, LLC, a consolidated subsidiary, refinanced its $115.3 million construction loan held by Wells Fargo with a new loan held by Aareal Capital Corporation in the amount of approximately $118.5 million with additional funding available 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 has a maturity date of February 6, 2021. At January 31, 2019, the total amount outstanding on this loan was approximately $118.5 million. As part of this transaction, Grande Rotunda, LLC purchased an interest rate cap on LIBOR for the full amount that can be drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan. At January 31, 2019, the derivative financial instrument has a notional amount of $121.9 million and a maturity date of March 5, 2020. On December 7, 2017, Station Place on Monmouth, LLC (owned 100% by FREIT) closed on a $12,350,000 mortgage loan with Provident Bank. The loan bears a floating interest rate equal to 180 basis points over the one-month BBA LIBOR with a maturity date of December 15, 2027. At January 31, 2019, the total amount outstanding on this loan was $12,350,000. In order to minimize interest rate volatility during the term of this loan, Station Place on Monmouth, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 4.35% over the term of the loan. At January 31, 2019, the derivative financial instrument has a notional amount of $12,350,000 and a maturity date of December 2027. On September 29, 2016, Wayne PSC, LLC, a consolidated subsidiary, refinanced its $24.2 million mortgage loan held by Metropolitan Life Insurance Company, with a new mortgage loan from People’s United Bank in the amount of $25.8 million. The new loan bears a floating interest rate equal to 220 basis points over the one-month BBA LIBOR with a maturity date of October 1, 2026. At January 31, 2019, the total amount outstanding on this loan was approximately $24.3 million. In order to minimize interest rate volatility during the term of the loan, Wayne PSC, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.625% over the term of the loan. At January 31, 2019, the derivative financial instrument has a notional amount of approximately $24.3 million and a maturity date of October 2026. On December 26, 2012, Damascus Centre, LLC refinanced its construction loan with long-term financing provided by People’s United Bank and the first tranche of the new loan was taken down in the amount of $20 million. Based on leasing and net operating income at the shopping center, People’s United Bank agreed to a take-down of the second tranche of this loan on April 22, 2016 in the amount of $2,320,000. The total amount outstanding for both tranches of this loan held with People’s United Bank as of January 31, 2019 was approximately $19.7 million. The loan has a maturity date of January 3, 2023 and bears a floating interest rate equal to 210 basis points over the one-month BBA LIBOR. In order to minimize interest rate volatility during the term of this loan, Damascus Centre, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate on each tranche of this loan, resulting in a fixed rate of 3.81% over the term of the first tranche of this loan and a fixed rate of 3.53% over the term of the second tranche of this loan. At January 31, 2019, the derivative financial instrument has a notional amount of approximately $19.8 million and a maturity date of January 2023. On December 29, 2014, FREIT Regency, LLC closed on a $16.2 million mortgage loan with Provident Bank. The loan bears a floating interest rate equal to 125 basis points over the one-month BBA LIBOR and the loan will mature on December 15, 2024. At January 31, 2019, the total amount outstanding on this loan was approximately $15.8 million. In order to minimize interest rate volatility during the term of the loan, FREIT Regency, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.75% over the term of the loan. At January 31, 2019, the derivative financial instrument has a notional amount of approximately $15.8 million and a maturity date of December 2024. In accordance with ASC 815, “ Accounting for Derivative Instruments and Hedging Activities The Grande Rotunda, LLC interest rate cap is, for accounting purposes, deemed to be accounted for as an ineffective cash flow hedge with a corresponding gain or loss being recorded in FREIT’s income statement. For the three months ended January 31, 2019, FREIT recorded an unrealized loss in the condensed consolidated statement of income of approximately $154,000 for the Grande Rotunda, LLC interest rate cap representing the change in the fair value of this ineffective cash flow hedge during such period with a corresponding asset of approximately $5,000 as of January 31, 2019. The fair values are based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance). |
Property acquisition
Property acquisition | 3 Months Ended |
Jan. 31, 2019 | |
Real Estate [Abstract] | |
Property acquisition | Note 5 – Property acquisition: On December 7, 2017, FREIT completed the acquisition of Station Place, a residential apartment complex consisting of one building with 45 units, located in Red Bank, New Jersey through Station Place on Monmouth, LLC (FREIT’s 100% owned consolidated subsidiary). FREIT identified Station Place as the replacement property for the Hammel Gardens property located in Maywood, New Jersey that FREIT sold on June 12, 2017, which completed the like-kind exchange pursuant to Section 1031 of the Internal Revenue Code. Station Place is part of FREIT’s residential segment. The acquisition cost was $19,550,000 (inclusive of approximately $550,000 of transaction costs capitalized as part of the asset acquisition), which was funded in part with $7 million in net proceeds from the sale of the Hammel Gardens property, and the remaining balance of $12,350,000 (inclusive of the transaction costs) was funded by Station Place on Monmouth, LLC through long-term financing for this property from Provident Bank. The acquisition cost of $19.6 million has been allocated as follows: $10.8 million to the building and $8.8 million to the land. |
Management agreement, fees and
Management agreement, fees and transactions with related party | 3 Months Ended |
Jan. 31, 2019 | |
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 office building at The Rotunda 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 4% to 5% of rents collected. Such fees, charged to operations, were approximately $619,000 and $575,000 for the three months ended January 31, 2019 and 2018, 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 commissions and reimbursements amounted to approximately $133,000 and $141,000 for the three months ended January 31, 2019 and 2018, respectively. The management agreement expires on October 31, 2019, 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. 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 were charged to operations and amounted to approximately $29,000 and $31,000 for the three months ended January 31, 2019 and 2018, respectively. From time to time, FREIT engages Hekemian to provide 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. Such fees incurred during the three months ended January 31, 2019 and 2018 were approximately $0 and $762,500, respectively. Fees incurred during the three months ended January 31, 2018 related to commissions to Hekemian for the purchase of the Station Place property in the amount of $522,500 and commissions related to the refinancing of the Pierre Towers, LLC loan in the amount of $240,000. In Fiscal 2007, FREIT’s Board of Trustees approved and FREIT executed a development fee agreement for the Rotunda redevelopment project for the development services to be provided by Hekemian Development Resources, LLC (“Resources”), a wholly-owned subsidiary of Hekemian. As part of this agreement, the Board approved the payment of a fee to Resources in the amount of $1.4 million in connection with the revision to the scope of the Rotunda redevelopment project. Grande Rotunda, LLC paid $500,000 of this fee to Resources in Fiscal 2013 and the balance of $900,000 became due upon the issuance of a certificate of occupancy for the multi-family portion of this project. A final certificate of occupancy was issued in Fiscal 2016; however Resources agreed to defer the payment of the $900,000 balance of this fee. Grande Rotunda, LLC paid the $900,000 portion of this fee to Resources in February 2018 in connection with the refinancing of the Wells Fargo construction loan for the Rotunda property with a new loan from Aareal Capital Corporation. Additionally, Grande Rotunda, LLC paid Resources the amount of approximately $45,000 representing a mutually agreed upon amount of interest on the $900,000 portion of the fee for the period during which Hekemian Resources had agreed to defer payment thereof. Robert S. Hekemian, the Chairman of the Board and Chief Executive Officer of Hekemian, is the former Chairman and Chief Executive Officer of FREIT. Mr. Hekemian retired as Chairman and Chief Executive Officer of FREIT effective upon the conclusion of FREIT’s 2018 Annual Meeting of Shareholders held on April 5, 2018 (the “2018 Annual Meeting”). Robert S. Hekemian, Jr., the President of Hekemian, is a Trustee of FREIT, and succeeded Robert S. Hekemian as Chief Executive Officer of FREIT effective upon the conclusion of the 2018 Annual Meeting. Robert S. Hekemian, Jr. was later appointed as the President of FREIT in February 2019, and as a result he holds the offices of both Chief Executive Officer and President of FREIT. David Hekemian, a Principal of Hekemian, was elected as a Trustee of FREIT at the 2018 Annual Meeting. Trustee fee expense (including interest) incurred by FREIT for the three months ended January 31, 2019 and 2018 was approximately $60,000 and $136,000, respectively, for Robert S. Hekemian, $95,000 and $14,000, respectively, for Robert S. Hekemian, Jr. and $12,000 and $0, respectively, for David Hekemian (See Note 12 to FREIT’s condensed consolidated financial statements). Pursuant to the terms of a Consulting Agreement between Robert S. Hekemian and the Trust, Mr. Hekemian will continue to serve the Trust in a consulting capacity effective April 5, 2018. The Consulting Agreement has a term of four years and obliges Mr. Hekemian to provide advice and consultation with respect to matters pertaining to FREIT and its subsidiaries, affiliates, assets and business for no fewer than 30 hours per month during the term of the agreement. FREIT will pay Mr. Hekemian a consulting fee of $5,000 per month during the term of the Consulting Agreement, which shall be 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 will be 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 is payable. For three months ended January 31, 2019 and 2018, consulting fee expense for Robert S. Hekemian was approximately $15,000 and $0, respectively. Rotunda 100, LLC owns a 40% minority equity interest in Grande Rotunda, LLC and FREIT owns a 60% equity interest in Grande Rotunda, LLC. Damascus 100, LLC owns a 30% minority equity interest in Damascus Centre, LLC and FREIT owns a 70% equity interest in Damascus Centre, LLC. The equity owners of Rotunda 100, LLC and Damascus 100, LLC are principally employees of Hekemian. To incentivize the employees of Hekemian, FREIT advanced, only to employees of Hekemian, up to 50% of the amount of the equity contributions that the Hekemian employees were required to invest in Rotunda 100, LLC and Damascus 100, LLC. These advances were in the form of secured loans that bear interest 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 secured by the Hekemian employees’ interests in Rotunda 100 and Damascus 100, and are full recourse loans. The notes originally had maturity dates at the earlier of (a) ten (10) years after issue (Grande Rotunda, LLC – 6/19/2015, Damascus Centre, LLC – 9/30/2016), or, (b) at the election of FREIT, ninety (90) days after the borrower terminates employment with Hekemian, at which time all outstanding unpaid principal and interest is due. On June 4, 2015, the Board approved an extension of the maturity date of the secured loans to occur the earlier of (a) June 19, 2018 or (b) five days after the closing of a permanent mortgage loan secured by the Rotunda property. On December 7, 2017, the Board approved a further extension of the maturity dates of these loans to the date or dates upon which distributions of cash are made by Grande Rotunda, LLC to its members as a result of a refinancing or sale of Grande Rotunda, LLC or the Rotunda property. In the fourth quarter of Fiscal 2018, the Damascus 100 members repaid their secured notes outstanding in full for a total payment of $1,870,000, which was composed of principal in the amount of $1,451,000 and accrued interest in the amount of approximately $419,000. As of January 31, 2019, and October 31, 2018, only the principal and accrued interest on the secured notes receivable with Rotunda 100 members was outstanding. As such, the aggregate outstanding principal balance of the notes was $4,000,000 at both January 31, 2019 and October 31, 2018. The accrued but unpaid interest related to these notes as of January 31, 2019 and October 31, 2018 amounted to approximately $909,000 and $862,000, respectively, and is included in accounts receivable on the accompanying condensed consolidated balance sheets. In Fiscal 2017, Grande Rotunda, LLC incurred substantial expenditures at 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, the equity owners in Grande Rotunda, LLC (FREIT 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. As of January 31, 2019 and October 31, 2018, Rotunda 100 has funded Grande Rotunda, LLC with approximately $5.5 million and $5.4 million (including interest), respectively, which is included in “Due to affiliate” on the accompanying condensed consolidated balance sheets. |
Mortgage financings and line of
Mortgage financings and line of credit | 3 Months Ended |
Jan. 31, 2019 | |
Debt Disclosure [Abstract] | |
Mortgage financings and line of credit | Note 7 – Mortgage financings and line of credit: On February 7, 2018, Grande Rotunda, LLC refinanced its $115.3 million construction loan held by Wells Fargo with a new loan held by Aareal Capital Corporation in the amount of approximately $118.5 million with additional funding available for retail tenant improvements and leasing costs in the amount of $3,380,000. This refinancing paid off the loan previously held by Wells Fargo, funded loan closing costs and paid the amount due to Hekemian Development Resources for a development fee of $900,000 plus accrued interest of approximately $45,000 (See Note 6 to FREIT’s condensed consolidated financial statements for further details on this fee). This loan is secured by the Rotunda property, bears a floating interest rate at 285 basis points over the one-month LIBOR rate and has a maturity date of February 6, 2021 with two one-year renewal options. As part of this transaction, Grande Rotunda, LLC purchased an interest rate cap on LIBOR for the full amount that can be drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan. As of January 31, 2019, approximately $118.5 million of this loan facility was drawn down and the interest rate was approximately 5.36%. On January 8, 2018, Pierre Towers, LLC (“Pierre Towers”), (which is owned by S And A Commercial Associates Limited Partnership (“S&A”), a consolidated subsidiary of FREIT), refinanced its $29.1 million loan held by State Farm with a new mortgage loan from New York Life Insurance in the amount of $48 million. Pierre Towers paid New York Life Insurance a good faith deposit in the amount of $960,000 and was reimbursed by New York Life when the loan was closed in January 2018. The new loan has a term of ten years and bears a fixed interest rate equal to 3.88%. Interest-only payments are required each month for the first five years of the term and thereafter, principal payments plus accrued interest will be required each month through maturity. This refinancing resulted in: (i) a reduction in the annual interest rate from a fixed rate of 5.38% to a fixed rate of 3.88%; and (ii) net refinancing proceeds of approximately $17.2 million (after giving effect to a $1.2 million loan prepayment cost to pay-off the loan held by State Farm) that were distributed to the partners in S&A with FREIT receiving approximately $11.2 million, based on its 65% membership interest in S&A, which can be used for capital expenditures and general corporate purposes. On December 7, 2017, Station Place on Monmouth, LLC (owned 100% by FREIT) closed on a mortgage loan in the amount of $12,350,000 held by Provident Bank to purchase the Station Place property in Red Bank, New Jersey (see Note 5 to FREIT’s condensed consolidated financial statements). Interest-only payments are required each month for the first two years of the term and thereafter, principal payments plus accrued interest will be required each month through maturity. The loan bears a floating interest rate equal to 180 basis points over the one-month BBA LIBOR with a maturity date of December 15, 2027. In order to minimize interest rate volatility during the term of the loan, Station Place on Monmouth, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 4.35% over the term of the loan. On January 21, 2019, Station Place on Monmouth, LLC entered into a modification agreement with Provident Bank. The material terms of the modification were: (i) FREIT guarantees $2,350,000 of the outstanding principal balance of the loan; and (ii) the loan’s Debt Service Coverage Ratio (“DSCR”) covenants are reduced to a single test that will be tested semi-annually (commencing with the six-month period ending April 30, 2019) and require a DSCR of 1.2 / 1.0 based on actual debt service. Prior to this modification, the loan’s DSCR covenants were calculated using the greater of the actual debt service or other hypothetical debt service measures, as provided in the loan agreement, that were to be tested quarterly. As previously disclosed in FREIT’s current report on Form 8-K filed with the SEC on January 24, 2019, Station Place had not been in compliance with the loan covenants as of October 31, 2018, and the modification waives all previous non-compliance. If the DSCR should fall below 1.2 / 1.0, Provident Bank, at its discretion, may require a current appraisal of the Station Place property. If the loan balance exceeds 85% loan-to-value (“L-T-V”) based on the appraised value, Station Place may be required to resize the loan to bring the L-T-V into compliance by paying down the outstanding principal balance of the loan, posting a letter of credit, or providing additional collateral to Provident Bank. On October 27, 2017, FREIT’s revolving line of credit provided by the Provident Bank was renewed for a three-year term ending on October 27, 2020 at which point no further advances shall be permitted and provided the line of credit is not renewed by the lender, the outstanding principal balance of the line of credit shall convert to a commercial term loan maturing on October 31, 2022. 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’s Franklin Crossing Shopping Center in Franklin Lakes, New Jersey and retail space in Glen Rock, New Jersey. The total line of credit was increased from $12.8 million to $13 million and the interest rate on the amount outstanding will be at a floating rate of 275 basis points over the 30-day LIBOR with a floor of 3.75%. As of January 31, 2019 and October 31, 2018, there was no amount outstanding and $13 million was available under the line of credit. |
Fair value of long-term debt
Fair value of long-term debt | 3 Months Ended |
Jan. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value of long-term debt | Note 8 – Fair value of long-term debt: The following table shows the estimated fair value and carrying value of FREIT’s long-term debt at January 31, 2019 and October 31, 2018: ($ in Millions) January 31, 2019 October 31, 2018 Fair Value $ 342.2 $ 338.3 Carrying Value $ 346.2 $ 347.0 Fair values are estimated based on market interest rates at January 31, 2019 and October 31, 2018 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). |
Segment information
Segment information | 3 Months Ended |
Jan. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Note 9 - 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 is comprised of eight (8) properties, excluding the land and building formerly occupied as a Pathmark supermarket in Patchogue, New York, which was sold on February 8, 2019 (see Note 13 to FREIT’s condensed consolidated financial statements). The residential segment is comprised of eight (8) 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, 2018. 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), 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 three month periods ended January 31, 2019 and 2018. Asset information is not reported since FREIT does not use this measure to assess performance. Three Months Ended January 31, 2019 2018 (In Thousands of Dollars) Real estate rental revenue: Commercial $ 6,627 $ 6,303 Residential 8,234 7,793 Total real estate rental revenue 14,861 14,096 Real estate operating expenses: Commercial 2,831 3,037 Residential 3,495 3,716 Total real estate operating expenses 6,326 6,753 Net operating income: Commercial 3,796 3,266 Residential 4,739 4,077 Total net operating income $ 8,535 $ 7,343 Recurring capital improvements - residential $ (124 ) $ (111 ) Reconciliation to condensed consolidated net income (loss) attributable to common equity: Segment NOI $ 8,535 $ 7,343 Deferred rents - straight lining 67 98 Investment income 71 55 Unrealized loss on interest rate cap contract (154 ) — General and administrative expenses (608 ) (553 ) Depreciation (2,824 ) (2,711 ) Financing costs (4,652 ) (5,152 ) Net income (loss) 435 (920 ) Net loss attributable to noncontrolling interests in subsidiaries 24 563 Net income (loss) attributable to common equity $ 459 $ (357 ) |
Income taxes
Income taxes | 3 Months Ended |
Jan. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 10 – Income taxes: FREIT intends to distribute 100% of its ordinary taxable income to its shareholders as dividends for the fiscal year ending October 31, 2019. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income was recorded in FREIT’s condensed consolidated financial statements. There was no ordinary taxable income for the fiscal year ended October 31, 2018 for FREIT to distribute to its shareholders. As described in Note 5 to FREIT’s condensed consolidated financial statements, FREIT completed a like-kind exchange with respect to the sale of the Hammel Gardens property in Maywood, New Jersey property, which was sold on June 12, 2017 resulting in a capital gain of approximately $15.4 million. The tax basis of Station Place in Red Bank, New Jersey, which was the replacement property in the like-kind exchange, was approximately $18.9 million lower than the acquisition cost of approximately $19.6 million recorded for financial reporting purposes. Accordingly, no provision for federal or state income taxes related to such gain was recorded in FREIT’s condensed consolidated financial statements for the fiscal year ended October 31, 2018. As of January 31, 2019, FREIT had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended October 31, 2016 remain open to examination by the major taxing jurisdictions to which FREIT is subject. |
Stock option plan
Stock option plan | 3 Months Ended |
Jan. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock option plan | Note 11 – Stock option plan: On September 4, 2014, the Board approved the grant of an aggregate of 246,000 non-qualified share options under FREIT’s Equity Incentive Plan (“the Plan”) to certain FREIT executive officers, the members of the Board and certain employees of Hekemian & Co., Inc., FREIT’s managing agent. The options have an exercise price of $18.45 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 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 April 5, 2018, FREIT shareholders approved an amendment to the Plan reserving an additional 300,000 shares for issuance under the Plan. As of January 31, 2019, 447,060 shares are available for issuance under the Plan. The following table summarizes stock option activity for the three-month period ended January 31, 2019: No. of Options Weighted Average Outstanding Exercise Price Options outstanding beginning of period 305,780 $ 18.40 Options granted during period — — Options forfeited/cancelled during period (40 ) 18.45 Options outstanding end of period 305,740 $ 18.40 Options vested and expected to vest 299,140 Options exercisable at end of period 200,260 For the three-month periods ended January 31, 2019 and 2018, compensation expense related to stock options granted amounted to approximately $34,000 and $31,000, respectively. At January 31, 2019, there was approximately $194,000 of unrecognized compensation cost relating to outstanding non-vested stock options to be recognized over the remaining weighted average vesting period of approximately 2.4 years. The aggregate intrinsic value of options vested and expected to vest at January 31, 2019 was approximately $11,000. There was no aggregate intrinsic value of options exercisable at January 31, 2019 as the exercise price of the vested options was greater than the market or average share price. |
Deferred fee plan
Deferred fee plan | 3 Months Ended |
Jan. 31, 2019 | |
Deferred Compensation Arrangements [Abstract] | |
Deferred fee plan | Note 12 – Deferred fee plan: On September 4, 2014, the Board approved amendments, effective November 1, 2014, to the FREIT Deferred Fee Plan for its Executive Officers and Trustees, one of which provides for the issuance of share units payable in FREIT shares in respect of (i) deferred amounts of all Trustee fees on a prospective basis; (ii) interest on Trustee fees deferred prior to November 1, 2014 (payable at a floating rate, adjusted quarterly, based on the average 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 shares on the date as set forth in the Deferred Fee Plan. All fees payable to Trustees for the three-month periods ended January 31, 2019 and 2018 were deferred under the Deferred Fee Plan except for fees payable to one Trustee, who elected to receive such fees in cash. As a result of the amendment to the Deferred Fee Plan described above, for the three-month periods ended January 31, 2019 and 2018, the aggregate amounts of deferred Trustee fees together with related interest and dividends were approximately $238,200 and $201,000, respectively, which have been paid through the issuance of 15,204 and 13,289 vested FREIT share units, respectively, based on the closing price of FREIT shares on the dates as set forth in the Deferred Fee Plan. For the three-month periods ended January 31, 2019 and 2018, FREIT has charged as expense approximately $212,600 and $201,000, respectively, representing deferred Trustee fees and interest, and the balance of approximately $25,600 and $0, respectively, representing dividends payable in respect of share units allocated to Plan participants, has been charged to equity. |
Subsequent events
Subsequent events | 3 Months Ended |
Jan. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 13 – Subsequent events: On February 8, 2019, FREIT sold a commercial building, formerly occupied as a Pathmark supermarket in Patchogue, New York for a sales price of $7.5 million. The sale of this property, which had a carrying value of approximately $6.2 million (and is presented as held for sale on the condensed consolidated balance sheet as of January 31, 2019), resulted in a capital gain of approximately $0.8 million (on a GAAP basis) net of sales fees and commissions. Net cash proceeds of approximately $2 million were realized after paying off the related mortgage on this property in the amount of approximately $5.2 million. The sale of this property eliminates an operating loss of approximately $0.8 million ($0.12 per share) incurred, annually, since Pathmark vacated in December 2015. On February 7, 2019, Donald W. Barney retired and resigned as President, Chief Financial Officer, Treasurer and a Trustee of First Real Estate Investment Trust of New Jersey (the “Trust”). The Board of Trustees appointed Allan Tubin as Chief Financial Officer and Treasurer of the Trust and Robert S. Hekemian, Jr. as President of the Trust. 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 $15.00 per share, will vest in equal annual installments over a 5-year period and will expire 10 years from the date of grant, which will be March 3, 2029. |
Fair value of long-term debt (T
Fair value of long-term debt (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of estimated fair value and carrying value of long-term debt | The following table shows the estimated fair value and carrying value of FREIT’s long-term debt at January 31, 2019 and October 31, 2018: ($ in Millions) January 31, 2019 October 31, 2018 Fair Value $ 342.2 $ 338.3 Carrying Value $ 346.2 $ 347.0 |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment and related information | 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 three month periods ended January 31, 2019 and 2018. Asset information is not reported since FREIT does not use this measure to assess performance. Three Months Ended January 31, 2019 2018 (In Thousands of Dollars) Real estate rental revenue: Commercial $ 6,627 $ 6,303 Residential 8,234 7,793 Total real estate rental revenue 14,861 14,096 Real estate operating expenses: Commercial 2,831 3,037 Residential 3,495 3,716 Total real estate operating expenses 6,326 6,753 Net operating income: Commercial 3,796 3,266 Residential 4,739 4,077 Total net operating income $ 8,535 $ 7,343 Recurring capital improvements - residential $ (124 ) $ (111 ) Reconciliation to condensed consolidated net income (loss) attributable to common equity: Segment NOI $ 8,535 $ 7,343 Deferred rents - straight lining 67 98 Investment income 71 55 Unrealized loss on interest rate cap contract (154 ) — General and administrative expenses (608 ) (553 ) Depreciation (2,824 ) (2,711 ) Financing costs (4,652 ) (5,152 ) Net income (loss) 435 (920 ) Net loss attributable to noncontrolling interests in subsidiaries 24 563 Net income (loss) attributable to common equity $ 459 $ (357 ) |
Stock option plan (Tables)
Stock option plan (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the three-month period ended January 31, 2019: No. of Options Weighted Average Outstanding Exercise Price Options outstanding beginning of period 305,780 $ 18.40 Options granted during period — — Options forfeited/cancelled during period (40 ) 18.45 Options outstanding end of period 305,740 $ 18.40 Options vested and expected to vest 299,140 Options exercisable at end of period 200,260 |
Interest rate cap and swap co_2
Interest rate cap and swap contracts (Details) - USD ($) | Feb. 07, 2018 | Dec. 07, 2017 | Oct. 27, 2017 | Sep. 29, 2016 | Jan. 31, 2019 | Jan. 31, 2018 | Oct. 31, 2018 | Apr. 22, 2016 | Dec. 26, 2012 |
Derivative [Line Items] | |||||||||
Mortgages and construction loan payable | $ 349,417,000 | $ 350,504,000 | |||||||
Interest rate swap contract assets | 2,076,000 | 4,434,000 | |||||||
Unrealized gain (loss) on derivatives | (154,000) | ||||||||
Net unrealized gain (loss) on interest rate swap contracts | (2,364,000) | $ 1,631,000 | 3,113,000 | ||||||
Interest rate swap contract liabilities | 160,000 | ||||||||
Damascus Centre Swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract assets | 502,000 | ||||||||
Wayne PSC swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract assets | 1,569,000 | ||||||||
Regency Swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liabilities | 86,000 | ||||||||
Monmouth swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract assets | 74,000 | 460,000 | |||||||
Station Place on Monmouth, LLC [Member] | |||||||||
Derivative [Line Items] | |||||||||
Percentage of acquisition | 100.00% | ||||||||
Wells Fargo Bank [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 115,300,000 | ||||||||
Aareal Capital Corporation [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | 118,500,000 | ||||||||
Available to draw | $ 3,380,000 | ||||||||
Basis points, interest rate | 2.85% | ||||||||
Maturity date of loan | Feb. 6, 2021 | ||||||||
Grande Rotunda LLC [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | 118,500,000 | ||||||||
Unrealized gain (loss) on derivatives | (154,000) | ||||||||
Interest rate cap asset | 5,000 | ||||||||
Grande Rotunda LLC Loan [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | 118,500,000 | ||||||||
Notional amount of interest rate swap | $ 121,900,000 | ||||||||
Fixed interest rate | 3.00% | ||||||||
Maturity date of cap | Mar. 5, 2020 | ||||||||
Provident Bank [Member] | |||||||||
Derivative [Line Items] | |||||||||
Refinanced loan amount | $ 16,200,000 | ||||||||
Loan amount | $ 12,350,000 | 15,800,000 | |||||||
Notional amount of interest rate swap | $ 12,350,000 | $ 15,800,000 | |||||||
Fixed interest rate | 4.35% | 3.75% | |||||||
Basis points, interest rate | 1.80% | 2.75% | 1.25% | ||||||
Maturity date of loan | Dec. 15, 2027 | Oct. 31, 2022 | Dec. 15, 2024 | ||||||
Wayne PSC, LLC Loan [Member] | |||||||||
Derivative [Line Items] | |||||||||
Refinanced loan amount | $ 24,200,000 | ||||||||
Loan amount | $ 24,300,000 | ||||||||
Description of loan amendment terms | In order to minimize interest rate volatility during the term of the loan, Wayne PSC, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.625% over the term of the loan. | ||||||||
Notional amount of interest rate swap | 24,300,000 | ||||||||
Fixed interest rate | 3.625% | ||||||||
Basis points, interest rate | 2.20% | ||||||||
People's United Bank [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 25,800,000 | 19,700,000 | |||||||
Mortgages and construction loan payable | $ 2,320,000 | ||||||||
Notional amount of interest rate swap | $ 19,800,000 | ||||||||
People's United Bank [Member] | Tranche One [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 20,000,000 | ||||||||
Fixed interest rate | 3.81% | ||||||||
Basis points, interest rate | 2.10% | ||||||||
Maturity date of loan | Jan. 3, 2023 | ||||||||
People's United Bank [Member] | Tranche Two [Member] | |||||||||
Derivative [Line Items] | |||||||||
Fixed interest rate | 3.53% | ||||||||
Damascus Centre [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract assets | 955,000 | ||||||||
Wayne PSC swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract assets | 2,452,000 | ||||||||
Regency Swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract assets | $ 408,000 |
Property acquisition (Details)
Property acquisition (Details) | Dec. 07, 2017USD ($) |
Real Estate [Line Items] | |
Transaction costs | $ 19,600,000 |
Building [Member] | |
Real Estate [Line Items] | |
Transaction costs | 10,800,000 |
Land [Member] | |
Real Estate [Line Items] | |
Transaction costs | 8,800,000 |
Provident Bank [Member] | |
Real Estate [Line Items] | |
Remaining balance (inclusive of the transaction costs) | $ 12,350,000 |
Station Place on Monmouth, LLC [Member] | |
Real Estate [Line Items] | |
Percentage of acquisition | 100.00% |
Acquisition costs | $ 19,550,000 |
Transaction costs | 550,000 |
Hammel Gardens Property [Member] | |
Real Estate [Line Items] | |
Net proceed from sales | $ 7,000,000 |
Management agreement, fees an_2
Management agreement, fees and transactions with related party (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Feb. 28, 2018 | Jan. 31, 2019 | Oct. 31, 2018 | Jan. 31, 2018 | Oct. 30, 2013 | |
Related Party Transaction [Line Items] | |||||
Asset management fees | $ 637,000 | $ 611,000 | |||
Brokerage commissions | 15,000 | 0 | |||
Secured loans receivable | 4,000,000 | $ 4,000,000 | |||
Due to affiliate | $ 5,488,000 | 5,417,000 | |||
Minimum [Member] | |||||
Related Party Transaction [Line Items] | |||||
Asset management fees percentage rate | 4.00% | ||||
Maximum [Member] | |||||
Related Party Transaction [Line Items] | |||||
Asset management fees percentage rate | 5.00% | ||||
Damascus Centre [Member] | |||||
Related Party Transaction [Line Items] | |||||
Secured notes outstanding | 1,870,000 | ||||
Principal amount on notes | 1,451,000 | ||||
Accrued interest payable | 419,000 | ||||
Unpaid accrued interest | $ 909,000 | 862,000 | |||
Grande Rotunda, LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership by noncontrolling owners (percentage) | 40.00% | ||||
Ownership by parent (percentage) | 60.00% | ||||
Due to affiliate | $ 5,500,000 | ||||
Damascus Centre, LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership by noncontrolling owners (percentage) | 30.00% | ||||
Ownership by parent (percentage) | 70.00% | ||||
Grande Rotunda, LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due to affiliate | $ 5,400,000 | ||||
Managing Agent Hekemian & Co [Member] | |||||
Related Party Transaction [Line Items] | |||||
Asset management fees | $ 619,000 | 575,000 | |||
Leasing commissions and reimbursement of operating expenses | 133,000 | 141,000 | |||
Sales commissions | 522,500 | ||||
Insurance commissions | 29,000 | 31,000 | |||
Additional services | 0 | 762,500 | |||
Brokerage commissions | 240,000 | ||||
Grande Rotunda LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Fee amount | $ 900,000 | 1,400,000 | 45,000 | $ 500,000 | |
Affiliated Entity 1 [Member] | |||||
Related Party Transaction [Line Items] | |||||
Development fees included in accounts payable | 900,000 | ||||
Hekemian and Resources [Member] | |||||
Related Party Transaction [Line Items] | |||||
Fee amount | $ 900,000 | ||||
Robert S. Hekemian [Member] | |||||
Related Party Transaction [Line Items] | |||||
Trustee fees and related interest payable in stock units | 60,000 | 136,000 | |||
Consulting fee per month | 5,000 | ||||
Consulting fee quarterly installments | 15,000 | ||||
Robert S. Hekemian, Jr. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Trustee fees and related interest payable in stock units | 95,000 | 14,000 | |||
David Hekemian [Member] | |||||
Related Party Transaction [Line Items] | |||||
Trustee fees and related interest payable in stock units | $ 12,000 | $ 0 |
Mortgage financings and line _2
Mortgage financings and line of credit (Details) - USD ($) | Feb. 07, 2018 | Dec. 07, 2017 | Feb. 28, 2018 | Oct. 27, 2017 | Jan. 31, 2019 | Jan. 21, 2019 | Oct. 31, 2018 | Jan. 08, 2018 |
Debt Instrument [Line Items] | ||||||||
Total loan carrying amount | $ 349,417,000 | $ 350,504,000 | ||||||
Station Place on Monmouth, LLC [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of acquisition | 100.00% | |||||||
Wells Fargo Bank [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 115,300,000 | |||||||
Aareal Capital Corporation [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 118,500,000 | |||||||
Basis points, interest rate | 2.85% | |||||||
Maturity date of loan | Feb. 6, 2021 | |||||||
Available to draw | $ 3,380,000 | |||||||
Grande Rotunda LLC Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 118,500,000 | |||||||
Fixed interest rate | 3.00% | |||||||
Rotunda [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 118,500,000 | |||||||
Fixed interest rate | 5.36% | |||||||
Basis points, interest rate | 2.85% | |||||||
Fee amount | $ 900,000 | |||||||
Interest payable | $ 45,000 | |||||||
Provident Bank [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 12,350,000 | $ 15,800,000 | ||||||
Fixed interest rate | 4.35% | 3.75% | ||||||
Portion of outstanding principal balance guaranteed by FREIT | $ 2,350,000 | |||||||
Basis points, interest rate | 1.80% | 2.75% | 1.25% | |||||
Maturity date of loan | Dec. 15, 2027 | Oct. 31, 2022 | Dec. 15, 2024 | |||||
Term of the loan | 3 years | |||||||
Line of credit, prior borrowing capacity | $ 12,800,000 | |||||||
Line of credit, maximum borrowing capacity | 13,000,000 | $ 13,000,000 | ||||||
Patchogue NY [Member] | Mortgages [Member] | Pierre Towers, LLC [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Fixed rate mortgage loans | $ 29,100,000 | |||||||
Loan amount | $ 48,000,000 | |||||||
Fixed interest rate | 3.88% | 5.38% | ||||||
Total loan carrying amount | $ 960,000 | |||||||
Term of the loan | 5 years | |||||||
Net proceeds from refinancing of debt | $ 17,200,000 | |||||||
Mortgage prepayment penalty | $ 1,200,000 | |||||||
S And A Commercial Associates Limited Partnership [Member] | Mortgages [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Membership interest percentage | 65.00% | |||||||
Repurchase amount of acquisition loan | $ 11,200,000 |
Fair value of long-term debt (D
Fair value of long-term debt (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Fair value of long-term debt | $ 342,200 | $ 338,300 |
Carrying value of long-term debt | $ 346,213 | $ 347,006 |
Segment information (Details)
Segment information (Details) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019USD ($)segmentsProperties | Jan. 31, 2018USD ($)segments | |
Reportable Segments | ||
Real estate rental revenue | $ 14,928 | $ 14,194 |
Real estate operating expenses | 9,758 | 10,017 |
Operating income | 5,170 | 4,177 |
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||
Segment NOI | 8,535 | 7,343 |
Deferred rents - straight lining | 67 | 98 |
Investment income | 71 | 55 |
Unrealized gain on interest rate cap contract | (154) | |
General and administrative expenses | (608) | (553) |
Depreciation | (2,824) | (2,711) |
Financing costs | (4,652) | (5,152) |
Net income (loss) | 435 | (920) |
Net loss attributable to noncontrolling interests in subsidiaries | 24 | 563 |
Net income (loss) attributable to common equity | $ 459 | $ (357) |
Number of reportable segments | segments | 2 | 2 |
Operating Segments [Member] | ||
Reportable Segments | ||
Real estate rental revenue | $ 14,861 | $ 14,096 |
Real estate operating expenses | 6,326 | 6,753 |
Operating income | $ 8,535 | 7,343 |
Commercial [Member] | ||
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||
Number of properties | Properties | 8 | |
Commercial [Member] | Operating Segments [Member] | ||
Reportable Segments | ||
Real estate rental revenue | $ 6,627 | 6,303 |
Real estate operating expenses | 2,831 | 3,037 |
Operating income | 3,796 | 3,266 |
Residential [Member] | ||
Reportable Segments | ||
Recurring capital improvements | $ (124) | (111) |
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||
Number of properties | Properties | 8 | |
Residential [Member] | Operating Segments [Member] | ||
Reportable Segments | ||
Real estate rental revenue | $ 8,234 | 7,793 |
Real estate operating expenses | 3,495 | 3,716 |
Operating income | $ 4,739 | $ 4,077 |
Income taxes (Details)
Income taxes (Details) $ in Millions | 12 Months Ended |
Oct. 31, 2019USD ($) | |
Income Tax Disclosure [Abstract] | |
Ordinary taxable income distributed as dividends (percentage) | 100.00% |
Deferral of capital gain on sale of property from qualification as like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code | $ 15.4 |
Amount by which tax basis of replacement property in like-kind exchange is lower than acquisition cost | 18.9 |
Acquisition cost | $ 19.6 |
Stock option plan (Narrative) (
Stock option plan (Narrative) (Details) - USD ($) | May 03, 2018 | Nov. 10, 2016 | Sep. 04, 2014 | Jan. 31, 2019 | Jan. 31, 2018 | Oct. 31, 2018 |
Equity Incentive Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Increase in number of shares authorized | 300,000 | |||||
Shares available for issuance | 447,060 | |||||
Employee Stock Option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Plan term | 10 years | 10 years | 10 years | 10 years | ||
Vesting term | 5 years | 5 years | 5 years | 5 years | ||
Options granted during period | 38,000 | 38,000 | 246,000 | |||
Options granted during period, price per share | $ 15.50 | $ 21 | $ 18.45 | |||
Compensation expense related to stock options | $ 34,000 | $ 31,000 | ||||
Unrecognized compensation cost | 194,000 | $ 305,780 | ||||
Unrecognized compensation cost, recognition period | 2 years 4 months 24 days | |||||
Aggregate intrinsic value of options expected to vest | 11,000 | |||||
Aggregate intrinsic value of options exercisable |
Stock option plan (Schedule of
Stock option plan (Schedule of Stock Option Activity) (Details) - Employee Stock Option [Member] - USD ($) | May 03, 2018 | Nov. 10, 2016 | Sep. 04, 2014 | Jan. 31, 2019 |
No. of Options Outstanding | ||||
Options outstanding beginning of period | $ 305,780 | |||
Options granted during period | 38,000 | 38,000 | 246,000 | |
Options forfeited/cancelled during period | (40) | |||
Options outstanding end of period | 305,740 | |||
Options vested and expected to vest | 299,140 | |||
Options exercisable at end of period | 200,260 | |||
Weighted Average Exercise Price | ||||
Options outstanding beginning of period | $ 18.40 | |||
Options granted during period | $ 15.50 | $ 21 | $ 18.45 | |
Options forfeited/cancelled during period | 18.45 | |||
Options outstanding end of period | $ 18.40 |
Deferred fee plan (Details)
Deferred fee plan (Details) - USD ($) | 3 Months Ended | ||
Jan. 31, 2019 | Jan. 31, 2018 | Oct. 31, 2018 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Dividends payable | $ 1,014,000 | $ 338,000 | |
Deferred Fee Plan [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Trustee fee expense | 238,200 | 201,000 | |
Deferred trustee fees | $ 212,600 | $ 201,000 | |
Basis spread on any deferred fee (percentage) | 1.50% | ||
Term of distribution to participants | 10 years | ||
Shares issued | 15,204 | 13,289 | |
Dividends payable | $ 25,600 | $ 0 |
Subsequent events (Details)
Subsequent events (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 04, 2019 | Feb. 08, 2019 | May 03, 2018 | Nov. 10, 2016 | Sep. 04, 2014 | Jan. 31, 2019 |
Employee Stock Option [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Plan term | 10 years | 10 years | 10 years | 10 years | ||
Vesting term | 5 years | 5 years | 5 years | 5 years | ||
Options granted during period | 38,000 | 38,000 | 246,000 | |||
Options granted during period, price per share | $ 15.50 | $ 21 | $ 18.45 | |||
Subsequent Event [Member] | Employee Stock Option [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Plan term | 10 years | |||||
Vesting term | 5 years | |||||
Options granted during period | 5,000 | |||||
Options granted during period, price per share | $ 15 | |||||
Subsequent Event [Member] | Pathmark supermarket in Patchogue [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Agreed sales price of property held for sale | $ 7,500 | |||||
Rental properties | 6,200 | |||||
Capital gain | 800 | |||||
Net cash proceeds from sale of property | 2,000 | |||||
Mortgage payoff | 5,200 | |||||
Sale of property operating loss | $ 800 | |||||
Price per share operating loss eliminated from sale of property | $ 0.12 |