RESULTS OF OPERATIONS
YEAR AND THREE MONTHS ENDED
OCTOBER 31, 2002 AND 2001
HACKENSACK, NJ, November 26, 2002 - First Real Estate Investment Trust
("FREIT") announced its operating results for the year and three months ended
October 31, 2002. All per share amounts discussed represent diluted earnings per
share. The results of operations for the year and three months are not
necessarily indicative of future operating results.
Net income from continuing operations for the three months ended October 31,
2002 increased by 8.1% to $1,271,000 ($.39 per share) on revenues of $4,755,000,
from $1,177,000 ($.37 per share) on revenues of $4,548,000 for the three months
ended October 31, 2001. During the quarter ended October 31, 2002 FREIT sold its
residential property in Camden, NJ at a capital gain of $475,000. FREIT has
classified the capital gain and the net earnings (loss) of the Camden property
as discontinued operations for all periods presented. Net income, including
discontinued operations was $1,703,000 ($.52 per share) for the three months
ended October 31, 2002 vs. $1,177,000 ($.37 per share) for the three months
ended October 31, 2001.
For the year ended October 31, 2002 ("Current Year") net income from continuing
operations increased 12.1% to $5,282,000 ($1.63 per share) on revenues of
$19,145,000, from $4,701,000 ($1.50 per share) on revenues of 18,935,000 for the
year ended October 31, 2001 ("Prior Year"). FFO for the Current Year increased
12.7% to $7,202,000 ($2.26 per share) from $6,389,000 ($2.04 per share) for the
Prior Year. Earnings from discontinued operations of $399,000 raised net income
for the Current Year to $5,681,000 ($1.75 per share).
RETAIL PROPERTIES: For the Current Year, Earnings (Net income before
depreciation, deferred rents, and financing costs) increased 5.6% to $8.4
million on revenues of $11.9 million. This compares to earnings of $7.9 million
on revenues of $11.5 million for the Prior Year. Average occupancy for the
Current Year and at October 31, 2002 was 96.2% and 93.0% respectively. Average
occupancy for the Prior Year and at October 31, 2001 was 95.8% and 97.3%
respectively. The drop in current occupancy is due, principally, to the
termination, effective July 31, 2002, of the Stop & Shop lease at Westwood Plaza
Shopping Center in Westwood, NJ. As previously reported (September 12, 2002),
FREIT expects to lease the vacated space to a tenant at rental rates that will
far exceed the below market rents under the terminated lease.
ACQUISITION OF PREAKNESS SHOPPING CENTER: On November 1, 2002, Wayne PSC, LLC
acquired, the 323,000 +/- SF Preakness Shopping Center in Wayne, NJ. FREIT has a
40% interest in Wayne PSC, LL, and is the Managing Member. The acquisition had
no effect on Current Year's operations, however, it is expected that this
acquisition will enhance shareholder value and cash flow in the coming years.
RESIDENTIAL PROPERTIES: Earnings for the Current Year increased 7.1% to $3.9
million on revenues of $6.3 million compared to earnings of $3.6 million on
revenues of $6.1 million for the Prior Year. Average occupancy for the Current
Year and at October 31, 2002 was 96.8% and 94.3% respectively. Average occupancy
for the Prior Year and at October 31, 2001 was 97.7% and 95.3% respectively. The
less than 1% reduction in occupancy from the Prior Year was more than offset by
the 4% increase in average tenant monthly rents during the Current Year - $1,046
vs. $1,006.
WESTWOOD HILLS, LLC: Net Income was further enhanced by the increase in FREIT's
equity in earnings of its 40% owned affiliate, Westwood Hills, LLC ("WH"), to
$269,000 for the Current Year from $190,000 for the Prior Year. WH owns a
210-unit apartment property in Westwood, NJ. During the Current Year this
property experienced revenue increases of 4.4% and operating expense reductions
of .5% compared to the Prior Year.
The holder of first mortgage on WH's property has agreed to increase the loan,
via a second mortgage, which will run co-terminus with the first mortgage loan -
approximately 11 years. The second mortgage loan amount will be approximately
$3.4 million and will bear interest at a fixed rate of 6.18%. This additional
financing is expected to close in about 60 days. FREIT will receive 40% of the
net financing proceeds, further adding it its liquidity.
INVESTMENT INCOME & FINANCING: Net Investment Income fell by $433,000 during the
Current Year compared to the Prior Year. This reduction, due to lower available
investment returns, was more than offset by the reduction in financing costs of
$483,000 for the Current Year compared to the Prior Year.
During November 2002, FREIT renegotiated the terms of the first mortgage note on
FREIT's retail property in Patchogue, NY. The mortgage note, which has an
outstanding principal balance of $6.9 million, is due on January 1, 2005, and
carries a fixed interest rate of 7.375%. The due date has been extended three
years (3) and the interest rate was reduced to 5.95% fixed. This interest rate
reduction will result in lower interest charges and, in turn, higher income, and
cash flow to shareholders.
DIVIDENDS: The Board of Trustees has declared a fourth quarter dividend of $.67
per share payable on December 17, 2002 to shareholders of record on December 2,
2002. This dividend raises dividends from continuing operations for the year to
$1.57 per share (excluding the special capital gain dividend of $.15 per share
paid on September 6, 2002). This compares to Prior Year's dividends of $1.38.
In addition, the Board of Trustees has increased the fixed dividend paid for the
first three quarters of each year to $.35 per share from $.30 per share.
The statements in this report that relate to future earnings or performance are
forward-looking. Actual results might differ materially and be adversely
affected by such factors as longer than anticipated lease-up periods, or the
inability of tenants to pay increased rents. Additional information about these
factors is contained in the Trust's filings with the SEC including the Trust's
most recent filed report on Forms 10-K and 10-Q.
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FREIT is a publicly traded (over-the-counter - symbol FREVS) REIT organized in
1961. It has approximately $96 million (historical cost basis) of assets. Its
portfolio of residential and retail properties extends from Eastern, L.I. to
Maryland, with the largest concentration in Northern New Jersey.
For additional information contact Shareholder Relations at (201) 488-6400.
(summary financial statements over)
FIRST REAL ESTATE INVESTMENT TRUST
of New Jersey
Summary Consolidated Statement of Income
(in thousands of dollars except per share amount)
Year Ended Three Months Ended
------------------------ ------------------------
October 31, October 31,
2002 2001 2002 2001
Revenues:
Real Estate Operations $ 18,626 $ 18,062 $ 4,616 $ 4,548
Net Investment Income 250 683 67 89
Equity In Earnings Of Affiliate 269 190 72 72
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Total Revenue 19,145 18,935 4,755 4,709
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Expenses:
Operating Expenses & Management Fees 3,658 3,814 958 834
Real Estate Taxes 2,400 2,293 619 589
Financing Costs 4,873 5,356 1,212 1,282
General & Administration 642 539 104 248
Depreciation 2,153 2,137 544 543
Minority Interest 137 85 47 37
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Total Expenses 13,863 14,224 3,484 3,533
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Net Income Before Discontinued Operations 5,282 4,711 1,271 1,176
Discontinued Operations
Gain On Sale 475 475
Operations (76) (10) (43) 1
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Total Discontinued Operations 399 (10) 432 1
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Net Income $ 5,681 $ 4,701 $ 1,703 $ 1,177
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Basic earnings per share:
Earnings before discontinued operations $ 1.69 $ 1.51 $ 0.41 $ 0.38
Discontinued operations 0.13 -- 0.14 --
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Total $ 1.82 $ 1.51 $ 0.55 $ 0.38
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Diluted earnings per share:
Earnings before discontinued operations $ 1.63 $ 1.50 $ 0.39 $ 0.37
Discontinued operations 0.12 -- 0.13 --
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Total $ 1.75 $ 1.50 $ 0.52 $ 0.37
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Funds From Operations:
Net Income $ 5,681 $ 4,701 $ 1,703 $ 1,177
Depreciation & Amortization 2,153 2,137 544 543
Discontinued operations (399) 10 (432) (1)
Deferred Rents (326) (414) (60) (113)
Project Abandoned 161 114 -- 114
Capital Improvements - Apartments (378) (429) (169) (104)
Minority Interest 137 85 47 37
Other 173 185 58 10
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Total FFO $ 7,202 $ 6,389 $ 1,691 $ 1,663
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FFO Per Share - Basic $ 2.31 $ 2.05 $ 0.54 $ 0.53
- Diluted $ 2.26 $ 2.04 $ 0.52 $ 0.52
Dividends Per Share
Regular $ 1.57 $ 1.38 $ 0.67 $ 0.48
Special Long Term Capital Gain $ 0.15 $ -- $ 0.15 $ --
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Total Dividends $ 1.72 $ 1.38 $ 0.82 $ 0.48
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