SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 8, 2003
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
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(Exact name of registrant as specified in its charter)
New Jersey 22-1697095
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(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
505 Main Street, P.O. Box 667, Hackensack, New Jersey 07602
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-488-6400
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Item 5. Other Events
The Registrant has reported to its shareholders its operating results for
the year and three months and three ended October 31, 2003. The Press
Release is included as Exhibit I to this Form 8-K.
Disclosure Concerning Forward-Looking Statements
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Certain Statements in this Form 8-K may contain information that is, or
anticipate certain events that are, forward-looking within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Registrant cautions readers
that forward-looking statements, including, without limitation, those relating
to the Registrant's liquidity and capital resources, are subject to certain
risks and uncertainties. Actual results may differ materially from those
described in the forward-looking statements and will be affected by a variety of
risks and factors, including without limitation, the Registrant's future
financial performance; the availability of capital; general market conditions;
national and local economic conditions; particularly long-term interest rates;
the terms of federal, state and local governmental regulations that affect the
Registrant; and the competitive environment in which the Registrant operates,
including the availability of retail space and residential apartment units in
the areas where the Registrant's properties are located. In addition, the
Registrant's continued qualification as a real estate investment trust involves
the application of highly technical and complex rules of the Internal Revenue
Code. The forward-looking statements are made as of the date of this Form 8-K
and the Registrant assumes no obligation to update the forward-looking
statements or to update the reasons actual results could differ from those
projected in such forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
FIRST REAL ESTATE INVESTMENT TRUST
OF NEW JERSEY
By: s/s Robert S, Hekemian
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Robert S. Hekemian
Chairman of the Board
DATED: December 9, 2003
Exhibit I
FIRST REAL ESTATE INVESTMENT TRUST
of New Jersey
RESULTS OF OPERATIONS
YEAR AND THREE MONTHS ENDED
OCTOBER 31, 2003 AND 2002
HACKENSACK, NJ, December 5, 2003 - First Real Estate Investment Trust ("FREIT")
announced its operating results for the year and three months ended October 31,
2003. 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,
2003 ("Current Quarter") increased by 20% to $1,525,000 on revenues of
$5,358,000, from $1,271,000 on revenues of $4,755,000 for the three months ended
October 31, 2002 ("Prior Year's Quarter").
For the year ended October 31, 2003 ("Current Year") net income from continuing
operations increased 5.3% to $5,565,000 on revenues of $20,190,000, from
$5,283,000 on revenues of 19,145,000 for the year ended October 31, 2002 ("Prior
Year").
The changes in the components of net income are summarized below:
Year ended Quarter Ended
October 31, Increase October 31, Increase
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2003 2002 (Decrease) 2003 2002 (Decrease)
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(in thousands, except per share amounts)
Net Income components
Real estate operations
Retail $ 7,046 $ 6,819 $ 227 $ 1,848 $ 1,574 $ 274
Residential 3,479 3,459 20 939 874 65
Equity in income of affiliates 250 269 (19) 137 72 65
Net investment income 187 250 (63) 48 67 (19)
Financing costs (4,802) (4,873) 71 (1,297) (1,212) (85)
General & Administrative expenses (595) (641) 46 (150) (104) (46)
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Income from continuing operations 5,565 5,283 282 1,525 1,271 254
Discontinued Operations
Operations (77) 77 (43) 43
Gain on Sale 475 (475) 475 (475)
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Total Discontinued Operations - 398 (398) - 432 (432)
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Net Income $ 5,565 $ 5,681 $ (116) $ 1,525 $ 1,703 $ (178)
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Depreciation included in
real estate operations $ 2,229 $ 2,153 $ 76 $ 628 $ 544 $ 84
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Basic earnings (loss) per share:
Income from continuing operations $ 1.78 $ 1.69 0.09 $ 0.48 $ 0.41 $ 0.07
Discontinued operations 0.13 (0.13) 0.14 (0.14)
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$ 1.78 $ 1.82 (0.04) $ 0.48 $ 0.55 $ (0.07)
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Diluted earnings (loss) per share: - -
Income from continuing operations $ 1.71 $ 1.63 0.08 $ 0.46 $ 0.40 $ 0.06
Discontinued operations 0.12 (0.12) 0.14 (0.14)
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$ 1.71 $ 1.75 $ (0.04) $ 0.46 $ 0.54 $ (0.08)
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Basic weighted average shares outstanding 3134 3,120 3156 3,120
Diluted weighted average shares outstanding 3261 3,233 3307 3,180
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RETAIL PROPERTIES: For the Current Year, Net Operating Income (Net income before
depreciation, deferred rents, and financing costs) increased 6.5% to $8.9
million on revenues of $13 million. This compares to earnings of $8.4 million on
revenues of $11.9 million for the Prior Year. Average occupancy (excluding the
Damascus Center, Damascus, MD) for the Current Year and at October 31, 2003 was
93.1% and 93.6% respectively. Average occupancy for the Prior Year and at
October 31, 2002 was 96.2% and 93.0% respectively.
In February 2003, a major tenant in one of our shopping centers closed their
store and ceased paying rent and additional rent, and is in default of both
monetary and non-monetary provisions of their lease. Annual rent and other
charges from this tenant approximate $480,000 per year. A tentative lease
termination agreement has been reached with the tenant whereby the tenant will
pay FREIT $1.7 million to terminate the lease. As of the date of this report we
await approval of this termination agreement by the mortgage lender on the
property.
ACQUISITION OF DAMASCUS SHOPPING CENTER: On July 31, 2003 a wholly owned
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affiliate of FREIT acquired the Damascus Shopping Center in Damascus, MD. The
Shopping Center is situated on 13 acres and contains approximately 139,000 sq.
ft. of retail and office space. A Safeway supermarket is the anchor tenant.
The total acquisition costs of $10.3 million were financed in part by the
assumption of an existing $2.6 million first mortgage loan and the balance of
$7.7 million with equity capital. FREIT is considering offering a minority
interest in this investment to employees of Hekemian & Co., Inc., FREIT's
managing agent.
FREIT plans to demolish the existing buildings, with the exception of the
freestanding McDonald's restaurant. The construction of a new Shopping Center of
approximately 145,000 sq. ft. is planned, of which 58,000 sq. ft. is expected to
be occupied by a new, prototype Safeway Supermarket. A smaller building will be
constructed on an out parcel, which will accommodate the office tenants as well
as some smaller, retail space. This plan to construct a new center is subject to
obtaining all approvals and building permits from the various governing
authorities. If all approvals are obtained, total development costs are
estimated at approximately $13 million. Construction is not expected to begin
before January 2005. During the holding period until construction begins, the
center is not expected to make a significant contribution to FREIT's earnings or
cash flow.
RESIDENTIAL PROPERTIES: The Net Operating Income (Net Income before
depreciation) for the Current Year increased 2.6% to $3.9 million on revenues of
$6.6 million compared to earnings of $3.8 million on revenues of $6.3 million
for the Prior Year. Average occupancy for the Current Year and at October 31,
2003 was 96.3% and 94.1% respectively. Average occupancy for the Prior Year and
at October 31, 2002 was 96.3% and 95.3% respectively. The Current Year's
earnings were burdened by increased expenses because of the severity of the
2002/2003 winter and by a weak rental market during most of the first three
quarters.
EQUITY IN INCOME OF AFFILIATES: This represents income from Westwood Hills, LLC,
which owns a 210 unit (family) garden apartment community in Westwood, NJ, and
from Wayne PSC, LLC, which owns the Preakness Shopping Center in Wayne, NJ.
FREIT has a 40% equity ownership in each of these entities. Results of
operations are as follows:
Year Ended Quarter Ended
October 31, October 31,
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Net Income of 2003 2002 2003 2002
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Westwood Hills, LLC $ 466 $ 673 $ 167 $ 180
Wayne PSC, LLC 158 175
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Total $ 624 $ 673 $ 342 $ 180
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FREIT's Share of Net Income $ 250 $ 269 $ 137 $ 72
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Net Income at Westwood Hills decreased 30.8% to $466,000 for the Current Year
from $673,000 for the Prior Year. Net income for the Current Quarter decreased
7.2% to $167,000 from $180,000 for the Prior Year's Quarter. The reduction for
the Current Year is largely due to two factors: 1) in spite of revenues
increasing 2.9% over the Prior Year, the increase was insufficient to cover the
11.3% increase in expenses directly related to the severe winter of 2002/2003
and, 2) the financing costs relating to the $3.4 million second mortgage
obtained in January 2003. FREIT received, as a distribution, approximately $1.4
million of the net financing proceeds. This financing will add approximately
$170,000 of financing costs to Westwood Hills operations. While FREIT bears 40%
of this additional financing cost, we feel this cost will be offset by the
income FREIT will ultimately earn from investing its $1.4 million distribution.
Income at the Preakness Shopping Center, before financing costs, was $2,357,000
and $665,000 for the Current Year and Current Quarter respectively. Net Income
for the Current Year, however, was burdened by one-time re-financing costs of
$457,000 related to the financing described below.
On June 30, 2003 Wayne PSC refinanced its original $26.5 million first mortgage
with a new $32.5 million mortgage loan. The term of the new loan is thirteen
(13) years, with interest fixed at 6.04 %, and the loan will require interest
only payments for the first three years and thereafter be amortized over a
25-year life. FREIT received $2.4 million of the net re-finance proceeds as a
distribution from Wayne PSC.
LIQUIDITY: Our financial condition remains strong. At October 31, 2003, we had
cash and cash equivalents totaling $12.8 million compared to $11.9 million at
October 31, 2002.
To create liquidity and lock in favorable long-term interest rates, FREIT took
advantage of the Freddie Mac second mortgage program. This program allows
add-ons to existing Freddie Mac first mortgages to the extent justified by
increased values and cash flows. On August 20, 2003 FREIT placed add-on second
mortgages on three of its residential properties. The second mortgage loans
aggregated approximately $7 million bearing an average fixed rate of 5.2%. The
due dates of the second mortgage loans are co-terminus with the underlying first
mortgage loans. FREIT received net financing proceeds of approximately $6.9
million.
DIVIDENDS: The fourth quarter dividend of $.75 per share is payable on December
16, 2003 to shareholders of record on December 1, 2003. This raised total
dividends this year to $1.81 compared to $1.72 last year. In addition, the Board
of Trustees has increased the fixed dividend payable for the first three
quarters of each year to $.40 per share from $.35 per share.
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FINANCIAL SUMMARY
(thousands, except per share values)
10/31/03 10/31/02
Net investment in real estate $ 84,414 $74,687
Cash and equivalents $ 12,871 $11,930
Total assets $ 107,150 $96,032
Mortgage debt $ 76,890 $68,393
Shareholder's equity $ 22,140 $21,903
Shares outstanding 3,156 3,120
Book value per share $ 7.02 $ 7.02
EPS (Continuing operations / Diluted) $ 1.71 $ 1.63
Dividends declared
From Continuing Operations $ 1.81* $ 1.57
From Discontinued Operations $ 0.15
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Total $ 1.81 $ 1.72
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* Based on weighted average shares outstanding.
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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 $107 million (historical cost basis) of assets. Its
portfolio of residential and retail properties extends from Eastern Long Island.
to Maryland, with the largest concentration in Northern New Jersey.
For additional information contact Shareholder Relations at (201) 488-6400.
505 Main Street, Hackensack, NJ, 07601