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: June 20, 1997
FIRST REAL ESTATE INVESTMENT TRUST
OF NEW JERSEY
(Exact name of registrant as specified in its charter)
New Jersey 2-27018 22-1697095
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(State or other (Commission File (I.R.S. Employer
jurisdiction of number) Identification
incorporation) Number)
505 Main Street, P.O. Box 667, Hackensack, New Jersey 07602
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 201-488-6400
<PAGE>
Item 5. Other Events
The Registrant has received a letter of comment from the Securities and
Exchange Commission (the "SEC") dated May 28, 1997, a copy of which is attached
to this 8-K under Item 7 (the "SEC Letter").
An amended 10K/A will be filed in response to the comments from the
SEC.
With respect to the SEC's comments set forth in the SEC Letter as to
Note 1, the Registrant has agreed to use the equity method of accounting for its
investment in the Westwood Hills, L.L.C. (the "LLC") for each accounting period
commencing with the first quarter fiscal year 1997 and to restate all financial
statements as they appeared in the 10-K filed for fiscal year 1996. Prior to the
change to the equity method, the Registrant had reported its investment in the
LLC on a consolidated basis.
As a consequence of changing the accounting for the LLC to the equity
method, the following is a summary of the significant changes which will occur:
1. The Combined Balance Sheets of the Registrant based upon the
consolidated method of accounting for the LLC shows that the Total Assets, Total
Liabilities, Minority Interest and Total Shareholder's Equity as of October 31,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Total Assets ....................... $65,222,000 $65,535,000
Total Liabilities .................. 42,350,000 42,587,000
Minority Interest .................. 2,888,000 2,959,000
Total Shareholders'
Equity ......................... 19,984,000 19,989,000
</TABLE>
2. As a result of the change to the equity method of accounting, the
Restated Balance Sheets of the Registrant will show that Total Assets, Total
Liabilities and Total Shareholders' Equity as of October 31, 1996 and 1995 will
be as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Total Assets ....................... $51,674,000 $51,838,000
Total Liabilities .................. 31,690,000 31,849,000
Total Shareholders'
Equity ......................... 19,984,000 19,989,000
</TABLE>
<PAGE>
3. The Combined Statements of Income and Undistributed Earnings for the
years ended October 31, 1996, 1995 and 1994, based upon the consolidated method
of accounting for the LLC, were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Total Revenues ........ $13,678,000 $13,250,000 $11,162,000
Total Expenses ........ 10,218,000 9,592,000 8,235,000
Net Income ............ 2,662,000 2,786,000 2,383,000
Earnings per
share ........... $ 1.71 $ 1.79 $ 1.53
</TABLE>
4. As a result of the change to the equity method of accounting, the
Statements of Income and Undistributed Earnings for the years ended October 31,
1996, 1995 and 1994 will be as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Total Revenues ........ $11,318,000 $11,038,000 $10,279,000
Total Expenses ........ 8,091,000 7,585,000 7,479,000
Net Income ............ 2,662,000 2,786,000 2,383,000
Earnings per
share ........... $ 1.71 $ 1.79 $ 1.53
</TABLE>
5. The foregoing discussion is a summary based upon revised financial
statements which will be incorporated into the 10K/A to be filed by the
Registrant. Any interested parties should review all of the financial
information which will be set forth in the 10K/A.
Item 7: Financial Statements and Exhibits.
1. Letter from the SEC dated May 28, 1997.
<PAGE>
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 hereunto duly authorized.
FREIT
By: /s/Robert S. Hekemian
---------------------
Robert S. Hekemian
Chairman of the Board
DATED: June 20, 1997
<PAGE>
[GRAPHIC-DIVISION OF CORPORATION FINANCE LOGO]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Stop 7-2 May 28, 1997
Mr. Robert S. Hekemian, Chief Executive Officer
Hekemian & Co., Inc.
505 Main Street, P.O. Box 667
Hackensack, New Jersey 07602
Re: First Real Estate Investment Trust of New Jersey
Form 10K for the fiscal year ended October 31, 1996
Filed on January 30, 1997
File Number: 2-27018
Form 10Q for the quarter ended January 31, 1997
Filed on April 1, 1997
File Number: 2-48728
Dear Mr. Hekemian:
The staff has reviewed only the portions of this filing related to the
financial statements and management's discussion and analysis and has the
following accounting comments.
Form 10K
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Management's Discussion and Analysis of Financial Condition and
- ---------------------------------------------------------------
Results of Operations
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Expand this section to include a discussion of the 1995 amounts in comparison
with 1994 amounts in accordance with Item 303 of Regulation S-X.
Revise this section to state whether the known trend of rental expenses which
are growing at a faster rate than rental revenue is expected to continue.
Describe management's plans to address this trend.
Note 4. Mortgages Payable
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Revise this note to include the disclosures required by FASB 107.
<PAGE>
Mr. Robert S. Hekemian
May 28, 1997
Page 2
Note 1. Accounting Policies
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Revise this note to explain the basis for the consolidation of Westwood Hills
LLC. Unless the registrant can demonstrate that it unilaterally controls the
LLC, revise the financial statements to use the equity method of accounting for
the investment in the LLC and include separate financial statements of the LLC
pursuant to Rule 3-09 of Regulation S-X. See, generally, SOP 78-9.
Form 10Q
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Note 3. Mortgages Payable
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Expand the filing to include a disclosure which describes the registrant's
current efforts to obtain alternative financing in order to pay off the State
Mutual Life Insurance Co. mortgage obligation prior to its August 1, 1997
maturity. See Item 303 of Regulation S-X.
The supplemental information which has been requested above should either be
submitted by June 9, 1997, or the staff should be advised by that date when such
information will be forthcoming.
In the event compliance with the above comments is not deemed
appropriate by the registrant, the basis therefore should be provided to the
staff in a supplemental letter as promptly as possible.
Questions regarding the above accounting comments may be directed to
Allen E. Webb at (202) 942-1868 or Hugh Miller III, the Assistant Chief
Accountant at (202) 942-1962 and questions on other disclosure issues may be
directed to Paula Dubberly, the Assistant Director, at (202) 942-1960.
Sincerely,
/s/ Hugh Miller III
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Hugh Miller III
Assistant Chief Accountant
