SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 1998 Commission File No. 2-27018
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
(exact name of registrant as specified in its charter)
New Jersey 22-1697095
- ------------------------------- -------------------
(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
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-488-6400
- --------------------------------------------------------------------------------
Former name,former address and former fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
INDEX
Part I: Financial Information
Item 1: Financial Statements
a.) Balance Sheets for July 31, 1998 and October 31, 1997;
b.) Statements of Income and Undistributed Earnings For
Nine and Three Months Ended July 31, 1998 and 1997;
c.) Statements of Cash Flows for Nine Months Ended July 31,
1998 and 1997;
Item 2: Management's Discussion and Analysis of Results of Operations
and Financial Condition
Part II:
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Disclosure Concerning Forward-Looking Statements
Certain statements in the "Management's Discussion and Analysis of the
Results of Operation and Financial Condition", and certain of the Notes to the
Registrant's Financial Statements, in particular Note 6, contain or may contain
information that is forward-looking within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Registrant cautions readers that forward-looking statements, including, without
limitation, those relating to the Registant'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 risk 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 commercial office space
and residential 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
programs of the Internal Revenue Code. The forward-looking statements are made
as of the date of this Form 10-Q and the Registrant assumes no obligation to
update the forward-looking statements or to update the reasons actual results
could differ from those projeced in such forward-looking statements.
<PAGE>
Part 1.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The following discussion should be read in conjunction with
the attached financial statements and notes thereto, and the Registrant's
Audited Financial Statements and notes thereto for Fiscal Year Ended October 31,
1997.
Liquidity and Capital Resources
Liquidity
Cash from operations has enabled the Registrant to meet all current
obligations. Registrant expects that cash from operations will allow it to meet
all future requirements as they become due.
Results of Operations
The Registrant's net income for the second quarter ended April 30,
1998, increased 24.5% to $973,000 ($.62 per share) from $776,000 ($.49 per
share) for the comparable prior year quarter.
Net income for the nine months ended July 31, 1998, increased 24.5% to
$2,688,000 ($1.72 per share) from $2,159,000 ($1.38 per share) for the nine
months ended July 31, 1997.
Earnings from operating properties (before interest costs) increased
the first nine months of Fiscal Year 1997. While earnings at comparable
properties in both years increased as a result of higher base rents and lower
operating costs, the principle reason for increase in earnings is Registrant's
new commercial properties in Patchogue, New York, and Franklin Lakes, New
Jersey. An increase of 21% in net income from the Registrant's affiliate also
contributed in the increase in net income realized during the first nine months
of fiscal 1998.
Funds from operations, consisting of net income, excluding deferred
rents and gains and losses from property sales, plus real estate related
depreciation and amortization, ("FFO") was $1,357,000 for the third quarter of
fiscal 1998 as compared to $1,137,000 for the same period in 1997. FFO for the
nine months 1998 was $3,924,000 as compared to $3,237,000 for the same period in
1997.
<PAGE>
Part II.
Item 4. Submission of Matters to a Vote of Security Holders.
On May 27, 1998 at the Annual Meeting of the Shareholders, the
Shareholders re-elected Donald W. Barney, Ronald A. Artinian and Alan L. Aufzien
as Trustees for additional three year terms. A total of 1,316,848 votes were
cast in favor of each Trustee; there were 1,559,788 shares of the Registrant
eligible to vote. There were no negative votes.
Item. 5. Other Information
The Board of Trustees declared a $0.40 third quarter dividend
payable on September 14, 1998, to shareholders of record as of September 1,
1998. This will raise dividends paid thus far this fiscal year to $1.20 per
share compared to $1.05 per share paid during the same period in 1997.
Item 6. Exhibits and Reports on Form 8-K
No Form 8-K was filed during the third quarter of fiscal year
1998 which ended July 31, 1998.
<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 thereunto duly authorized.
FIRST REAL ESTATE INVESTMENT
TRUST OF NEW JERSEY
(Registrant)
Date September 15, 1998
/s/ William R. DeLorenzo, Jr.
-----------------------------
(Signature)*
William R. DeLorenzo, Jr.
Executive Secretary and Treasurer
- -------------------
*Print name and title of the signing officer under his signature.
<PAGE>
SALES OF UNREGISTERED SECURITIES (DEBT OR EQUITY)
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
N O N E
<PAGE>
<TABLE>
<CAPTION>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
BALANCE SHEETS
JULY 31, 1998 AND OCTOBER 31, 1997
July October
ASSETS 31, 1998 31, 1997
------- -------
(Unaudited) (See Note 1)
(In Thousands of Dollars)
<S> <C> <C>
Real estate, at cost, net of accumulated depreciation ............... $64,683 $53,737
Equipment, at cost, net of accumulated depreciation of $693,000 and
$657,000 .......................................................... 188 184
Investment in affiliate ............................................. 1,854 1,905
Cash ................................................................ 649 228
Tenants' security accounts .......................................... 781 719
Sundry receivables .................................................. 1,021 280
Prepaid expenses and other assets ................................... 904 1,470
Deferred charges, net ............................................... 1,171 710
------- -------
Totals .................................................... $71,251 $59,233
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages payable ............................................... $48,020 $24,429
Note payable - bank ............................................. 11,429
Accounts payable and accrued expenses ........................... 441 409
Construction liabilities ........................................ 496
Dividends payable ............................................... 624 1,326
Tenants' security deposits ...................................... 991 905
Deferred revenue ................................................ 375 255
------- -------
Total liabilities ......................................... 50,451 39,249
------- -------
Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest without par value; 1,560,000 shares
authorized; 1,559,788 shares issued and outstanding ......... 19,314 19,314
Undistributed earnings .......................................... 1,486 670
------- -------
Total shareholders' equity ................................ 20,800 19,984
------- -------
Totals .................................................... $71,251 $59,233
======= =======
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS
NINE AND THREE MONTHS ENDED JULY 31, 1998 AND 1997
(Unaudited)
Nine Months Three Months
Ended July 31, Ended July 31,
INCOME 1998 1997 1998 1997
-------- -------- -------- --------
(In Thousands of Dollars,
Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenue:
Rental income ....................... $ 9,233 $ 7,419 $ 3,207 $ 2,508
Reimbursements ...................... 1,202 1,060 378 375
Equity in income of affiliate ....... 149 123 71 46
Sundry income ....................... 149 110 47 28
-------- -------- -------- --------
Totals .......................... 10,733 8,712 3,703 2,957
-------- -------- -------- --------
Expenses:
Operating expenses .................. 2,251 1,979 760 658
Management fees ..................... 428 369 155 121
Real estate taxes ................... 1,325 1,258 437 419
Interest ............................ 2,813 1,960 948 648
Depreciation ........................ 1,220 978 428 332
-------- -------- -------- --------
Totals .......................... 8,037 6,544 2,728 2,178
-------- -------- -------- --------
Income before state income taxes ........ 2,696 2,168 975 779
Provision for state income taxes ........ 8 9 2 3
-------- -------- -------- --------
Net income .............................. $ 2,688 $ 2,159 $ 973 $ 776
======== ======== ======== ========
Earnings per share ...................... $ 1.72 $ 1.38 $ .62 $ .49
======== ======== ======== ========
UNDISTRIBUTED EARNINGS
Balance, beginning of period ............ $ 670 $ 670 $ 1,137 $ 961
Net income .............................. 2,688 2,159 973 776
Less dividends .......................... (1,872) (1,637) (624) (545)
-------- -------- -------- --------
Balance, end of period .................. $ 1,486 $ 1,192 $ 1,486 $ 1,192
======== ======== ======== ========
Dividends per share ..................... $ 1.20 $ 1.05 $ .40 $ .35
======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1998 AND 1997
(Unaudited)
1998 1997
-------- --------
(In Thousands
of Dollars)
<S> <C> <C>
Operating activities:
Net income ......................................................... $ 2,688 $ 2,159
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .................................. 1,313 1,005
Deferred revenue ............................................... 120 (259)
Equity in income of affiliate ...................................... (149) (123)
Changes in operating assets and liabilities:
Tenants' security accounts .................................. (62) 7
Sundry receivables, prepaid expenses and other assets ....... (175) 103
Accounts payable and accrued expenses ....................... 32 (61)
Tenants' security deposits .................................. 86 22
-------- --------
Net cash provided by operating activities ............... 3,853 2,853
-------- --------
Investing activities:
Capital expenditures ............................................... (5,195) (4,447)
Distributions from affiliate ....................................... 200 117
-------- --------
Net cash used in investing activities ................... (4,995) (4,330)
-------- --------
Financing activities:
Dividends paid ..................................................... (2,574) (2,120)
Proceeds (repayments) of note payable - bank ....................... (11,429) 4,721
Net proceeds from mortgage refinancing ............................. 5,443 1,314
Proceeds from mortgage borrowings .................................. 11,100
Repayment of mortgages ............................................. (452) (377)
Deferred mortgage costs ............................................ (525) (224)
-------- --------
Net cash provided by financing activities ............... 1,563 3,314
-------- --------
Net increase in cash ................................................... 421 1,837
Cash, beginning of period .............................................. 228 189
-------- --------
Cash, end of period .................................................... $ 649 $ 2,026
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1998 AND 1997
(Unaudited)
(continued)
1998 1997
-------- --------
(In Thousands
of Dollars)
<S> <C> <C>
Supplemental disclosure of cash flow data:
Interest paid, net of capitalized interest of $67,000 and $51,000 in
1998 and 1997, respectively .................................... $ 2,814 $ 1,961
======== ========
Supplemental schedule of noncash investing and financing activities:
Dividends declared but not paid amounted to $624,000 and $545,000 at July
31, 1998 and 1997, respectively.
During the nine months ended July 31, 1998, the Trust completed its
acquisition of a 64,000 square foot commercial property in Patchogue, New
York for approximately $11,000,000, in part, with the proceeds of a
$7,500,000 mortgage.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and significant accounting policies:
Organization:
First Real Estate Investment Trust of New Jersey (the
"Trust") was organized November 1, 1961 as a New Jersey
Business Trust. The Trust is engaged in owning residential
and commercial income producing properties located primarily
in New Jersey, Maryland and New York.
The Trust has elected to be taxed as a Real Estate
Investment Trust under the provisions of Sections 856-860 of
the Internal Revenue Code, as amended. Accordingly, the
Trust does not pay Federal income tax on income whenever
income distributed to shareholders is equal to at least 95%
of real estate investment trust taxable income. Further, the
Trust pays no Federal income tax on capital gains
distributed to shareholders.
The Trust is subject to Federal income tax on undistributed
taxable income and capital gains. The Trust may make an
annual election under Section 858 of the Internal Revenue
Code to apply part of the regular dividends paid in each
respective subsequent year as a distribution for the
immediately preceding year.
Basis of presentation:
The financial information included herein as at July 31,
1998 and for the nine and three months ended July 31, 1998
and 1997 is unaudited and, in the opinion of the Trust,
reflects all adjustments (which include only normal
recurring accruals) necessary for a fair presentation of the
financial position as of that date and the results of
operations for those periods. The information in the balance
sheet as of October 31, 1997 was derived from the Trust's
audited annual report for 1997.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Investment in Affiliate:
The Trust's 40% investment in Westwood Hills, LLC (the
"Affiliate") is accounted for using the equity method.
Cash:
The Trust maintains its cash in bank deposit accounts which,
at times, may exceed Federally insured limits. The Trust
considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.
At July 31, 1998 and October 31, 1997, the Trust had no cash
equivalents.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and significant accounting policies (concluded):
Depreciation:
Real estate and equipment are depreciated on the
straight-line method by annual charges to operations
calculated to absorb costs of assets over their estimated
useful lives.
Revenue recognition:
Income from leases is recognized on a straight-line basis
regardless of when payment is due. Lease agreements between
the Trust and commercial tenants generally provide for
additional rentals based on such factors as percentage of
tenants' sales in excess of specified volumes, increases in
real estate taxes, Consumer Price Indices and common area
maintenance charges. These additional rentals are generally
included in income when reported to the Trust, when billed
to tenants or ratably over the appropriate period.
Deferred charges:
Deferred charges consist of mortgage costs and leasing
commissions. Deferred mortgage costs are amortized on the
straight-line method by annual charges to operations over
the terms of the mortgages. Amortization of such costs is
included in interest expense and approximated $49,000 and
$19,000 for the nine and three months ended July 31, 1998,
respectively. Deferred leasing commissions are amortized on
the straight-line method over the terms of the applicable
leases.
Advertising:
The Trust expenses the cost of advertising and promotions as
incurred. Advertising costs charged to operations amounted
to approximately $40,000 and $23,000 for the nine months
ended July 31, 1998 and 1997, respectively, and
approximately $17,000 and $10,000 for the three months ended
July 31, 1998 and 1997, respectively.
Earnings per share:
Earnings per share are computed based on the weighted
average number of shares outstanding. The weighted average
number of shares outstanding was 1,559,788 for each of the
nine and three month periods ended July 31, 1998 and 1997.
Reclassification:
Certain amounts in the 1997 financial statements have been
reclassified to conform with the current presentation.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 2 - Investment in affiliate:
The Trust is a 40% member of the Affiliate, a limited liability
company that is managed by Hekemian & Co., Inc. ("Hekemian"), a
company which manages all of the Trust's properties and in which
one of the trustees of the Trust is the chairman of the board.
Certain other members of the Affiliate are either trustees of
the Trust or their families or officers of Hekemian. The
Affiliate owns a residential apartment complex located in
Westwood, New Jersey.
Summarized financial information of the Affiliate as of July 31,
1998 and October 31, 1997 and for the nine and three months
ended July 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
July October
31, 1998 31, 1997
-------- --------
(In Thousands of Dollars)
<S> <C> <C>
Balance sheet data:
Assets:
Real estate and equipment, net ............... $14,489 $14,696
Other ........................................ 544 551
------- -------
Total assets .......................... $15,033 $15,247
======= =======
Liabilities and members' equity:
Liabilities:
Mortgage payable .......................... $10,068 $10,192
Other ..................................... 333 295
------- -------
Totals ................................ 10,401 10,487
------- -------
Members' equity:
Trust ..................................... 1,854 1,905
Others .................................... 2,778 2,855
------- -------
Totals ................................ 4,632 4,760
------- -------
Total liabilities and members' equity . $15,033 $15,247
======= =======
</TABLE>
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Nine Months Three Months
Ended Ended
July 31, July 31,
------------------ ------------------
1998 1997 1998 1997
------ ------ ------ ------
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
Income statement data:
Rental revenue .............. $1,953 $1,878 $ 660 $ 632
Rental expenses ............. 1,581 1,570 483 515
------ ------ ------ ------
Net income .................. $ 372 $ 308 $ 177 $ 117
====== ====== ====== ======
</TABLE>
Note 3 - Real estate:
Real estate consists of the following:
<TABLE>
<CAPTION>
Range
of Estimated July October
Useful Lives 31, 1998 31, 1997
------------ -------- --------
(In Thousands
of Dollars)
<S> <C> <C> <C>
Land $22,768 $20,244
Unimproved land 2,308 2,310
Apartment buildings 7-40 years 10,929 10,711
Commercial buildings and shopping
centers 15-50 years 39,866 30,328
Construction in progress 1,981 2,126
--------- ---------
77,852 65,719
Less accumulated depreciation 13,169 11,982
-------- --------
Totals $64,683 $53,737
======= =======
</TABLE>
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 4 - Mortgages payable:
Mortgages payable consist of the following:
<TABLE>
<CAPTION>
July October
31, 1998 31, 1997
----------- -----------
(In Thousands
of Dollars)
<S> <C> <C>
Northern Life Insurance Cos. (A) $ 18,940 $ 19,123
Travelers Insurance (B) 5,181
National Realty Funding L.C. (B) 10,551
Summit Bank (C) 54 125
Summit Bank (D) 7,437
Federal Home Loan Mortgage Corporation (E) 11,038
----------- -----------
Totals $ 48,020 $ 24,429
=========== ===========
</TABLE>
(A) The mortgage is payable in monthly installments of
$152,153 including interest at 8.31% through June
2007 at which time the outstanding balance is due.
The mortgage is secured by a shopping center in
Frederick, Maryland having a net book value of
approximately $24,665,000.
(B) On January 9, 1998, the Trust repaid the existing
mortgage on the Westwood, New Jersey shopping center
utilizing proceeds from a new mortgage in the amount
of $10,600,000 with National Realty Funding L.C. The
new mortgage is payable in monthly installments of
$73,248 including interest at 7.38% through February
2013 at which time the outstanding balance is due.
The mortgage is secured by a shopping center in
Westwood, New Jersey having a net book value of
approximately $11,568,000.
(C) Payable in monthly installments of $8,555 including
interest at 7.625% through March 1999. The mortgage
is secured by an apartment building in Spring Lake,
New Jersey having a net book value of approximately
$566,000. One of the directors of the bank is a
trustee of the Trust.
(D) Payable in monthly installments of $54,816 including
interest at 7.375% through January 2005 at which time
the outstanding balance is due. The mortgage is
secured by a commercial building in Patchogue, New
York having a net book value of approximately
$10,752,000.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 4 - Mortgages payable: (concluded)
(E) Payable in monthly installments of $76,023 including
interest at 7.29% through July 2010 at which time the
outstanding balance is due. The mortgage is secured
by an apartment building in Wayne, New Jersey having
a net book value of approximately $1,608,000.
Principal amounts (in thousands of dollars) due under the above
obligations in each of the five years subsequent to July 31,
1998 are as follows:
Year Ending
July 31, Amount
-------- ------
1999 $648
2000 633
2001 684
2002 739
2003 799
Based on borrowing rates currently available to the Trust, the
carrying amount of mortgages payable approximates fair value at
July 31, 1998.
Note 5 - Note payable - bank:
At October 31, 1997, note payable - bank consisted of borrowings
under a revolving line of credit agreement with Summit Bank
which expired on April 30, 1998, at which time the agreement was
renegotiated and extended to May 31, 1999. Maximum borrowings
under the agreement were $12,310,000 and $20,000,000 at July 31,
1998 and October 31, 1997, respectively. The line of credit
bears interest at the bank's floating base rate plus .25% or the
LIBOR rate plus 175 basis points. Outstanding borrowings are
secured by all of the Trust's properties except commercial
property located in Frederick, Maryland, Westwood, New Jersey
and Patchogue, New York, apartment buildings in Wayne, New
Jersey, River Edge, New Jersey and Maywood, New Jersey and any
vacant land owned by the Trust. There were no outstanding
borrowings under the agreement at July 31, 1998.
Note 6 - Commitments and contingencies:
Leases:
Commercial tenants:
The Trust leases commercial space having a net book
value of approximately $56,957,000 at July 31, 1998 to
tenants for periods of up to twenty years. Most of the
leases contain clauses for reimbursement of real estate
taxes, maintenance, insurance and certain other
operating expenses of the properties. Minimum rental
income (in thousands of dollars) to be received from
noncancelable operating leases in years subsequent to
July 31, 1998 are as follows:
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Year Ending
July 31, Amount
-------- ------
1999 $ 6,050
2000 5,616
2001 5,406
2002 5,048
2003 4,793
Thereafter 50,433
-------
Total $ 77,346
========
The above amounts assume that all leases which expire
are not renewed and, accordingly, neither minimal
rentals nor rentals from replacement tenants are
included.
Minimum future rentals do not include contingent
rentals which may be received under certain leases on
the basis of percentage of reported tenants' sales
volume or increases in Consumer Price Indices.
Contingent rentals included in income for each of the
nine and three months ended July 31, 1998 and 1997 were
not material.
Residential tenants:
Lease terms for residential tenants are usually one
year or less.
Standby letters of credit:
At July 31, 1998, the Trust was obligated under
irrevocable standby letters of credit of approximately
$100,000 in connection with certain required land
improvements at the Franklin Lakes shopping center.
Environmental concerns:
In accordance with applicable regulations, the Trust
reported to the New Jersey Department of Environmental
Protection that a discharge of hazardous material was
recently discovered at the newly renovated Franklin
Crossing Shopping Center (the "Center").
At present, the discharge material appears to be
isolated and management believes there will be no
significant effect on the operations of the Center.
In connection therewith, the Trust is required to
investigate and monitor such discharge, the cost of
which will not be material.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 7 - Management agreement and related party transactions:
The properties owned by the Trust are currently managed by
Hekemian. The management agreement requires fees equal to a
percentage of rents collected. Such fees were approximately
$428,000 and $369,000 for the nine months ended July 31, 1998
and 1997, respectively, and approximately $155,000 and $121,000
for the three months ended July 31, 1998 and 1997, respectively.
Note 8 - Earnings per share:
Earnings per share, based on the weighted average number of
shares outstanding during each period, are comprised of ordinary
income.
* * *
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 649
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 78,697
<DEPRECIATION> (13,826)
<TOTAL-ASSETS> 71,251
<CURRENT-LIABILITIES> 0
<BONDS> 48,020
0
0
<COMMON> 19,314
<OTHER-SE> 1,486
<TOTAL-LIABILITY-AND-EQUITY> 71,251
<SALES> 0
<TOTAL-REVENUES> 10,733
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,813
<INCOME-PRETAX> 2,696
<INCOME-TAX> 8
<INCOME-CONTINUING> 2,688
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,688
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 1.72
</TABLE>
