1998
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ANNUAL
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REPORT
FREIT [GRAPHIC-PICTURE OF
FIRST REAL ESTATE CLOCK TOWER]
INVESTMENT TRUST
OF NEW JERSEY
<PAGE>
TRUST PROFILE
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First Real Estate Investment Trust of New Jersey, organized in 1961, is an
equity real estate investment trust. The focus of its activities has been to
acquire real property for long-term investment.
The Trust has elected and conducts its operations in a manner intended to comply
with the requirements for qualifying as a real estate investment trust pursuant
to the Federal Internal Revenue Code. As a result, the Trust receives favorable
tax treatment as provided under the tax code. The Trust has recorded a profit
and has paid dividends to its shareholders during each year since its founding.
Hekemian & Co., Inc., a real estate management and
brokerage company, has managed the Trust's real estate since its inception. The
Trust offices are located at "Corporate 505," 505 Main Street, Hackensack, New
Jersey.
Cover Photo
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This two-story Clock Tower is the focal point of our 254,274 square foot
Westridge Square Shopping Center in Frederick, Maryland.
<PAGE>
Contents
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Message to Our Shareholders 1
Properties 3
Balance Sheets 4
Statements of Income and Undistributed Earnings 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Report of Independent Public Accountants 12
Selected Financial Data 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Shares of Beneficial Interest 16
Corporate Information Inside Back Cover
<PAGE>
Message to Our Shareholders
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HIGHLIGHTS THIS PAST YEAR:
o Net Income increased 24.4% to $2.36 per share.
o Dividends increased 11.6% to $2.12 per share.
o Funds From Operations (FFO) increased 20.5% to $3.40 per share.
o The Trust took advantage of the favorable interest rate environment and
placed long-term, fixed rate mortgages on a number of properties. This
reduced reliance on the Trust's short-term, variable rate credit facility.
o The purchase of the Pathmark Super Center in Patchogue, NY (December 22,
1997) and the continuing lease-up at the Franklin Crossing Shopping Center,
Franklin Lakes, NJ, contributed substantially to fiscal 1998 earnings.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
Net Earnings
(thousands of dollars)
----------------------------------
Residential * Retail
------------- ------
1998 $4,108 $4,785
1997 $3,708 $3,214
1996 $3,481 $3,165
1995 $3,379 $3,418
*includes Affiliate
OPERATING RESULTS:
Net income for the year ended October 31, 1998, increased 24.4% to $3,685,000
from $2,963,000 for the prior year. Revenues increased 23.4% to $14,432,000 from
$11,698,000; with 85% of the revenue increase attributable to the retail
properties at Pathmark Super Center in Patchogue, NY and the operations at the
Franklin Crossing Shopping Center. The fixed rental component of revenues
increased 25.3% to $12,393,000. Overall, expenses increased $2,012,000 (23%)
primarily from increased financing costs of $1,133,000, increased depreciation
of $331,000, and $470,000 attributable to operation costs at Patchogue and
Franklin Crossing.
RESIDENTIAL PROPERTIES: The apartment communities continued to make a steady
contribution to net income and FFO. Net Earnings (before financing costs) from
residential properties - including the Trust's 40% owned affiliate - increased
10.8% to $4,108,000 from $3,708,000 last year. This increase resulted from
higher occupancy levels and higher monthly apartment rental rates.
<PAGE>
RETAIL PROPERTIES: Revenues from retail properties increased 41.6% to
$8,330,000. As a result, net earnings (before financing costs) increased 49% to
$4,782,000 from $3,209,000. Of the percentage increase, 27% was attributable to
Patchogue, 20% to the Franklin Crossing Shopping Center and the balance of 3% to
same properties.
FINANCING ACTIVITIES:
During fiscal 1997, the Trust recognized the declining cost trend of fixed rate,
long-term mortgage financing. Accordingly, a plan was developed to replace the
Trust's reliance on its short-term, variable rate financing with long-term,
fixed rate financing.
During fiscal 1998, the Trust mortgaged a previously debt-free property for
$11,100,000, and refinanced an existing $5,157,000 mortgage for $10,600,000. The
net proceeds from these financings of approximately $16,600,000 were used to
repay the outstanding balance under its line of credit, fund the construction
costs at Franklin Crossing, and pay the cash portion of the Patchogue
acquisition. During the first quarter of fiscal 1999, the Trust closed on a
number of mortgages that yielded net cash proceeds of $12,706,000. Additionally
during the first quarter, the Trust's 40% owned affiliate, Westwood Hills
L.L.C., secured a new mortgage which yielded approximately $4,900,000 in surplus
funds. Of these proceeds, $2 million were distributed to the Trust in accordance
with its equity ownership position. As a result of these financings, the Trust's
cash and cash equivalents totaled $14,942,000 at December 31, 1998. In addition
to these funds, the Trust has $8,000,000 available under its Line of Credit.
1
<PAGE>
FUNDS FROM OPERATIONS / DIVIDENDS:
Funds From Operations (FFO) is a standard measurement of a REIT's performance.
It is an indication of a REIT's financial results and its ability to pay
dividends. FFO is defined by the Trust as net income, excluding (i) deferred
rents and gains and losses from property sales and (ii) real estate related
depreciation and amortization. During fiscal 1998 FFO increased $900,000 (20.5%)
to $5,299,000 ($3.40 per share) from $4,399,000 ($2.82 per share) during fiscal
1997.
As a result of increased earnings and FFO during fiscal 1998, the Trust
increased its normal first three quarterly dividends to $.40 per share from $.35
per share. In addition, the fourth quarter dividend was raised to $.92 per
share, which raised 1998 dividends to $2.12 per share from $1.90 per share last
year. 1998 dividends represent 90% of Net Income and 62% of FFO compared to 100%
and 67.4% respectively last year. The higher dividend pay-out, but lower pay
ratios, enables the Trust to retain a higher percentage of funds generated for
future asset and income growth.
34 ACT REPORTING COMPANY:
During fiscal 1998, as a result of meeting certain tests under the Federal
Securities Laws, the Trust registered its shares under the Securities Exchange
Act of 1934. While the 1934 Exchange Act registration will not materially change
the way the Trust reports to shareholders, there will be certain changes to the
reporting procedures. The month in which the Annual Meeting takes place has been
changed and the financial data section has been expanded.
The section titled "Management's Discussion and Analysis of Financial Condition
and Results of Operations," has been included. There is a new form of proxy
statement that was not previously included and requires your immediate
attention.
FUTURE OUTLOOK:
During 1998 the foundation was put in place for continued long-term growth in
both net earnings and FFO. We expect continued steady growth from our core
properties and from the lease-up at Franklin Crossing. The Trust's financing
activities strengthened our balance sheet by providing long-term capital at
fixed rates. This capital will assist us as we continue to pursue new investment
opportunities in the Mid-Atlantic states area.
The Board of Trustees looks forward to seeing you at the Annual Meeting
scheduled for Wednesday, April 7, 1999, at 7:30 p.m. at the Trust's headquarters
located at 505 Main Street, Hackensack, NJ.
Sincerely,
/s/Robert S. Hekemian /s/Donald W. Barney
--------------------- -------------------
Robert S. Hekemian Donald W. Barney
Chairman President
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 recently filed report on Form 10-K under the section "Management's
Discussion and Analysis of Financial Condition and Results of Operations," also
included elsewhere in this report.
2
<PAGE>
Properties
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Portfolio of Real Estate Investments
Apartment Buildings
BERDAN COURT APARTMENTS Wayne, New Jersey
GRANDVIEW APARTMENTS Hasbrouck Heights, New Jersey
HAMMEL GARDENS Maywood, New Jersey
HEIGHTS MANOR APARTMENTS Spring Lake Heights, New Jersey
LAKEWOOD APARTMENTS Lakewood, New Jersey
PALISADES MANOR Palisades Park, New Jersey
SHERIDAN APARTMENTS Camden, New Jersey
STEUBEN ARMS River Edge, New Jersey
WESTWOOD HILLS* Westwood, New Jersey
Shopping Centers/Commercial Buildings
FRANKLIN CROSSING SHOPPING CENTER Franklin Lakes, New Jersey
WESTRIDGE SQUARE SHOPPING CENTER Frederick, Maryland
WESTWOOD PLAZA SHOPPING CENTER Westwood, New Jersey
SINGLE TENANT STORE Glen Rock, New Jersey
PATHMARK CENTER Patchogue, New York
Vacant Land
33 ACRES, INDUSTRIAL ZONE South Brunswick, New Jersey
19.26 ACRES, MULTI-FAMILY ZONE Rockaway, New Jersey
4.27 ACRES, OFFICE/RESIDENTIAL ZONE Franklin Lakes, New Jersey
*The Trust holds a 40% interest in Westwood Hills LLC, a New Jersey Limited
Liability Company, which owns the 210-unit apartment community.
3
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
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<TABLE>
<CAPTION>
Balance Sheets (in thousands)
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October 31, 1998 1997
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<S> <C> <C>
Assets
Real estate, at cost, net of accumulated depreciation $64,432 $53,737
Equipment, at cost, net of accumulated depreciation of $703,000 and $657,000 190 184
Investment in affiliate 1,918 1,905
Cash and cash equivalents 793 228
Tenants' security accounts 752 719
Note receivable - affiliate 100 --
Sundry receivables 728 280
Prepaid expenses and other assets 1,172 1,470
Deferred charges, net 1,190 710
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Totals $71,275 $59,233
===================================================================================================================
Liabilities and Shareholders' Equity
Liabilities:
Mortgages payable $47,853 $24,429
Note payable - bank -- 11,429
Accounts payable and accrued expenses 401 409
Construction liabilities -- 496
Dividends payable 1,435 1,326
Tenants' security deposits 969 905
Deferred revenue 255 255
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Total liabilities 50,913 39,249
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Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest without par value;
1,790,000 and 1,560,000 shares authorized;
1,559,788 shares issued and outstanding 19,314 19,314
Undistributed earnings 1,048 670
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Total shareholders' equity 20,362 19,984
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Totals $71,275 $59,233
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
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<TABLE>
<CAPTION>
Statements of Income and Undistributed Earnings
(in thousands except per share amounts)
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Years ended October 31, 1998 1997 1996
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<S> <C> <C> <C>
Revenue
Rental income $ 12,450 $ 9,982 $ 9,589
Reimbursements 1,576 1,433 1,568
Equity in income of affiliate 213 139 92
Sundry income 193 144 168
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Totals 14,432 11,698 11,417
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Expenses
Operating expenses 2,989 2,588 2,483
Management fees 576 495 476
Real estate taxes 1,758 1,692 1,739
Interest 3,762 2,629 2,750
Depreciation 1,650 1,319 1,295
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Totals 10,735 8,723 8,743
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Income before state income taxes 3,697 2,975 2,674
Provision for state income taxes 12 12 12
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Net income $ 3,685 $ 2,963 $ 2,662
===================================================================================================================
Basic earnings per share $ 2.36 $ 1.90 $ 1.71
===================================================================================================================
Basic weighted average shares outstanding 1,559,788 1,559,788 1,559,788
===================================================================================================================
Undistributed Earnings
Balance, beginning of year $ 670 $ 670 $ 675
Net income 3,685 2,963 2,662
Less dividends (3,307) (2,963) (2,667)
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Balance, end of year $ 1,048 $ 670 $ 670
===================================================================================================================
Dividends per share $ 2.12 $ 1.90 $ 1.71
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
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<TABLE>
<CAPTION>
Statements of Cash Flows (in thousands)
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Years ended October 31, 1998 1997 1996
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<S> <C> <C> <C>
Operating Activities
Net income $ 3,685 $ 2,963 $ 2,662
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,777 1,356 1,333
Equity in income of affiliate (213) (139) (92)
Deferred revenue -- (4) 2
Changes in operating assets and liabilities:
Tenants' security accounts (33) 35 (28)
Sundry receivables, prepaid expenses and other assets (150) (712) (585)
Accounts payable and accrued expenses (8) 131 (54)
Tenants' security deposits 64 52 26
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Net cash provided by operating activities 5,122 3,682 3,264
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Investing Activities
Capital expenditures (5,347) (7,723) (880)
Distributions from affiliate 200 160 140
Loan to affiliate (100) -- --
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Net cash used in investing activities (5,247) (7,563) (740)
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Financing Activities
Dividends paid (3,198) (2,667) (2,792)
Proceeds (repayments) of note payable - bank (11,429) 5,767 493
Net proceeds from mortgage refinancing 5,443 1,314 --
Proceeds from mortgage borrowings 11,100 -- --
Repayment of mortgages (619) (494) (501)
Deferred mortgage costs (607) -- --
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Net cash provided by (used in) financing activities 690 3,920 (2,800)
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Net increase (decrease) in cash and cash equivalents 565 39 (276)
Cash and cash equivalents, beginning of year 228 189 465
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Cash and cash equivalents, end of year $ 793 $ 228 $ 189
===================================================================================================================
Supplemental Disclosure of Cash Flow Data
Interest paid, net of capitalized interest of $68,000 in 1998
and $158,000 in 1997 $ 3,763 $ 2,589 $ 2,883
===================================================================================================================
Income taxes paid $ 12 $ 12 $ 8
===================================================================================================================
</TABLE>
<PAGE>
Supplemental schedule of noncash investing and financing activities:
During 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.
Dividends declared but not paid amounted to $1,435,000, $1,326,000 and
$1,029,000 in 1998, 1997 and 1996, respectively.
Capital expenditures incurred but not paid amounted to $496,000 in 1997.
See Notes to Financial Statements.
6
<PAGE>
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. For fiscal 1998, 1997 and 1996, the Trust made such an
election.
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 and cash equivalents:
The Trust maintains its cash in bank deposit accounts which, at times, may
exceed Federally insured limits. The Trust considers all highly liquid
investments purchased with a maturity of three months or less to be cash
equivalents.
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.
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 $67,000, $40,000 and
$85,000 in 1998, 1997 and 1996, respectively. Deferred leasing commissions
are amortized on the straight-line method over the terms of the applicable
leases.
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
<PAGE>
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.
Advertising:
The Trust expenses the cost of advertising and promotions as incurred.
Advertising costs charged to operations amounted to approximately $73,000,
$33,000 and $49,000 in 1998, 1997 and 1996, respectively.
Earnings per share:
The Trust has presented "basic" earnings per share in the accompanying
statements of income in accordance with the provisions of Statement of
Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128").
SFAS 128 also requires the presentation of "diluted" earnings per share if
the amount differs from basic earnings per share. Basic earnings per share
is calculated by dividing net income by the weighted average number of
common shares outstanding during each period. 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
common shares that would have been outstanding if all potentially dilutive
common shares, such as those issuable upon the exercise of stock options
and war-
7
<PAGE>
rants, were issued during the period. For each of the three years in the
period ended October 31, 1998, the Trust had no potentially dilutive common
shares.
Other recent accounting pronouncements:
The Financial Accounting Standards Board has issued certain other
pronouncements as of October 31, 1998 that will become effective in
subsequent periods; however, management does not believe that any of those
pronouncements will effect any financial accounting measurements or
disclosures the Trust will be required to make.
Reclassifications:
Certain amounts in the 1997 and 1996 financial statements have been
reclassified to conform with the current presentation.
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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 October 31, 1998
and 1997 and for each of the three years in the period ended October 31,
1998 is as follows:
<TABLE>
<CAPTION>
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1998 1997
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(In Thousands
of Dollars)
<S> <C> <C>
Balance sheet data:
Assets:
Real estate and equipment, net $14,416 $14,696
Other 976 551
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Total assets $15,392 $15,247
===================================================================================================================
Liabilities and equity:
Liabilities:
Mortgage payable $10,025 $10,192
Other 576 295
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Totals 10,601 10,487
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Members' equity:
Trust 1,918 1,905
Others 2,873 2,855
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Totals 4,791 4,760
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Total liabilities and equity $15,392 $15,247
===================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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1998 1997 1996
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(In Thousands of Dollars)
<S> <C> <C> <C>
Income statement data:
Rental revenue $2,617 $2,497 $2,360
Rental expenses 2,086 2,149 2,130
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Net income $ 531 $ 348 $ 230
===================================================================================================================
</TABLE>
At October 31, 1998, the Trust had a $100,000 note receivable from the Affiliate
that is due on demand and bears interest at 7%. Interest income was not material
for the year ended October 31, 1998.
8
<PAGE>
Note 3 - Real estate:
Real estate consists of the following:
<TABLE>
<CAPTION>
Range
of Estimated
Useful Lives 1998 1997
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(In Thousands of Dollars)
<S> <C> <C> <C>
Land $22,773 $20,244
Unimproved land 2,305 2,310
Apartment buildings 7 - 40 years 11,013 10,711
Commercial buildings and
shopping centers 15 - 50 years 39,931 30,328
Construction in progress 2,053 2,126
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78,075 65,719
Less accumulated depreciation 13,643 11,982
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Totals $64,432 $53,737
====================================================================================================================
</TABLE>
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Note 4 - Mortgages payable:
Mortgages payable consist of the following:
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------------
(In Thousands of Dollars)
<S> <C> <C>
Northern Life Insurance Cos. - Frederick, MD (A) $18,876 $19,123
Travelers Insurance - Westwood, NJ (B) -- 5,181
National Realty Funding L.C. - Westwood, NJ (B) 10,526 --
Summit Bank - Spring Lake, NJ (C) 29 125
Summit Bank - Patchogue, NY (D) 7,410 --
Federal Home Loan Mortgage Corporation - Wayne, NJ (E) 11,012 --
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Totals $47,853 $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 $24,510,000.
<PAGE>
(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
the shopping center in Westwood, New Jersey having a net book value of
approximately $11,510,000.
(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 $532,000. One of the
directors of the bank is a trustee of the Trust (see Note 10).
(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 $10,700,000.
(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 $1,573,000.
Principal amounts (in thousands of dollars) due under the above obligations
in each of five years subsequent to October 31, 1998 are as follows:
Year Ending
October 31, Amount
- --------------------------------------------------------------------------------
1999 $630
2000 650
2001 702
2002 759
2003 820
Based on borrowing rates currently available to the Trust, the fair value
of the mortgage debt is approximately $50,000,000 at October 31, 1998.
9
<PAGE>
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 allowable borrowings under the agreement were $12,310,000
and $20,000,000 at October 31, 1998 and 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 October 31, 1998.
In connection with new financing discussed in Note 10, maximum borrowings
under the line of credit agreement were reduced to $8,000,000 effective
November 19, 1998.
- --------------------------------------------------------------------------------
Note 6 - Commitments and contingencies:
Leases:
Retail tenants:
The Trust leases retail space having a net book value of approximately
$56,791,000 at October 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 October 31, 1998
are as follows:
Year Ending
October 31, Amount
- --------------------------------------------------------------------------------
1999 $ 6,331
2000 6,063
2001 5,904
2002 5,560
2003 5,176
Thereafter 50,039
- --------------------------------------------------------------------------------
Total $79,073
================================================================================
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 three years in the period ended
October 31, 1998 were not material.
Residential tenants:
Lease terms for residential tenants are usually one year or less.
<PAGE>
Standby letters of credit:
At October 31, 1998, the Trust is obligated under irrevocable standby
letters of credit of approximately $60,000 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 historical discharge
of hazardous material was recently discovered at the newly renovated
Franklin Lakes shopping center (the "Center").
At present, the historical 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.
- --------------------------------------------------------------------------------
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 $576,000, $495,000 and $476,000 in
1998, 1997 and 1996, respectively. In addition, Hekemian charged the Trust
fees and
10
<PAGE>
commissions in connection with the acquisition of the commercial building
in Patchogue, New York and various mortgage refinancing and lease
acquisition fees. Such fees and commissions amounted to approximately
$718,000 in 1998.
- --------------------------------------------------------------------------------
Note 8 - Basic earnings per share:
Basic earnings per share, based on the weighted average number of shares
outstanding during each period, are comprised of ordinary income.
- --------------------------------------------------------------------------------
Note 9 - Equity incentive plan:
On September 10, 1998, the Board of Trustees approved the Trust's Equity
Incentive Plan (the "Plan") whereby, subject to ratification of the Plan by
the Trust's stockholders, up to 230,000 of the Trust's shares of beneficial
interest may be granted to key personnel in the form of stock options,
restricted share awards and other share-based awards. In connection
therewith, the Board of Trustees approved an increase of 230,000 shares in
the Trust's number of authorized shares of beneficial interest. Key
personnel eligible for these awards include trustees, executive officers
and other persons or entities including, without limitation, employees,
consultants and employees of consultants, who are in a position to make
significant contributions to the success of the Trust. Under the Plan, the
exercise price of all options will be the fair market value of the shares
on the date of grant. The consideration to be paid for restricted share and
other share-based awards shall be determined by the Board of Trustees, with
the amount not to exceed the fair market value of the shares on the date of
grant. The maximum term of any award granted may not exceed ten years. The
actual terms of each award will be determined by the Board of Trustees.
In accordance with the provisions of Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees ("APB 25"), the Trust will
recognize compensation costs as a result of the issuance of restricted
share and other share-based awards based on the excess, if any, of the fair
value of the underlying stock at the date of grant or award (or at an
appropriate subsequent measurement date) over the amount the recipient must
pay to acquire the stock. Therefore, the Trust will not be required to
recognize compensation expense as a result of any grants of stock options,
restricted share and other share-based awards at an exercise price that is
equivalent to or greater than fair value. The Trust will also make proforma
disclosures, as required by Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation ("SFAS 123"), of net income or
loss as if a fair value based method of accounting for stock options had
been applied instead if such amounts differ materially from the historical
amounts.
- --------------------------------------------------------------------------------
Note 10- Subsequent events:
On November 2, 1998, the Trust closed on a $5,375,000 mortgage with Larson
Financial Resources, Inc. The mortgage is payable in monthly installments
of $43,711 including interest at 6.75% through December 2013 at which time
the outstanding balance is due. The mortgage is secured by an apartment
building in River Edge, New Jersey having a net book value of approximately
$1,369,000.
On November 2, 1998, the Trust also closed on a $3,900,000 mortgage with
Larson Financial Resources, Inc. The mortgage is payable in monthly
<PAGE>
installments of $33,676 including interest at 6.75% through December 2013
at which time the outstanding balance is due. The mortgage is secured by an
apartment building in Maywood, New Jersey having a net book value of
approximately $949,000.
On November 19, 1998, the Trust repaid the outstanding mortgage on the
Spring Lake, New Jersey apartment building (approximately $29,000 - see
Note 4) utilizing proceeds from a new mortgage in the amount of $3,700,000
with Larson Financial Resources, Inc. The new mortgage is payable in
monthly installments of $29,863 including interest at 6.70% through
December 2013 at which time the outstanding balance is due.
Principal amounts (in thousands of dollars) due under the above obligations
in each of the five years subsequent to October 31, 1998 are as follows:
Year Ending
October 31, Amount
- --------------------------------------------------------------------------------
1999 $115
2000 147
2001 157
2002 168
2003 179
11
<PAGE>
Report of Independent Public Accountants
J. H. Cohn LLP LAWRENCEVILLE, NJ
75 EISENHOWER PARKWAY NEW YORK, NY
ROSELAND, NJ 07068-1697 ROSELAND, NJ
(973) 228-3500 SAN DIEGO, CA
To the Trustees and Shareholders
First Real Estate Investment Trust of New Jersey
We have audited the accompanying balance sheets of FIRST REAL ESTATE
INVESTMENT TRUST OF NEW JERSEY as of October 31, 1998 and 1997, and the
related statements of income and undistributed earnings and cash flows for
each of the three years in the period ended October 31, 1998. These financial
statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of First Real Estate
Investment Trust of New Jersey as of October 31, 1998 and 1997, and its
results of operations and cash flows for each of the three years in the
period ended October 31, 1998, in conformity with generally accepted
accounting principles.
Our audits referred to above included the information in Schedules IX, X
and XI which present fairly, when read in conjunction with the financial
statements, the information required to be set forth therein.
/s/J. H. Cohn LLP
Roseland, New Jersey -----------------
November 20, 1998 J. H. Cohn LLP
12
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Selected Financial Data (1)
(in thousands except per share amounts)
- -----------------------------------------------------------------------------------------------------------------------
Years ended October 31, 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity in Income of Affiliate $ 213 $ 139 $ 92 $ 81 $ 51
Total Revenues 14,432 11,698 11,417 11,124 10,335
Total Expenses 10,747 8,735 8,755 8,338 7,952
Net Income 3,685 2,963 2,662 2,786 2,383
Net Income Per Share 2.36 1.90 1.71 1.79 1.53
Total Assets 71,275 59,233 51,674 51,838 52,398
Long-Term Mortgage Debt 47,853 24,429 23,609 24,110 24,564
Shareholders' Equity 20,362 19,984 19,984 19,989 21,148
Dividends Paid Per Share 2.12 1.90 1.71 2.53 1.62
Weighted Average Number
of Shares Outstanding 1,559 1,559 1,559 1,559 1,559
=======================================================================================================================
</TABLE>
(1) Westwood Hills L.L.C. is accounted for using the equity method of
accounting. Fiscal years ended October 31, 1996, 1995 and 1994 have been
restated to reflect this accounting method.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
- --------------------------------------------------------------------------------
Overview
The Trust is an equity REIT which owns a portfolio of residential apartment
and retail properties. The Trust's revenues consist primarily of fixed rental
income and additional rent in the form of expense reimbursements derived from
its income producing retail properties. The Trust also receives income from its
40% owned affiliate, Westwood Hills, which owns a residential apartment
property. The Trust's policy has been to acquire real property for long-term
investment.
During the period covering fiscal 1996 through the first quarter of fiscal
1999, the events which had the most significant impact on the Trust's operations
were (i) the closing and demolition of the old Franklin Lakes Shopping Center in
December 1996 and the completion of construction of the new and expanded
(approximately 87,000 square feet) Franklin Crossing Shopping Center in the
fourth quarter of fiscal 1997; (ii) the acquisition in December 1997 of the
Patchogue, New York single tenant retail property which has a large Pathmark
supermarket super store (63,900 square feet) as its tenant; and (iii) the series
of mortgage financings which the Trust closed during fiscal 1998 and the first
quarter of fiscal 1999.
<PAGE>
The following discussion should be read in conjunction with the Trust's
financial statements and related notes included elsewhere in this Annual Report.
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" may constitute forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Although the Trust believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties, including those discussed
elsewhere in this Annual Report, that could cause actual results to differ
materially from those projected.
Results of Operations
Fiscal Years ended October 31, 1998 and October 31, 1997
Revenues
For the fiscal year ended October 31, 1998, total revenue increased
$2,734,000(23.4%) from $11,698,000 in fiscal 1997 to $14,432,000. $2,313,000 of
the increase in revenues is due, primarily, to the December 1997 acquisition of
13
<PAGE>
the property in Patchogue, New York and the reopening of the new and expanded
Franklin Crossing Shopping Center in the fourth quarter of fiscal 1997. Grand
Union, which leases approximately 47% of the available leasable space and
operates a supermarket at Franklin Crossing, commenced paying rent in October
1997. At October 31, 1998, Franklin Crossing was 60% occupied and 65% leased.
The balance of the revenue increase is attributable to increased revenues at the
Trust's other properties and its 40% equity in the earnings of Westwood Hills.
Expenses
For the year ended October 31, 1998, total expenses increased $2,012,000
(23.0%) from $8,735,000 in fiscal 1997 to $10,747,000 in fiscal 1998. $1,133,000
of this increase is attributable to an increase in financing costs (including a
one-time debt retirement charge of $130,000) resulting from the Trust's
increased debt level. Real estate operating expenses increased $528,000 (11.7%)
from $4,498,000 in fiscal 1997 to $5,026,000 in fiscal 1998, primarily due to
$470,000 attributable to the operations at Patchogue and Franklin Crossing.
Depreciation increased $331,000 (25.1%) from $1,319,000 in fiscal 1997 to
$1,650,000 in fiscal 1998 primarily due to additional depreciation taken on the
Patchogue and Franklin Crossing properties. In fiscal 1999, the Trust expects
its rental revenues to continue to grow at a faster rate than its expenses.
Under the terms of their leases, retail tenants reimburse the Trust for the
majority of the operating expenses and real estate taxes incurred at the retail
properties. Varying occupancy rates affect the amount of reimbursements received
by the Trust. For the past three fiscal years, average occupancy at the retail
properties has been 98.5%.
Net Income and Funds from Operations
For the fiscal year ended October 31, 1998, the Trust's net income
increased $722,000 (24.4%) from $2,963,000 in fiscal 1997 to $3,685,000.
Earnings per share increased from $1.90 per share in fiscal 1997 to $2.36 per
share in fiscal 1998. Earnings at operating properties increased $1,801,000
(31.5%) to $7,538,000 from $5,733,000 for the prior year. Earnings at same
properties increased 5.9% as a result of high, stable occupancy levels, and
revenue increases (3.7%) outpacing expense increases (1.4%). Earnings from the
Trust's new retail property in Patchogue, New York and the reopened Franklin
Crossing Shopping Center accounted for the majority of the earnings increases.
Funds from Operations (FFO) increased $900,000 (20.5%) from $4,399,000 ($2.82
per share) in fiscal 1997 to $5,299,000 ($3.40 per share) in fiscal 1998.
The Trust believes that in fiscal 1999 the continued economic strength in
the employment markets in which its properties are located, should allow the
Trust to realize its current occupancy rates for its apartment properties with a
sound support base for its retail properties. The Trust expects that continued
increasing occupancy at Franklin Crossing should generate increased earnings and
FFO in fiscal 1999.
FFO is a standard measurement of a REIT's performance. It is an indication
of a REIT's financial results and its ability to pay dividends. FFO is defined
by the Trust as net income, excluding (i) deferred rents and gains and losses
from property sales and (ii) real estate related depreciation and amortization.
FFO does not represent cash generated from operating activities in accordance
with generally accepted accounting principles (GAAP), and therefore should not
be considered a substitute for net income as a measure of results of operations
or for cash flow from operations as a measure of liquidity. Additionally, the
application and calculation of FFO by certain other REITs may vary materially
from that of the Trust, and therefore the Trust's FFO and the FFO of other REITs
may not be directly comparable. As an example, the definition of FFO adopted by
the National Association of Real Estate Investment Trusts (NAREIT) encourages
including the "straight-lining" of rents. The Trust does not incorporate
straight-line rents in determining FFO, which results in lesser amounts of FFO
reported by the Trust than if it used the method of calculation adopted by
NAREIT.
<PAGE>
Fiscal Years ended October 31, 1997 and October 31, 1996
Revenues
The Trust's total revenue increased $281,000 (2.5%) from $11,417,000 in
fiscal 1996 to $11,698,000 in fiscal 1997. The Trust's shopping center in
Franklin Lakes, New Jersey was closed and demolished in December 1996. As a
practical matter, the shopping center was really closed for the last quarter of
fiscal 1996, as the Trust did not renew leases as they expired. Construction on
the new and expanded Franklin Crossing was not completed until August 1997 and
did not reopen until the end of fiscal 1997. Rental income would have been
greater in fiscal 1996 and fiscal 1997 if the Franklin Lakes Shopping Center had
not been closed. However, the Trust expects that the new and expanded Franklin
Crossing Shopping Center will provide a more significant contribution to the
Trust's revenues and income than was provided by the previous shopping center.
Expenses
For the fiscal year ended October 31, 1997, the Trust's total expenses
decreased by $20,000 from $8,743,000 in fiscal 1996 to $8,723,000. The decrease
in expenses in fiscal 1997 was mainly a result of certain increased costs in
fiscal 1996 incurred during the harsh winter of 1996 such as snow removal costs
and utility costs that were not incurred during fiscal 1997. Property taxes are
a major component of operating expenses. The Trust continues to
14
<PAGE>
vigorously appeal real estate assessments where appropriate in an effort to
assure that its properties are fairly assessed for real estate tax purposes.
During the demolition and the construction of the new Franklin Crossing
Shopping Center, various costs were incurred by the Trust. In accordance with
GAAP, the costs relating to construction were capitalized during the period of
construction. The effect of capitalizing construction costs is that while the
Trust is experiencing cash outflows with respect to such costs, there is an
immaterial effect on the Trust's fiscal 1997 Statement of Income and
Undistributed Earnings with respect to such capitalized costs.
Net Income and Funds from Operations
For the fiscal year ended October 31, 1997, the Trust's net income
increased $301,000 (11.3%) from $2,662,000 in fiscal 1996 to $2,963,000.
Earnings per share for fiscal 1997 were $1.90 as compared to $1.71 for fiscal
1996. FFO increased $231,000 (5.5%) in fiscal 1997 from $4,158,000 ($2.67 per
share) in fiscal 1996 to $4,399,000 ($2.82 per share). Earnings at operating
properties increased 4.3%.
Liquidity and Capital Resources
At October 31, 1998, the Trust's cash and cash equivalents totaled $793,000
as compared to $228,000 at October 31, 1997. At December 31, 1998, cash and cash
equivalents totaled $14,942,000. Net cash inflows from the Trust's operations
amounted to $5.1 million in fiscal 1998 as compared to $3.7 million in fiscal
1997 and $3.3 million in fiscal 1996. In fiscal 1997, the Trust recognized the
declining cost trend of fixed rate, long-term financing, and developed a plan to
replace its reliance on its short-term, variable rate financing with long-term,
fixed rate financing.
During fiscal 1998, the Trust mortgaged a previously debt-free property for
$11,100,000, and refinanced an existing $5,157,000 mortgage for $10,600,000. The
net proceeds from these financings of approximately $16,065,000 were used to
repay the then outstanding balance under the Summit Bank line of credit, fund
construction costs at Franklin Crossing, and pay the cash portion of the
Patchogue acquisition. In the first quarter of fiscal 1999, the Trust closed on
a series of mortgage financings which yielded net cash proceeds of $12,706,000
to the Trust. In addition, the Trust's 40% owned affiliate, Westwood Hills, also
completed a mortgage financing in the first quarter of fiscal 1999 which yielded
approximately $4,900,000 in net cash proceeds. Approximately $2 million of these
proceeds were distributed to the Trust in accordance with its equity ownership.
As a result of the various mortgage financings, and reflecting the reduced
collateral available, the Trust's line of credit from Summit Bank was reduced
from $20 million at October 31, 1997, to $12.3 million at October 31, 1998, and
to $8 million at November 30, 1998. The Trust may use this line of credit to
finance the acquisition or development of additional properties and for general
business purposes. At October 31, 1998 and December 31, 1998, there were no
outstanding borrowings under the line of credit as compared to $11.4 million
which was outstanding at October 31, 1997.
At October 31, 1998, the Trust's aggregate outstanding mortgage debt was
approximately $47.9 million as compared to approximately $24.4 million at
October 31, 1997 and approximately $34 million at October 31, 1996. At December
31, 1998, the Trust's aggregate outstanding mortgage debt was $60.69 million.
Cash flow from operations has been sufficient to meet all operational needs of
the Trust. The Trust anticipates that the cash flow from operations will be more
than sufficient to meet the Trust's increased mortgage obligations. However, to
the extent the proceeds from the various financings cannot be redeployed to earn
more than the stated interest costs, there will be a negative impact on earnings
and cash flow available to pay dividends.
<PAGE>
The Trust continues to make capital improvements to, primarily, its
apartment properties when it deems such improvements to be necessary or
appropriate. The short-term impact of such capital outlays will be to depress
the Trust's current cash flow. The Trust is now experiencing the benefits of
these expenditures by preserving the physical integrity of its properties and
securing increased rentals. Other than the apartment rehabilitation program
described above, the Trust has made no commitments and has no understandings for
any material capital expenditures during fiscal 1999 other than in the ordinary
course of business.
REIT Distributions to Shareholders
Since its inception in 1961, the Trust has elected to be treated as a REIT
for Federal Income Tax purposes. In order to qualify as a REIT, the Trust must
satisfy a number of highly technical and complex operational requirements
including, that it must distribute to its shareholders at least 95% of its REIT
taxable income. The Trust anticipates making distributions to shareholders from
operating cash flows, which are expected to increase from future growth in
rental revenues. Although cash used to make distributions reduces amounts
available for capital investment, the Trust generally intends to distribute not
less than 95% of net income in order to satisfy the applicable REIT requirement
as set forth in the Internal Revenue Code.
Cash dividends are paid to shareholders on a quarterly basis. Dividends per
share were $2.12, $1.90 and $1.71 in the fiscal years ended October 31, 1998,
1997 and 1996, respectively. Total dividends paid to shareholders during these
three fiscal years were $3,306,750, $2,963,597 and $2,667,237, respectively,
representing 104.3%, 105.4% and 99.3% of the Trust's REIT taxable income of
$3,171,000, $2,813,762, and $2,686,000, respectively, for each such fis-
15
<PAGE>
cal year. Although the Trust receives most of its rental payments on a monthly
basis, it has and intends to continue to make regular quarterly dividend payment
distributions. The funds accumulated for dividend distributions may be invested
by the Trust in short-term marketable instruments.
Inflation
The Trust anticipates that the U.S. Mid-Atlantic states will continue to
experience moderate growth with limited inflation. Any sustained inflation may,
however, negatively impact the Trust in at least two areas: (i) the interest
costs of any new mortgage financing or the use of the Summit Bank line of credit
may be higher than rates currently in effect; and (ii) higher real estate
operating costs, especially in those areas where such costs are not chargeable
to commercial tenants.
Year 2000 Issue
The Trust and Hekemian & Co., Inc., which manages the Trust's developed
properties and provides other services to the Trust, have undertaken a
comprehensive assessment of the Trust's business exposure relative to the Y2K
issue. While the Trust does not own or use any computer systems, the business
managed by Hekemian & Co., Inc., is dependent on computer hardware, software,
systems and processes. Hekemian & Co., Inc., has advised the Trust that all of
its major Non-IT systems are Y2K compliant and that it expects that all major IT
systems will be compliant before the end of 1999. The Trust expects that any
costs incurred by it to assess the Y2K issue and to remediate any Y2K problems
will not have a significant adverse effect on the Trust's operating results or
financial condition. Hekemian & Co., Inc., has also contacted the Trust's
tenants and all other critical external entities to determine their exposure to
the Y2K issue and how and if such exposure may impact the Trust's business. To
date, no party responding to this inquiry has indicated that it expects its
business operations to be significantly affected by the Y2K issue. At this time,
the Trust does not expect that the Y2K issue will have a materially adverse
effect on its properties, business, operating results, or financial condition.
Quantitative and Qualitative Disclosures About Market Risk
As a result of the Trust having replaced short-term, variable rate
financing with long-term fixed rate financing during fiscal 1998 and the first
quarter of fiscal 1999, the Trust believes that its exposure to market risk
relating to interest rate risk is not material. The Trust's only variable rate
financing is the Summit Bank line of credit under which there was no outstanding
balance as of December 31, 1998. The Trust believes that its business operations
are not exposed to market risk relating to foreign currency exchange risk,
commodity price risk or equity price risk.
<PAGE>
Shares of Beneficial Interest
- --------------------------------------------------------------------------------
The Shares are traded in the over-the-counter market through the use of the
OTCBulletin Board(R) Service (the "OTCBulletin Board") provided by NASD, Inc.
The Trust's symbol is FREVS. The Trust does not believe that an active public
trading market exists for the Shares, since historically only a small volume of
the shares are traded on a sporadic basis. The following table sets forth the
high and low bid quotations on the OTCBulletin Board, as provided by Janney
Montgomery Scott, Inc., members of the New York StockExchange and other national
securities exchanges. As of January 15, 1999, there were 429 holders of record
of the Shares.
<TABLE>
<CAPTION>
Dividends
High Low Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fiscal Year Ended October 31, 1998
First Quarter $ 25 1/2 $ 25 $ 0.40
Second Quarter $ 26 $ 25 1/2 $ 0.40
Third Quarter $ 28 $ 26 $ 0.40
Fourth Quarter $ 30 $ 27 $ 0.92
Fiscal Year Ended October 31, 1997
First Quarter $ 21 7/8 $ 21 1/2 $ 0.35
Second Quarter $ 22 3/4 $ 22 1/4 $ 0.35
Third Quarter $ 24 1/2 $ 24 $ 0.35
Fourth Quarter $ 25 1/8 $ 25 1/8 $ 0.85
</TABLE>
The bid quotations set forth above for the Shares reflect inter-dealer
prices, without retail mark-up, mark-downs or commission and may not necessarily
represent actual transactions.
16
<PAGE>
Corporate Information
- --------------------------------------------------------------------------------
Trustees
ROBERT S. HEKEMIAN
Chairman and Chief Executive Officer,
Hekemian & Co., Inc.
DONALD W. BARNEY
Consultant and Investor
JOHN B. VOSKIAN, M.D.
Physician
HERBERT C. KLEIN, Esq.
Partner,
Nowell, Amoroso, Klein, Bierman, P.A.
NICHOLAS A. LAGANELLA
President,
P.T. & L. Construction Co.
CHARLES J. DODGE
Chief Executive Officer and President,
David Cronheim Mortgage Corp.
RONALD J. ARTINIAN
Private Investor
ALAN L. AUFZIEN
Chairman, Norall Organisation
Officers
Robert S. Hekemian
Chairman of the Board
Donald W. Barney
President
John B. Voskian, M.D.
Secretary
William R. DeLorenzo, Jr.
Executive Secretary and Treasurer
<PAGE>
General Information
Corporate Headquarters
505 Main Street, P.O. Box 667
Hackensack, New Jersey 07602
(201) 488-6400
Market Maker
Janney Montgomery Scott, Inc.
Hackensack, New Jersey
Managing Agent
Hekemian & Co., Inc.
Hackensack, New Jersey
Auditors
J. H. Cohn LLP
Roseland, New Jersey
Transfer Agent
Registrar and Transfer Company
Cranford, New Jersey
Annual Meeting
The Annual Meeting of Shareholders is
scheduled for Wednesday, April 7, 1999,
at 7:30 p.m. to be held at the offices of
First Real Estate Investment Trust of
New Jersey, 505 Main Street,
Hackensack, New Jersey
Form 10-K
A copy of Form 10-K filed with the Securities and Exchange Commission is
available to shareholders upon written request.
<PAGE>
FIRST REAL ESTATE [GRAPHIC-PICTURE OF
INVESTMENT TRUST CLOCK TOWER]
OF NEW JERSEY
