SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended July 31, 1999 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 1,559,788 shares of beneficial interest outstanding at October 6,
1999.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
INDEX
Part I: Financial Information
Item 1: Financial Statements
a.) Balance Sheets as at July 31, 1999 and October 31,
1998;
b.) Statements of Income and Undistributed Earnings For the
Nine Months and three Months Ended July 31, 1999 and
1998;
c.) Statements of Cash Flows for the Nine Months Ended July
31, 1999 and 1998;
d.) Notes to Financial Statements.
NOTE: The Form 10Q has been amended to correct column pagination errors in the
Statements of Income.
<PAGE>
<TABLE>
<CAPTION>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
BALANCE SHEETS
JULY 31, 1999 AND OCTOBER 31, 1998
July October
31, 1998 31, 1998
-------- --------
(Unaudited) (See Note 1)
(In Thousands of Dollars)
ASSETS
- ------
<S> <C> <C>
Real estate, at cost, net of accumulated depreciation ............... $63,512 $64,432
Equipment, at cost, net of accumulated depreciation of
$321,000 and $657,000 ........................................... 189 190
Investment in affiliate ............................................. 1,918
Cash and cash equivalents ........................................... 15,792 793
Tenants' security accounts .......................................... 755 752
Note receivable - affiliate ......................................... 100
Sundry receivables .................................................. 1,185 728
Prepaid expenses and other assets ................................... 847 1,172
Deferred charges, net ............................................... 1,373 1,190
------- -------
Totals ................................................... $83,653 $71,275
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgages payable ............................................... $60,262 $47,853
Accounts payable and accrued expenses ........................... 311 401
Cash distributions in excess of investment in affiliate ......... 296
Dividends payable ............................................... 624 1,435
Tenants' security deposits ...................................... 967 969
Deferred revenue ................................................ 114 255
------- -------
Total liabilities ........................................ 62,574 50,913
------- -------
Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest without par value; 1,790,000 shares
authorized; 1,559,788 shares issued and outstanding ......... 19,314 19,314
Undistributed earnings .......................................... 1,765 1,048
------- -------
Total shareholders' equity ............................... 21,079 20,362
------- -------
Totals ................................................... $83,653 $71,275
======= =======
</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, 1999 AND 1998
(Unaudited)
Nine Months Three Months
Ended July 31, Ended July 31,
----------------------- -----------------------
1999 1998 1999 1998
-------- -------- -------- --------
(In Thousands of Dollars,
Except Per Share Amounts)
<S> <C> <C> <C> <C>
INCOME
- ------
Revenue:
Rental income ...................... $ 9,778 $ 9,233 $ 3,345 $ 3,207
Reimbursements ..................... 1,277 1,202 400 378
Equity in income (loss) of affiliate (93) 149 43 71
Interest income .................... 490 184
Sundry income ...................... 162 149 67 47
-------- -------- -------- --------
Totals ......................... 11,614 10,733 4,039 3,703
-------- -------- -------- --------
Expenses:
Operating expenses ................. 2,446 2,251 786 760
Management fees .................... 460 428 154 155
Real estate taxes .................. 1,367 1,325 468 437
Interest ........................... 3,466 2,813 1,157 948
Depreciation ....................... 1,277 1,220 432 428
-------- -------- -------- --------
Totals ......................... 9,016 8,037 2,997 2,728
-------- -------- -------- --------
Income before state income taxes ....... 2,598 2,696 1,042 975
Provision for state income taxes ....... 9 8 4 2
-------- -------- -------- --------
Net income ............................. $ 2,589 $ 2,688 $ 1,038 $ 973
======== ======== ======== ========
Earnings per share ..................... $ 1.66 $ 1.72 $ .67 $ .62
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNDISTRIBUTED EARNINGS
- ----------------------
Balance, beginning of period ........... $ 1,048 $ 670 $ 1,351 $ 1,137
Net income ............................. 2,589 2,688 1,038 973
Less dividends ......................... (1,872) (1,872) (624) (624)
-------- -------- -------- --------
Balance, end of period ................. $ 1,765 $ 1,486 $ 1,765 $ 1,486
======== ======== ======== ========
Dividends per share .................... $ 1.20 $ 1.20 $ .40 $ .40
======== ======== ======== ========
</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, 1999 AND 1998
(Unaudited)
1999 1998
-------- --------
(In Thousands
of Dollars)
<S> <C> <C>
Operating activities:
Net income ................................................... $ 2,589 $ 2,688
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ............................ 1,391 1,313
Deferred revenue ......................................... (141) 120
Equity in (income) loss of affiliate ..................... 93 (149)
Changes in operating assets and liabilities:
Tenants' security accounts ............................ (3) (62)
Sundry receivables, prepaid expenses and other assets . (132) (175)
Deferred charges ...................................... (112)
Accounts payable and accrued expenses ................. (90) 32
Tenants' security deposits ............................ (2) 86
-------- --------
Net cash provided by operating activities ......... 3,593 3,853
-------- --------
Investing activities:
Capital expenditures ......................................... (356) (5,195)
Distributions from affiliate ................................. 2,121 200
Repayment of loan by affiliate ............................... 100
-------- --------
Net cash provided by (used in) investing activities 1,865 (4,995)
-------- --------
Financing activities:
Dividends paid ............................................... (2,683) (2,574)
Repayments of note payable - bank ............................ (11,429)
Net proceeds from mortgage refinancing ....................... 3,671 5,443
Proceeds from mortgage borrowings ............................ 9,275 11,100
Repayment of mortgages ....................................... (537) (452)
Deferred mortgage costs ...................................... (185) (525)
-------- --------
Net cash provided by financing activities ......... 9,541 1,563
-------- --------
Net increase in cash and cash equivalents ........................ 14,999 421
Cash and cash equivalents, beginning of period ................... 793 228
-------- --------
Cash and cash equivalents, end of period ......................... $ 15,792 $ 649
======== ========
Supplemental disclosure of cash flow data:
Interest paid, net of capitalized interest of $67,000 in 1998 $ 3,399 $ 2,764
======== ========
</TABLE>
<PAGE>
Supplemental schedule of noncash investing and financing activities: Dividends
declared but not paid amounted to $624,000 at July 31, 1999 and 1998.
During the nine months ended July 31, 1998, the Trust completed its
acquisition of a 64,000 square foot retail property in Patchogue, New York
for approximately $11,000,000, in part, with the proceeds of a $7,500,000
mortgage.
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 on November 1, 1961 as a New Jersey
Business Trust. The Trust is engaged in owning residential
and retail income producing properties located 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,
1999 and for the nine and three months ended July 31, 1999
and 1998 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, 1998 was derived from the Trust's
audited annual report for 1998.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assump-tions 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 debt instruments 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.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and significant accounting policies (concluded):
Revenue recognition:
Income from leases is recognized on a straight-line basis
regardless of when payment is due. Lease agreements between
the Trust and retail 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 $67,000 and
$49,000 for the nine months ended July 31, 1999 and 1998,
respectively, and approximately $23,000 and $19,000 for the
three months ended July 31, 1999 and 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 $47,000 and $40,000 for the nine months
ended July 31, 1999 and 1998, respectively, and
approximately $15,000 and $17,000 for the three months ended
July 31, 1999 and 1998, 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 warrants,
were issued during the period. For the nine and three months
ended July 31, 1999, diluted earnings per share have not
been presented because prices of all of the outstanding
stock options approximated the average fair market value and
there were no additional shares derived from the assumed
exercise of stock options and the application of the
treasury stock method. For the nine and three months ended
July 31, 1998, the Trust had no potentially dilutive common
shares.
<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,
1999 and October 31, 1998 and for the nine and three months
ended July 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
July October
31, 1999 31, 1998
-------- --------
(In Thousands
of Dollars)
<S> <C> <C>
Balance sheet data:
Assets:
Real estate and equipment, net ............ $ 14,244 $ 14,416
Other ..................................... 666 976
-------- --------
Total assets ........................ $ 14,910 $ 15,392
======== ========
Liabilities and equity:
Liabilities:
Mortgage payable ........................ $ 15,404 $ 10,025
Other ................................... 348 576
-------- --------
Totals .............................. 15,752 10,601
-------- --------
Members' equity (deficiency):
Trust ................................... (296) 1,918
Others .................................. (546) 2,873
-------- --------
Totals .............................. (842) 4,791
-------- --------
Total liabilities and members' equity $ 14,910 $ 15,392
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
July 31, July 31,
--------------------- --------------------
1999 1998 1999 1998
------- ------- ------- -------
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
Income statement data:
Rental revenue ............... $ 2,037 $ 1,953 $ 703 $ 660
Rental expenses .............. 1,828 1,581 595 483
------- ------- ------- -------
Income from rental operations 209 372 108 177
Prepayment penalty on mortgage
refinancing .............. (442)
------- ------- ------- -------
Net income (loss) ............ $ (233) $ 372 $ 108 $ 177
======= ======= ======= =======
</TABLE>
At October 31, 1998, the Trust had a $100,000 note receivable
from the Affiliate that was repaid during the nine months ended
July 31, 1999 with interest at 7%. Interest income was not
material.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 3 - Real estate:
Real estate consists of the following:
<TABLE>
<CAPTION>
Range
of Estimated July October
Useful Lives 31, 1999 31, 1998
------------ -------- --------
(In Thousands
of Dollars)
<S> <C> <C> <C>
Land $22,773 $22,773
Unimproved land 2,327 2,305
Apartment buildings 7-40 years 10,688 11,013
Retail buildings 15-50 years 40,721 39,931
Construction in progress 1,426 2,053
------- -------
77,935 78,075
Less accumulated depreciation 14,423 13,643
------- -------
Totals $63,512 $64,432
======= =======
</TABLE>
<PAGE>
Note 4 - Mortgages payable:
Mortgages payable consist of the following:
<TABLE>
<CAPTION>
July October
31, 1999 31, 1998
-------- --------
(In thousands
of Dollars)
<S> <C> <C>
Northern Life Insurance Cos. - Frederick, MD (A) $18,678 $18,876
National Realty Funding L.C. - Westwood, NJ (B) 10,447 10,526
Summit Bank - Spring Lake, NJ (C) 29
Larson Financial Resources, Inc. - Spring Lake, NJ (C) 3,674
Summit Bank - Patchogue, NY (D) 7,325 7,410
Larson Financial Resources, Inc. - Wayne, NJ (E) 10,928 11,012
Larson Financial Resources, Inc. - River Edge, NJ (F) 5,337
Larson Financial Resources, Inc. - Maywood, NJ (G) 3,873
------- -------
Totals $60,262 $47,853
======= =======
</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 retail building in
Frederick, Maryland having a net book value of
approximately $24,004,000.
(B) The 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 retail building in
Westwood, New Jersey having a net book value of
approximately $11,346,000.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 4 - Mortgages payable (concluded):
(C) On November 19, 1998, the Trust repaid the
outstanding mortgage on the Spring Lake, New Jersey
apartment building utilizing proceeds from a new
mortgage in the amount of $3,700,000. 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.
The mortgage is secured by an apartment building in
Spring Lake, New Jersey having a net book value of
approximately $526,000.
(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 retail building in Patchogue, New York
having a net book value of approximately $10,541,000.
(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 $1,614,000.
(F) 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
$1,322,000.
(G) Payable in monthly 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
$930,000.
Principal amounts (in thousands of dollars) due under the above
obligations in each of the five years subsequent to July 31,
1999 are as follows:
Year Ending
July 31, Amount
----------- -------
2000 $ 777
2001 838
2002 904
2003 976
2004 1,052
Based on borrowing rates currently available to the Trust, the
fair value of the mortgage debt is approximately $63,000,000 at
July 31, 1999.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 5 - Line of credit agreement:
The Trust has a revolving line of credit agreement with Summit
Bank which expires on December 31, 1999. Maximum allowable
borrowings under the agreement were $8,000,000 and $12,310,000
at July 31, 1999 and October 31, 1998, 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 apartment buildings in Hasbrouck Heights, New
Jersey, Lakewood, New Jersey, and Palisades Park, New Jersey as
well as a retail building in Franklin Lakes, New Jersey. There
were no outstanding borrowings under the agreement at July 31,
1999 and October 31, 1998. One of the directors of the bank is a
trustee of the Trust.
Note 6 - Commitments and contingencies:
Leases:
Retail tenants:
The Trust leases retail space having a net book value of
approximately $56,000,000 at July 31, 1999 to tenants for
periods of up to twenty-five 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, 1999 are
as follows:
Year Ending
July 31, Amount
----------- ------
2000 $ 6,325
2001 6,194
2002 5,878
2003 5,626
2004 4,988
Thereafter 47,298
--------
Total $76,309
=======
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, 1999 and 1998 were not material.
In June 1999, the major lessee of the Frederick, MD retail
building filed for protection under Chapter 11 of the U.S.
Bankruptcy Code. In as much as the major lessee had never
occupied the premises, but had sublet the location to
another entity who is seeking assignment of the lease,
management does not believe that the Trust will suffer any
material loss from the bankruptcy petition.
Residential tenants:
Lease terms for residential tenants are usually one year
or less.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 6 - Commitments and contingencies (concluded): 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
Retail Building (the "Building").
At present, the discharge material appears to be isolated
and management believes there will be no significant effect
on the operations of the Building.
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
$460,000 and $428,000 for the nine months ended July 31, 1999
and 1998, respectively, and approximately $154,000 and $155,000
for the three months ended July 31, 1999 and 1998, respectively.
In addition, Hekemian charged the Trust fees and commissions in
connection with the acquisition of the retail building in
Patchogue, New York and various mortgage refinancing and lease
acquisition fees. Such fees and commissions amounted to
approximately $127,000 and $707,000 for the nine months ended
July 31, 1999 and 1998, respectively, and approximately $6,000
and $12,000 for the three months ended July 31, 1999 and 1998,
respectively.
Note 8 - Equity incentive plan:
On September 10, 1998, the Board of Trustees approved the
Trust's Equity Incentive Plan (the "Plan"), which was ratified
by the Trust's stockholders on April 7, 1999, whereby 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.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOTES TO FINANCIAL STATEMENTS
Note 8 - Equity incentive plan (concluded):
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.
In the opinion of management, if compensation cost for the stock
options granted in 1999 had been determined based on the fair
value of the options at the grant date under the provisions of
SFAS 123 using the Black-Scholes option pricing model and
assuming a risk-free interest rate of 5.25%, expected option
lives of ten years, expected volatility of 1% and expected
dividends of 7.13%, the Company's pro forma net income and pro
forma basic net income per share arising from such computation
would not have differed materially from the corresponding
historical amounts.
Note 9 - 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.
* * *
<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 October 6, 1999 /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.
