FREIT Announces Fourth Quarter Fiscal 2023 Results
- Residential properties maintained a positive cash flow despite an inflationary market.
- Net income increased in the fiscal quarter compared to the prior year's period.
- The company refinanced multiple loans, resulting in annual debt service savings.
- The Board of Directors declared a fourth quarter dividend of $0.05 per share on the common stock.
- Real estate revenue decreased by 9.4% for the twelve months ended October 31, 2023.
- The decline in revenue was primarily due to the sale of Maryland Properties in Fiscal 2022.
- Net income decreased significantly for the twelve months ended October 31, 2023 compared to the prior year's period.
FINANCIAL HIGHLIGHTS & OPERATING STATISTICS | |||||
For the Fiscal Quarter Ended | For the Twelve Months Ended | ||||
October 31, | October 31, | ||||
2023 | 2022 | 2023 | 2022 | ||
GAAP Earnings (Loss) Per Share - Basic | ( | ||||
GAAP Earnings (Loss) Per Share - Diluted | ( | ||||
AFFO Per Share - Basic and Diluted | ( | ||||
Dividends Per Share | |||||
Total Average Residential Occupancy * | 95.9 % | 97.6 % | 96.8 % | 98.2 % | |
Total Average Commercial Occupancy * | 61.3 % | 65.9 % | 64.4 % | 66.8 % | |
* Average occupancy rate excludes the Rotunda Property, the Damascus Property and the Westridge Square Property (collectively the "Maryland Properties") from all periods presented as the properties were sold in the twelve months ended October 31, 2022. |
"We delivered a solid quarter of operational and financial performance despite continuing legal expenses and other costs associated with adverse actions from an external entity," said Robert Hekemian, Jr., Chief Executive Officer of FREIT. Mr. Hekemian also stated that "While operating in a highly inflationary market, our residential properties have continued to maintain a positive cash flow with same property net operating income increasing modestly from
Results for the Quarter
Real estate revenue increased
Net income (loss) attributable to common equity ("Net Income (Loss)") was Net Income of approximately
(Refer to "Table of Revenue & Net Income (Loss) Components")
Results for the Twelve Months
Real estate revenue decreased
Net Income was approximately
(Refer to "Table of Revenue & Net Income (Loss) Components")
Table of Revenue & Net Income (Loss) Components | ||||||||||||
For the Fiscal Quarter Ended October 31, | For the Twelve Months Ended October 31, | |||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | |||||||
(In Thousands Except Per Share Amounts) | (In Thousands Except Per Share Amounts) | |||||||||||
Revenue: | ||||||||||||
Commercial properties | $ 2,167 | $ 2,224 | $ (57) | $ 8,689 | $ 10,644 | $ (1,955) | ||||||
Residential properties | 4,986 | 4,824 | 162 | 19,655 | 20,627 | (972) | ||||||
Total real estate revenues | 7,153 | 7,048 | 105 | 28,344 | 31,271 | (2,927) | ||||||
Operating expenses: | ||||||||||||
Real estate operating expenses | 3,446 | 3,347 | 99 | 13,754 | 15,281 | (1,527) | ||||||
General and administrative expenses | 882 | 1,896 | (1,014) | 4,243 | 5,003 | (760) | ||||||
Depreciation | 746 | 738 | 8 | 2,944 | 3,995 | (1,051) | ||||||
Total operating expenses | 5,074 | 5,981 | (907) | 20,941 | 24,279 | (3,338) | ||||||
Financing costs | (1,859) | (1,835) | (24) | (7,717) | (8,064) | 347 | ||||||
Investment income | 331 | 175 | 156 | 1,013 | 358 | 655 | ||||||
Loss on investment in tenancy-in-common | (40) | (129) | 89 | (271) | (228) | (43) | ||||||
Net (loss) gain on sale of | - | - | - | (1,003) | 68,771 | (69,774) | ||||||
Net realized gain on Wayne PSC interest rate swap | - | - | - | - | 1,415 | (1,415) | ||||||
Net income (loss) | 511 | (722) | 1,233 | (575) | 69,244 | (69,819) | ||||||
Net loss (income) attributable to noncontrolling | 145 | 168 | (23) | 1,335 | (23,252) | 24,587 | ||||||
Net income (loss) attributable to common equity | $ 656 | $ (554) | $ 1,210 | $ 760 | $ 45,992 | $ (45,232) | ||||||
Earnings (Loss) per share: | ||||||||||||
Basic | $ 0.09 | $ (0.08) | $ 0.17 | $ 0.10 | $ 6.52 | $ (6.42) | ||||||
Diluted | $ 0.09 | $ (0.08) | $ 0.17 | $ 0.10 | $ 6.45 | $ (6.35) | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 7,450 | 7,106 | 7,441 | 7,055 | ||||||||
Diluted | 7,453 | 7,106 | 7,447 | 7,132 |
Same Property Net Operating Income
FREIT considers same property net operating income ("Same Property NOI") to be a useful supplemental non-GAAP measure of its operating performance. FREIT defines same property within both the commercial and residential segments to be those properties that FREIT has owned and operated for both the current and prior periods presented, excluding those properties that FREIT acquired, sold or redeveloped during those periods. Any newly acquired property that has been in operation for less than a year, any property that is undergoing a major redevelopment but may still be in operation at less than full capacity, and/or any property that has been sold is not considered same property. Currently, FREIT's commercial segment contains five (5) same properties and the residential segment contains six (6) same properties. The Maryland Properties sold in the prior year's comparable period were excluded from same property results for all periods presented.
Same property NOI for the residential properties increased modestly to approximately
Financing Update
On August 3, 2023, Westwood Hills, LLC refinanced its
On October 31, 2023, FREIT exercised its right, pursuant to the loan agreement, to extend the term of its
On December 1, 2023, the mortgage secured by an apartment building located in
On January 11, 2024, FREIT paid off its
FREIT's revolving line of credit provided by the Provident Bank was renewed for a three-year term ending on October 31, 2026. Draws against the credit line are secured by mortgages on FREIT's Franklin Crossing Shopping Center in
Dividend
On October 4, 2023, the Board of Directors of FREIT declared a fourth quarter dividend of
Adjusted Funds From Operations
Funds From Operations ("FFO") is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts ("NAREIT"). FREIT does not include distributions from equity/debt/capital gain sources in its computation of FFO. Although many consider FFO as the standard measurement of a REIT's performance, FREIT modified the NAREIT computation of FFO to include other adjustments to GAAP net income, which are not considered by management to be the primary drivers of its decision making process. These adjustments to GAAP net income are straight-line rents and recurring capital improvements on FREIT's residential apartments.
The modified FFO computation is referred to as Adjusted Funds From Operations ("AFFO"). FREIT believes that AFFO is a superior measure of its operating performance. FREIT computes FFO and AFFO as follows:
For the Fiscal Quarter Ended October 31, | For the Twelve Months Ended October 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
(In Thousands Except Per Share Amounts) | (In Thousands Except Per Share Amounts) | |||||||||||
Funds From Operations ("FFO") (a) | ||||||||||||
Net income (loss) | $ 511 | $ (722) | $ (575) | $ 69,244 | ||||||||
Depreciation of consolidated properties | 746 | 738 | 2,944 | 3,995 | ||||||||
Amortization of deferred leasing costs | 36 | 26 | 103 | 133 | ||||||||
Distributions to non-controlling interests | (240) | - | (240) | (b) | (735) | (c) | ||||||
Net loss (gain) on sale of | - | - | 1,003 | (68,771) | ||||||||
Net realized gain on Wayne PSC interest rate swap | - | - | - | (1,415) | ||||||||
Adjustment to loss on investment in tenancy-in- | 363 | 357 | 1,438 | 1,419 | ||||||||
FFO | $ 1,416 | $ 399 | $ 4,673 | $ 3,870 | ||||||||
Per Share - Basic | $ 0.19 | $ 0.06 | $ 0.63 | $ 0.55 | ||||||||
Per Share - Diluted | $ 0.19 | $ 0.06 | $ 0.63 | $ 0.54 | ||||||||
(a) As prescribed by NAREIT. | ||||||||||||
(b) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately | ||||||||||||
(c) FFO excludes the distribution of proceeds to non-controlling interests in the amount of approximately | ||||||||||||
Adjusted Funds From Operations ("AFFO") | ||||||||||||
FFO | $ 1,416 | $ 399 | $ 4,673 | $ 3,870 | ||||||||
Deferred rents (Straight lining) | 9 | (43) | 100 | (18) | ||||||||
Capital Improvements - Apartments | (125) | (633) | (532) | (1,034) | ||||||||
AFFO | $ 1,300 | $ (277) | $ 4,241 | $ 2,818 | ||||||||
Per Share - Basic and Diluted | $ 0.17 | $ (0.04) | $ 0.57 | $ 0.40 | ||||||||
Weighted Average Shares Outstanding: | ||||||||||||
Basic | 7,450 | 7,106 | 7,441 | 7,055 | ||||||||
Diluted | 7,453 | 7,106 | 7,447 | 7,132 |
FFO and AFFO do not represent cash generated from operating activities in accordance with accounting principles generally accepted in
_____________________________________________________________________________________________________________
The statements in this report, which relate to future earnings or performance, are forward-looking. Actual results may differ materially and be adversely affected by such factors as market and economic conditions, longer than anticipated lease-up periods or the inability of certain tenants to pay rents. Additional information about these factors is contained in the Company's filings with the SEC including the Company's most recent filed reports on Form 10-K and Form 10-Q.
First Real Estate Investment Trust of New Jersey, Inc. is a publicly traded (over-the-counter – symbol FREVS) REIT organized in 1961. Its portfolio of residential and commercial properties are located in
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SOURCE First Real Estate Investment Trust of New Jersey
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