FREIT Announces Third Quarter Fiscal 2023 Results
- Real estate revenue increased 4.8% for the quarter
- The recapture of the Kmart space is expected to generate additional annual revenues
- Refinancing resulted in annual debt service savings of approximately $535,000
- Declared a total dividend of $0.30 per share
- Real estate revenue decreased 12.5% for the nine months
- Net (loss) income was ($412,000) for the quarter and $104,000 for the nine months
- Total average commercial occupancy was 65.1%
FINANCIAL HIGHLIGHTS & OPERATING STATISTICS | |||||||
For the Fiscal Quarter Ended | For the Nine Months Ended | ||||||
July 31, | July 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
GAAP (Loss) Earnings Per Share - Basic | ( | ||||||
GAAP (Loss) Earnings Per Share - Diluted | ( | ||||||
AFFO Per Share - Basic and Diluted | |||||||
Dividends Per Share | |||||||
Total Average Residential Occupancy * | 96.8 % | 97.8 % | 97.1 % | 98.4 % | |||
Total Average Commercial Occupancy * | 65.1 % | 65.9 % | 65.4 % | 67.1 % | |||
* Average occupancy rate excludes the Rotunda Property, the Damascus Property and the Westridge Square Property | |||||||
"We delivered a solid quarter of operational and financial performance," said Robert Hekemian, Chief Executive Officer of FREIT. "This performance was achieved despite increases in legal expenses and other costs associated with adverse actions from an external entity. We are also pleased to announce the recapture of the Kmart space at our Westwood Plaza shopping center-see discussion below. The Board is committed to protecting and delivering value for all FREIT stockholders".
Results for the Quarter
Real estate revenue increased
Net (loss) income attributable to common equity ("Net (Loss) Income") was Net Loss of approximately (
(Refer to "Table of Revenue & Net (Loss) Income Components")
Results for the Nine Months
Real estate revenue decreased
Net Income was approximately
(Refer to "Table of Revenue & Net (Loss) Income Components")
Table of Revenue & Net (Loss) Income Components | ||||||||||||
For the Fiscal Quarter Ended July 31, | For the Nine Months Ended July 31, | |||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | |||||||
(In Thousands Except Per Share Amounts) | (In Thousands Except Per Share Amounts) | |||||||||||
Revenue: | ||||||||||||
Commercial properties | $ 2,260 | $ 2,215 | $ 45 | $ 6,522 | $ 8,420 | $ (1,898) | ||||||
Residential properties | 5,036 | 4,744 | 292 | 14,669 | 15,803 | (1,134) | ||||||
Total real estate revenues | 7,296 | 6,959 | 337 | 21,191 | 24,223 | (3,032) | ||||||
Operating expenses: | ||||||||||||
Real estate operating expenses | 3,483 | 3,328 | 155 | 10,308 | 11,934 | (1,626) | ||||||
General and administrative expenses | 1,559 | 911 | 648 | 3,361 | 3,107 | 254 | ||||||
Depreciation | 744 | 723 | 21 | 2,198 | 3,257 | (1,059) | ||||||
Total operating expenses | 5,786 | 4,962 | 824 | 15,867 | 18,298 | (2,431) | ||||||
Financing costs | (2,031) | (1,774) | (257) | (5,858) | (6,229) | 371 | ||||||
Investment income | 275 | 119 | 156 | 682 | 183 | 499 | ||||||
(Loss) gain on investment in tenancy-in-common | (43) | 57 | (100) | (231) | (99) | (132) | ||||||
Net (loss) gain on sale of | (557) | - | (557) | (1,003) | 68,771 | (69,774) | ||||||
Net realized gain on Wayne PSC interest rate swap contract termination | - | 1,415 | (1,415) | - | 1,415 | (1,415) | ||||||
Net (loss) income | (846) | 1,814 | (2,660) | (1,086) | 69,966 | (71,052) | ||||||
Net loss (income) attributable to noncontrolling interests in subsidiaries | 434 | (693) | 1,127 | 1,190 | (23,420) | 24,610 | ||||||
Net (loss) income attributable to common equity | $ (412) | $ 1,121 | $ (1,533) | $ 104 | $ 46,546 | $ (46,442) | ||||||
(Loss) earnings per share: | ||||||||||||
Basic | $ (0.06) | $ 0.16 | $ (0.22) | $ 0.01 | $ 6.61 | $ (6.60) | ||||||
Diluted | $ (0.06) | $ 0.16 | $ (0.22) | $ 0.01 | $ 6.56 | $ (6.55) | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 7,449 | 7,040 | 7,438 | 7,038 | ||||||||
Diluted | 7,449 | 7,114 | 7,444 | 7,110 |
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
Kmart Lease Update
On June 24, 2023, the owner/operator of the 84,254 square foot Kmart store located at our Westwood Plaza shopping center in
Financing Update
On August 3, 2023, Westwood Hills, LLC refinanced its
Dividend
The Board declared a total dividend of approximately
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 July 31, | For the Nine Months Ended July 31, | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
(In Thousands Except Per Share Amounts) | (In Thousands Except Per Share Amounts) | ||||||||||
Funds From Operations ("FFO") (a) | |||||||||||
Net (loss) income | $ (846) | $ 1,814 | $ (1,086) | $ 69,966 | |||||||
Depreciation of consolidated properties | 744 | 723 | 2,198 | 3,257 | |||||||
Amortization of deferred leasing costs | 27 | 19 | 67 | 107 | |||||||
Distributions to non-controlling interests | - | (b) | (210) | - | (b) | (735) | (c) | ||||
Net loss (gain) on sale of | 557 | - | 1,003 | (68,771) | |||||||
Net realized gain on Wayne PSC interest rate | - | (1,415) | - | (1,415) | |||||||
Adjustment to loss on investment in tenancy-in- | 359 | 355 | 1,075 | 1,062 | |||||||
FFO | $ 841 | $ 1,286 | $ 3,257 | $ 3,471 | |||||||
Per Share - Basic and Diluted | $ 0.11 | $ 0.18 | $ 0.44 | $ 0.49 | |||||||
(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 | $ 841 | $ 1,286 | $ 3,257 | $ 3,471 | |||||||
Deferred rents (Straight lining) | 15 | (36) | 91 | 25 | |||||||
Capital Improvements - Apartments | (117) | (195) | (407) | (401) | |||||||
AFFO | $ 739 | $ 1,055 | $ 2,941 | $ 3,095 | |||||||
Per Share - Basic and Diluted | $ 0.10 | $ 0.15 | $ 0.40 | $ 0.44 | |||||||
Weighted Average Shares Outstanding: | |||||||||||
Basic | 7,449 | 7,040 | 7,438 | 7,038 | |||||||
Diluted | 7,449 | 7,114 | 7,444 | 7,110 |
FFO and AFFO do not represent cash generated from operating activities in accordance with accounting principles generally accepted in
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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