On June 14, 2024, First Real Estate Investment Trust of New Jersey Inc (FREVS, Financial) released its 8-K filing detailing the operating results for the fiscal quarter ended April 30, 2024. The company, which operates in the real estate sector of the United States, focuses on investing in real estate properties to provide regular income and capital appreciation to its shareholders. FREVS operates in two reportable segments: commercial properties and residential properties, with the majority of revenue derived from the residential segment.
Performance Overview
For the fiscal quarter ended April 30, 2024, FREVS reported a 5.2% increase in total real estate revenue, reaching approximately $7,275,000 compared to $6,916,000 in the same period last year. This growth was primarily driven by an increase in base rents in the residential segment across most properties.
Net income attributable to common equity was approximately $533,000 or $0.07 per share basic and diluted, a significant improvement from $97,000 or $0.01 per share in the prior year’s comparable period. This increase in net income was mainly due to higher revenue and increased income from the investment in tenancy-in-common (TIC).
Challenges and Financial Achievements
Despite the revenue growth, FREVS faced challenges with occupancy rates. The total average residential occupancy decreased to 96.5% from 97.5% in the prior year, while the total average commercial occupancy dropped significantly to 50.7% from 64.8%. This decline in commercial occupancy was primarily due to Kmart vacating its space at the Westwood Plaza Shopping Center in October 2023.
For the six months ended April 30, 2024, total real estate revenue increased by 2.7% to approximately $14,274,000 compared to $13,895,000 in the prior year. However, net income for the six months was approximately $21,000 or $0.00 per share, down from $516,000 or $0.07 per share in the previous year. This decline was mainly due to an increase in general and administrative expenses, including costs related to a financial advisory firm and legal proceedings.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| GAAP Earnings Per Share | $0.07 | $0.01 | $0.06 |
| AFFO Per Share | $0.21 | $0.13 | $0.08 |
| Dividends Per Share | $0.05 | $0.05 | $0.00 |
| Total Average Residential Occupancy | 96.5% | 97.5% | -1.0% |
| Total Average Commercial Occupancy | 50.7% | 64.8% | -14.1% |
Segment Performance
Net Operating Income (NOI) for the residential properties increased to approximately $2,948,000 for the fiscal quarter, up from $2,683,000 in the prior year. Conversely, NOI for the commercial properties decreased to approximately $817,000 from $843,000 in the previous year.
Financing and Dividend Update
On May 1, 2024, FREVS entered into a loan extension and modification agreement with Provident Bank, extending a $9 million loan for three years with a fixed interest rate of 6.75%. Additionally, the Board of Directors declared a second-quarter dividend of $0.05 per share, payable on June 14, 2024.
Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) for the fiscal quarter ended April 30, 2024, was approximately $1,541,000 or $0.21 per share, up from $931,000 or $0.13 per share in the prior year. AFFO is considered a superior measure of operating performance for REITs as it adjusts for non-cash items and recurring capital improvements.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from First Real Estate Investment Trust of New Jersey Inc for further details.
