Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jul. 31, 2017 | Sep. 08, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY | |
Entity Central Index Key | 36,840 | |
Document Type | 10-Q | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Document Period End Date | Jul. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 6,740,069 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
ASSETS | ||
Real estate, at cost, net of accumulated depreciation | $ 333,877 | $ 336,770 |
Construction in progress | 128 | 128 |
Cash and cash equivalents | 6,449 | 10,906 |
Tenants' security accounts | 1,904 | 1,875 |
Receivables arising from straight-lining of rents | 3,277 | 2,725 |
Accounts receivable, net of allowance for doubtful accounts | 2,156 | 1,730 |
Secured loans receivable | 5,451 | 5,451 |
Prepaid expenses and other assets | 9,094 | 6,559 |
Escrow deposit - 1031 exchange | 6,956 | |
Deferred charges, net | 2,309 | 1,736 |
Interest rate swap contracts | 1,314 | 91 |
Total Assets | 372,915 | 367,971 |
Liabilities: | ||
Mortgages and construction loan payable | 324,558 | 329,719 |
Less unamortized debt issuance costs | 1,988 | 2,521 |
Mortgages payable, net | 322,570 | 327,198 |
Due to affiliate | 4,814 | |
Deferred trustee compensation payable | 9,078 | 9,078 |
Accounts payable and accrued expenses | 3,082 | 8,379 |
Dividends payable | 2,022 | |
Tenants' security deposits | 2,938 | 2,817 |
Deferred revenue | 1,483 | 1,134 |
Interest rate swap contracts | 587 | 1,882 |
Total Liabilities | 344,552 | 352,510 |
Commitments and contingencies | ||
Common equity: | ||
Shares of beneficial interest without par value: 8,000,000 shares authorized; 6,993,152 shares issued plus 109,680 and 77,544 vested share units granted to trustees at July 31, 2017 and October 31, 2016, respectively | 27,425 | 26,713 |
Treasury stock, at cost: 253,083 shares at July 31, 2017 and October 31, 2016 | (5,273) | (5,273) |
Dividends in excess of net income | (4,822) | (16,916) |
Accumulated other comprehensive loss | (20) | (1,690) |
Total Common Equity | 17,310 | 2,834 |
Noncontrolling interests in subsidiaries | 11,053 | 12,627 |
Total Equity | 28,363 | 15,461 |
Total Liabilities and Equity | $ 372,915 | $ 367,971 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - shares | Jul. 31, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Shares of benefical interest, authorized | 8,000,000 | 8,000,000 |
Shares of benefical interest, issued | 6,993,152 | 6,993,152 |
Vested share units to trustees, issued | 109,680 | 77,544 |
Treasury stock at cost, shares | 253,083 | 253,083 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Revenue: | ||||
Rental income | $ 11,349 | $ 10,249 | $ 33,367 | $ 29,930 |
Reimbursements | 1,226 | 1,255 | 3,999 | 3,896 |
Sundry income | 105 | 86 | 577 | 252 |
Total revenue | 12,680 | 11,590 | 37,943 | 34,078 |
Expenses: | ||||
Operating expenses | 4,049 | 3,460 | 11,964 | 10,198 |
Lease termination fee | 620 | |||
Management fees | 593 | 515 | 1,749 | 1,501 |
Real estate taxes | 2,554 | 1,988 | 7,362 | 5,949 |
Depreciation | 2,709 | 1,791 | 7,887 | 5,263 |
Total expenses | 9,905 | 7,754 | 29,582 | 22,911 |
Operating income | 2,775 | 3,836 | 8,361 | 11,167 |
Investment income | 54 | 44 | 145 | 106 |
Gain on sale of property | 15,395 | 314 | 15,395 | 314 |
Loan prepayment costs relating to property sale | (1,139) | (1,139) | ||
Interest expense including amortization of deferred financing costs | (3,984) | (2,737) | (11,706) | (8,153) |
Net income | 13,101 | 1,457 | 11,056 | 3,434 |
Net (income) loss attributable to noncontrolling interests in subsidiaries | 653 | (211) | 2,062 | (377) |
Net income attributable to common equity | $ 13,754 | $ 1,246 | $ 13,118 | $ 3,057 |
Earnings per share - basic and diluted | $ 2.01 | $ 0.18 | $ 1.92 | $ 0.45 |
Weighted average shares outstanding: | ||||
Basic | 6,839 | 6,787 | 6,828 | 6,777 |
Diluted | 6,839 | 6,800 | 6,831 | 6,777 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 13,101 | $ 1,457 | $ 11,056 | $ 3,434 |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on interest rate swap contracts before reclassifications | (198) | (924) | 2,077 | (2,070) |
Amount reclassified from accumulated other comprehensive loss to interest expense | 110 | 150 | 441 | 455 |
Net unrealized gain (loss) on interest rate swap contracts | (88) | (774) | 2,518 | (1,615) |
Comprehensive income | 13,013 | 683 | 13,574 | 1,819 |
Net (income) loss attributable to noncontrolling interests | 653 | (211) | 2,062 | (377) |
Other comprehensive income (loss): | ||||
Unrealized (gain) loss on interest rate swap contract attributable to noncontrolling interests | 31 | 110 | (848) | 230 |
Comprehensive income (loss) attributable to noncontrolling interests | 684 | (101) | 1,214 | (147) |
Comprehensive income attributable to common equity | $ 13,697 | $ 582 | $ 14,788 | $ 1,672 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - 9 months ended Jul. 31, 2017 - USD ($) $ in Thousands | Shares of Beneficial Interest [Member] | Treasury Shares at Cost [Member] | Dividends in Excess of Net Income [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total Common Equity [Member] | Noncontrolling Interests [Member] | Total |
Balance at Oct. 31, 2016 | $ 26,713 | $ (5,273) | $ (16,916) | $ (1,690) | $ 2,834 | $ 12,627 | $ 15,461 |
Stock based compensation expense | 92 | 92 | 92 | ||||
Vested share units granted to Trustees | 620 | 620 | 620 | ||||
Distributions to noncontrolling interests | (360) | (360) | |||||
Net income | 13,118 | 13,118 | (2,062) | 11,056 | |||
Dividends declared, including $13 payable in share units ($0.15 per share) | (1,024) | (1,024) | (1,024) | ||||
Net unrealized gain on interest rate swaps | 1,670 | 1,670 | 848 | 2,518 | |||
Balance at Jul. 31, 2017 | $ 27,425 | $ (5,273) | $ (4,822) | $ (20) | $ 17,310 | $ 11,053 | $ 28,363 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (Parenthetical) $ in Thousands | 9 Months Ended |
Jul. 31, 2017USD ($)$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Stock dividends payable | $ | $ 13 |
Dividends declared, per share | $ / shares | $ 0.15 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Jul. 31, 2017 | Jul. 31, 2016 | |
Operating activities: | ||
Net income | $ 11,056 | $ 3,434 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 7,887 | 5,263 |
Amortization | 1,273 | 572 |
Stock based compensation expense | 92 | 71 |
Trustee fees and related interest paid in stock units | 607 | 521 |
Gain on sale of property | (15,395) | (314) |
Deferred rents - straight line rent | (552) | (251) |
Bad debt expense | 152 | 156 |
Changes in operating assets and liabilities: | ||
Tenants' security accounts | 92 | 92 |
Accounts receivable, prepaid expenses and other assets | (3,065) | (870) |
Accounts payable, accrued expenses and deferred trustee compensation | (1,648) | (741) |
Deferred revenue | 349 | 239 |
Net cash provided by operating activities | 848 | 8,172 |
Investing activities: | ||
Proceeds from sale of property | 9,144 | 3,059 |
Capital improvements - existing properties | (9,348) | (2,036) |
Construction and pre-development costs | (16,871) | |
Net cash used in investing activities | (204) | (15,848) |
Financing activities: | ||
Repayment of mortgages and construction loan | (33,010) | (3,148) |
Proceeds from mortgage loan refinancing | 23,500 | |
Proceeds from additional tranche of loan | 2,320 | |
Restricted loan proceeds held in escrow | (1,850) | |
Proceeds from construction loan | 1,349 | 15,214 |
Advance funding for construction loan interest reserve | (1,002) | |
Proceeds from credit line | 3,000 | |
Deferred financing costs | (359) | (60) |
Dividends paid | (3,033) | (6,054) |
Due to affiliate | 4,814 | |
Distributions to noncontrolling interests | (360) | (375) |
Net cash (used in) provided by financing activities | (5,101) | 6,047 |
Net decrease in cash and cash equivalents | (4,457) | (1,629) |
Cash and cash equivalents, beginning of period | 10,906 | 13,500 |
Cash and cash equivalents, end of period | 6,449 | 11,871 |
Supplemental disclosure of cash flow data: | ||
Interest paid, net of amounts capitalized including $1,139 in loan prepayment costs related to property sale | 11,605 | 7,625 |
Investing activities: | ||
Accrued capital expenditures, construction costs, pre-development costs and interest | 253 | 6,717 |
Proceeds from sale of property, held in escrow pending 1031 exchange | 6,956 | |
Financing activities: | ||
Dividends declared but not paid | 2,018 | |
Dividends paid in share units | $ 13 | $ 53 |
CONDENSED CONSOLIDATED STATEME9
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 9 Months Ended |
Jul. 31, 2017USD ($) | |
Statement of Cash Flows [Abstract] | |
Loan prepayment costs related to property sale | $ 1,139 |
Basis of presentation
Basis of presentation | 9 Months Ended |
Jul. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Note 1 - Basis of presentation: The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the rules of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnotes required by GAAP for complete financial statements have been omitted. It is the opinion of management that all adjustments considered necessary for a fair presentation have been included, and that all such adjustments are of a normal recurring nature. The consolidated results of operations for the nine and three-month periods ended July 31, 2017 are not necessarily indicative of the results to be expected for the full year or any other period. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended October 31, 2016 of First Real Estate Investment Trust of New Jersey (“FREIT”). |
Recently issued accounting stan
Recently issued accounting standards | 9 Months Ended |
Jul. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently issued accounting standards | Note 2 –Recently issued accounting standards: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) Leases (Topic 840) In November 2016, the FASB issued ASU No. 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash |
Earnings per share
Earnings per share | 9 Months Ended |
Jul. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per share | Note 3 - Earnings per share: Basic earnings per share is calculated by dividing net income attributable to common equity (numerator) by the weighted average number of shares and vested share units (See Note 13) outstanding during each period (denominator). 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 shares that would have been outstanding if all potentially dilutive shares, such as those issuable upon the exercise of stock options, were issued during the period using the Treasury Stock method. Under the Treasury Stock method, the assumption is that the proceeds received upon exercise of the options, including the unrecognized stock option compensation expense attributable to future services, are used to repurchase FREIT’s stock at the average market price during the period, thereby reducing the number of shares to be added in computing diluted earnings per share. For the nine months ended July 31, 2017, the outstanding stock options increased the average dilutive shares outstanding by approximately 3,000 shares with no impact on earnings per share. For the three months ended July 31, 2017, the outstanding stock options were anti-dilutive with no impact on earnings per share. For the nine months ended July 31, 2016, the outstanding stock options were anti-dilutive with no impact on earnings per share. For the three months ended July 31, 2016, the outstanding stock options increased the average dilutive shares outstanding by approximately 13,000 shares with no impact on earnings per share. |
Interest rate swap contracts
Interest rate swap contracts | 9 Months Ended |
Jul. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest rate swap contracts | Note 4 - Interest rate swap contracts: On September 29, 2016, Wayne PSC, LLC, a consolidated subsidiary, refinanced its $24.2 million mortgage loan held with Metropolitan Life Insurance Company, with a new mortgage loan from People’s United Bank in the amount of $25.8 million. The new loan bears a floating interest rate equal to 220 basis points over the one-month BBA LIBOR with a maturity date of October 1, 2026. At July 31, 2017, the total amount outstanding on this loan was approximately $25.3 million. In order to minimize interest rate volatility during the term of the loan, Wayne PSC, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.625% over the term of the loan. At July 31, 2017, the derivative financial instrument has a notional amount of approximately $25.3 million and a maturity date of October 2026. On December 26, 2012, Damascus Centre, LLC refinanced its construction loan with long-term financing provided by People’s United Bank and the first tranche of the new loan was taken-down in the amount of $20 million. Based on leasing and net operating income at the shopping center, People’s United Bank agreed to a take-down of the second tranche of this loan on April 22, 2016 in the amount of $2,320,000. The total amount outstanding for both tranches of this loan held with People’s United Bank as of July 31, 2017 was approximately $20.5 million. The loan has a maturity date of January 3, 2023 and bears a floating interest rate equal to 210 basis points over the BBA LIBOR. In order to minimize interest rate volatility during the term of this loan, Damascus Centre, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate on each tranche of this loan, resulting in a fixed rate of 3.81% over the term of the first tranche of this loan and a fixed rate of 3.53% over the term of the second tranche of this loan. At July 31, 2017, the derivative financial instrument has a notional amount of approximately $20.5 million and a maturity date of January 2023. On December 29, 2014, FREIT Regency, LLC closed on a $16.2 million mortgage loan with Provident Bank. The loan bears a floating interest rate equal to 125 basis points over the one-month BBA LIBOR and the loan will mature on December 15, 2024. At July 31, 2017, the total amount outstanding on this loan was $16.2 million. In order to minimize interest rate volatility during the term of the loan, FREIT Regency, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.75% over the term of the loan. At July 31, 2017, the derivative financial instrument has a notional amount of approximately $16.2 million and a maturity date of December 2024. In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, FREIT is accounting for the Damascus Centre, LLC, FREIT Regency, LLC, and Wayne PSC, LLC interest rate swaps as cash flow hedges and marks to market its fixed pay interest rate swaps, taking into account present interest rates compared to the contracted fixed rate over the life of the contract. For the nine months ended July 31, 2017, FREIT recorded an unrealized gain of approximately $2,518,000 in comprehensive income representing the change in the fair value of the swaps during such period with a corresponding asset of approximately $1,177,000 for the Wayne PSC swap and $137,000 for the Damascus Centre swaps and a corresponding liability of approximately $587,000 for the Regency swap as of July 31, 2017. For the nine months ended July 31, 2016, FREIT recorded an unrealized loss of approximately $1,615,000 in comprehensive income representing the change in the fair value of the swaps during such period. For the three months ended July 31, 2017 and 2016, FREIT recorded an unrealized loss of approximately $88,000 and $774,000, respectively, in comprehensive income representing the change in the fair value of the swaps during such periods. For the year ended October 31, 2016, FREIT recorded an unrealized loss of $725,000 in comprehensive income representing the change in the fair value of the swaps during such period with a corresponding liability of $521,000 for the Damascus Centre swaps and $1,361,000 for the Regency swap and a corresponding asset of $91,000 for the Wayne PSC swap as of October 31, 2016. The fair values are based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance). |
Property sales
Property sales | 9 Months Ended |
Jul. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Property sales | Note 5 – Property sales: On January 11, 2016, FREIT was notified by Lakeland Bank (as successor by merger to Pascack Community Bank) of its election to exercise the option under its lease to purchase the property leased by FREIT to Lakeland Bank located in Rochelle Park, New Jersey. Pursuant to the Lease Agreement, Lakeland Bank had the right to exercise this option at a price equal to the greater of $3 million or the fair market value of the property as determined by mutual agreement between tenant and landlord. FREIT and Lakeland Bank agreed to a purchase price of $3.1 million. On June 17, 2016, FREIT sold this property, having a carrying amount of approximately $2.7 million (including a straight-line rent receivable in the amount of approximately $0.5 million), to Lakeland Bank for $3.1 million resulting in a gain of approximately $0.3 million net of sales fees. This sale resulted in FREIT’s loss of future annual rents of approximately $241,000, which would have increased periodically through September 2023. On June 12, 2017, FREIT sold its Hammel Gardens property, a residential property located in Maywood, New Jersey, for a sales price of $17 million. The sale of this property, which had a carrying value of approximately $0.7 million, resulted in a capital gain of approximately $15.4 million net of sales fees and commissions. As a result of this sale, FREIT incurred a loan prepayment cost of approximately $1.1 million and paid off the related mortgage on the Hammel Gardens property in the amount of approximately $8 million from the proceeds of the sale. FREIT has structured this sale in a manner that qualifies it as a like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code. If FREIT completes a like-kind exchange under Section 1031, FREIT may defer its income tax liability with respect to the $15.4 million capital gain from the sale of the Hammel Gardens property. The net proceeds from this sale, which were approximately $7 million, will be held in escrow until a replacement property is purchased. FREIT has identified a replacement property related to this exchange and has until December 9, 2017 to complete an acquisition. As the disposal of these two properties did not represent a strategic shift that would have a major impact on FREIT’s operations or financial results, the property’s operations were not reflected as discontinued operations in the accompanying condensed consolidated financial statements. |
Capitalized interest
Capitalized interest | 9 Months Ended |
Jul. 31, 2017 | |
Capitalized interest [Abstract] | |
Capitalized interest | Note 6 – Capitalized interest Interest costs associated with amounts expended at the Grande Rotunda development were capitalized and included in the cost of the project. Capitalization of interest ceased upon substantial completion of the project which occurred as of the end of the third quarter of Fiscal 2016. There was no interest capitalized in Fiscal 2017. Interest capitalized during the nine and three months ended July 31, 2016 amounted to approximately $2,611,000 and $916,000, respectively. |
Management agreement, fees and
Management agreement, fees and transactions with related party | 9 Months Ended |
Jul. 31, 2017 | |
Related Party Transactions [Abstract] | |
Management agreement, fees and transactions with related party | Note 7 - Management agreement, fees and transactions with related party: Hekemian & Co., Inc. (“Hekemian”) currently manages all the properties owned by FREIT and its affiliates, except for the office building at The Rotunda located in Baltimore, Maryland, which is managed by an independent third party management company. The management agreement with Hekemian, effective November 1, 2001, requires the payment of management fees equal to 4% to 5% of rents collected. Such fees, charged to operations, were approximately $1,629,000 and $1,419,000 for the nine-month periods ended July 31, 2017 and 2016, respectively, and $555,000 and $485,000 for the three-month periods ended July 31, 2017 and 2016, respectively. In addition, the management agreement provides for the payment to Hekemian of leasing commissions, as well as the reimbursement of operating expenses incurred on behalf of FREIT. Such commissions and reimbursements amounted to approximately $702,000 and $452,000 for the nine months ended July 31, 2017 and 2016, respectively, and $305,000 and $147,000 for the three months ended July 31, 2017 and 2016, respectively. The management agreement expires on October 31, 2017, and is automatically renewed for successive periods of two years unless either party gives not less than six (6) months prior notice of non-renewal. FREIT also uses the resources of the Hekemian insurance department to secure various insurance coverages for its properties and subsidiaries. Hekemian is paid a commission for these services. Such commissions were charged to operations and amounted to approximately $171,000 and $164,000 for the nine months ended July 31, 2017 and 2016, respectively, and $116,000 and $101,000 for the three months ended July 31, 2017 and 2016, respectively. From time to time, FREIT engages Hekemian to provide certain additional services, such as consulting services related to development, property sales and financing activities of FREIT. Separate fee arrangements are negotiated between Hekemian and FREIT with respect to such additional services. Grande Rotunda, LLC and Hekemian Development Resources, LLC, a wholly-owned subsidiary of Hekemian (“Resources”), entered into an agency agreement pursuant to which Resources is to provide development services in connection with the development activities at the Rotunda, which is owned and operated by Grande Rotunda, LLC. Such fees incurred to Hekemian and Resources during the nine months ended July 31, 2017 and 2016 were approximately $467,500 and $391,000, respectively, and $467,500 and $33,000 for the three months ended July 31, 2017 and 2016, respectively. Fees incurred in Fiscal 2017 related to commissions to Hekemian relating to the sale of the Hammel Gardens property. Fees incurred in Fiscal 2016 related to the Rotunda development project and were capitalized and included in the cost of the project. Mr. Robert S. Hekemian, Chairman of the Board, Chief Executive Officer and a Trustee of FREIT, is the Chairman of the Board and Chief Executive Officer of Hekemian. Mr. Robert S. Hekemian, Jr., a Trustee of FREIT, is the President of Hekemian. Trustee fee expense (including interest) incurred by FREIT for the nine months ended July 31, 2017 and 2016 was approximately $405,000 and $401,000, respectively, for Mr. Robert S. Hekemian, and $50,000 and $49,000, respectively, for Mr. Robert S. Hekemian, Jr. and for the three months ended July 31, 2017 and 2016 was approximately $132,000 and $131,000, respectively, for Mr. Robert S. Hekemian, and $16,000 and $16,000, respectively, for Mr. Robert S. Hekemian, Jr. (See Note 13). Rotunda 100, LLC and Damascus 100, LLC own the minority interests in Grande Rotunda, LLC and Damascus Centre, LLC, respectively. Rotunda 100, LLC owns a 40% equity interest in Grande Rotunda, LLC and Damascus 100, LLC owns a 30% equity interest in Damascus Centre, LLC, and FREIT owns a 60% equity interest in Grande Rotunda, LLC and a 70% equity interest in Damascus Centre, LLC. The equity owners of Rotunda 100, LLC and Damascus 100, LLC are principally employees of Hekemian. To incentivize the employees of Hekemian, FREIT advanced, only to employees of Hekemian, up to 50% of the amount of the equity contributions that the Hekemian employees were required to invest in Rotunda 100, LLC and Damascus 100, LLC. These advances, which amounted to $5,451,000 at both July 31, 2017 and October 31, 2016, were in the form of secured loans that bear interest that will float at 225 basis points over the ninety (90) day LIBOR, as adjusted each November 1, February 1, May 1 and August 1. These loans are secured by the Hekemian employees’ interests in Rotunda 100 and Damascus 100, and are full recourse loans. The notes had maturity dates at the earlier of (a) ten (10) years after issue (Grande Rotunda, LLC – 6/19/2015, Damascus Centre, LLC – 9/30/2016), or, (b) at the election of FREIT, ninety (90) days after the borrower terminates employment with Hekemian, at which time all outstanding unpaid principal is due. On June 4, 2015, the Board approved an extension of the maturity date of the secured loans to occur the earlier of (a) June 19, 2018 or (b) five days after the closing of a permanent mortgage loan secured by the Rotunda property. Grande Rotunda, LLC continues to incur substantial expenditures at the Rotunda property. These expenditures include tenant improvements, leasing costs and operating expenditures which, in the aggregate, exceed revenues as the property is still in the rent up phase. The construction loan is at its maximum level resulting in no additional funding available to draw. Accordingly, the equity owners in Grande Rotunda, LLC (FREIT with a 60% ownership and Rotunda 100, LLC with a 40% ownership) are contributing their respective pro-rata share of any cash needs through loans to Grande Rotunda, LLC. As of July 31, 2017, Rotunda 100, LLC has funded Grande Rotunda, LLC with approximately $4.8 million which is included in “Due to affiliate” on the accompanying condensed consolidated balance sheet. |
Mortgage financings
Mortgage financings | 9 Months Ended |
Jul. 31, 2017 | |
Debt Disclosure [Abstract] | |
Mortgage financings | Note 8 – Mortgage financings On April 28, 2017, WestFREIT Corp., a consolidated subsidiary, refinanced its $22 million mortgage loan held with Wells Fargo Bank, with a new mortgage loan from Manufacturer’s and Traders Trust Company in the amount of $23.5 million. The new loan, secured by a shopping center in Frederick, Maryland, bears a floating interest rate equal to 275 basis points over the one-month LIBOR and a maturity date of April 28, 2019 with the option to extend for 12 months. This refinancing resulted in: (i) a reduction in the annual interest rate from a fixed rate of 5.55% to a variable rate of 3.74% based on the one-month LIBOR as of April 30, 2017, and (ii) net refinancing proceeds of approximately $1.1 million. The net refinancing proceeds have been used for general corporate purposes. The original Rotunda acquisition loan for $22.5 million, which was subsequently reduced to $19.5 million on February 1, 2010, was acquired by FREIT on May 28, 2013. FREIT subsequently sold this loan to Wells Fargo Bank, the lender providing the construction financing for the major redevelopment and expansion project at the Rotunda. On December 9, 2013, Grande Rotunda, LLC closed with Wells Fargo Bank on a construction loan of up to $120 million to be used to redevelop and expand the Rotunda property in Baltimore, Maryland with a term of four (4) years, with one twelve-month extension, at a rate of 225 basis points over the monthly LIBOR. On November 23, 2016, the following terms and conditions of this loan were modified: (i) the total amount that may be drawn on this loan was decreased from $120 million to $116.1 million, allowing for an additional draw of $2.1 million over the then existing balance of approximately $114 million to be used for retail tenant improvements and leasing commissions; (ii) leasing benchmarks are no longer required to be met including the waiver of the leasing benchmarks FREIT was not in compliance with as of June 30, 2016; (iii) Grande Rotunda, LLC provided an interest reserve to Wells Fargo Bank in the amount of $2 million for the purpose of funding interest payments, and is obliged to replenish the account balance to $1 million if it should fall below $500,000; (iv) the maturity date of the loan was changed from December 31, 2017 to October 31, 2017 with no option to extend; (v) the interest rate on the amount outstanding on the loan was increased by 25 basis points to 250 basis points over the monthly LIBOR. As of July 31, 2017, $115.3 million of this loan was drawn down (including approximately $1.3 million during Fiscal 2017), of which $19 million was used to pay off the loan from FREIT, and $96.3 million was used toward the construction at the Rotunda. The loan was fully drawn down as of July 31, 2017 with a remaining reserve of approximately $0.8 million used as a letter of credit for offsite improvements. FREIT has a line of credit provided by the Provident Bank in the amount of approximately $12.8 million. The line of credit was for a two-year term ending on November 1, 2016, which was extended by the bank to November 1, 2017. FREIT expects the credit line will be extended for an additional period of 36 months when the current term expires on November 1, 2017. Draws against the credit line can be used for general corporate purposes, for property acquisitions, construction activities, and letters of credit. Draws against the credit line are secured by mortgages on FREIT’s Franklin Crossing Shopping Center in Franklin Lakes, New Jersey and retail space in Glen Rock, New Jersey. Interest rates on draws will be set at the time of each draw for 30, 60, or 90-day periods, based on FREIT’s choice of the prime rate or at 175 basis points over the 30, 60, or 90-day LIBOR rates at the time of the draws. The interest rate on the line of credit has a floor of 3.25%. During the second quarter of Fiscal 2017, FREIT utilized $3 million of its credit line to fund tenant improvements for new retail tenants at the Rotunda property. As of July 31, 2017, approximately $9.8 million was available under the line of credit. On September 29, 2016, Wayne PSC, LLC, a consolidated subsidiary, refinanced its $24.2 million mortgage loan held with Metropolitan Life Insurance Company, with a new mortgage loan from People’s United Bank in the amount of $25.8 million. The new loan, secured by a shopping center in Wayne, New Jersey, bears a floating interest rate equal to 220 basis points over the one-month BBA LIBOR with a maturity date of October 1, 2026. In order to minimize interest rate volatility during the term of the loan, Wayne PSC, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.625% over the term of the loan. This refinancing resulted in: (i) a reduction in the interest rate from 6.04% to 3.625% and (ii) net refinancing proceeds of approximately $1 million that were distributed to the partners in Wayne PSC, LLC with FREIT receiving $0.4 million based on its 40% membership interest in Wayne PSC, LLC. On December 26, 2012, Damascus Centre, LLC refinanced its construction loan with long-term financing provided by People’s United Bank and the first tranche of the new loan was taken-down in the amount of $20 million. Based on leasing and net operating income at the shopping center, People’s United Bank agreed to a take-down of the second tranche of this loan on April 22, 2016 in the amount of $2,320,000, of which approximately $470,000 was readily available and the remaining $1,850,000 (included in prepaid expenses and other assets in the accompanying condensed consolidated balance sheets) is held in escrow and available to Damascus Centre, LLC once certain tenants open and begin paying rent. The loan has a maturity date of January 3, 2023 and bears a floating interest rate equal to 210 basis points over the BBA LIBOR. In order to minimize interest rate volatility during the term of this loan, Damascus Centre, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate on each tranche of this loan, resulting in a fixed rate of 3.81% over the term of the first tranche of this loan and a fixed rate of 3.53% over the term of the second tranche of this loan. |
Fair value of long-term debt
Fair value of long-term debt | 9 Months Ended |
Jul. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value of long-term debt | Note 9 – Fair value of long-term debt: The following table shows the estimated fair value and carrying value of FREIT’s long-term debt at July 31, 2017 and October 31, 2016: ($ in Millions) July 31, 2017 October 31, 2016 Fair Value $ 319.6 $ 331.3 Carrying Value $ 322.6 $ 327.2 Fair values are estimated based on market interest rates at July 31, 2017 and October 31, 2016 and on discounted cash flow analysis. Changes in assumptions or estimation methods may significantly affect these fair value estimates. The fair value is based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance). |
Segment information
Segment information | 9 Months Ended |
Jul. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment information | Note 10 - Segment information: FREIT has determined that it has two reportable segments: commercial properties and residential properties. These reportable segments offer different types of space, have different types of tenants, and are managed separately because each requires different operating strategies and management expertise. The commercial segment is comprised of nine (9) properties after giving effect to the sale of a property on June 17, 2016 (See Note 5), and the residential segment is comprised of seven (7) properties after giving effect to the sale of a property on June 12, 2017 (See Note 5). The accounting policies of the segments are the same as those described in Note 1 in FREIT’s Annual Report on Form 10-K for the fiscal year ended October 31, 2016. The chief operating and decision-making group of FREIT's commercial segment, residential segment and corporate/other is comprised of FREIT’s Board of Trustees (“Board”). FREIT assesses and measures segment operating results based on net operating income ("NOI"). NOI, a standard used by real estate professionals, is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes: deferred rents (straight lining), depreciation, financing costs and other items. NOI is not a measure of operating results or cash flows from operating activities as measured by GAAP, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Real estate rental revenue, operating expenses, NOI and recurring capital improvements for the reportable segments are summarized below and reconciled to condensed consolidated net income attributable to common equity for the nine and three-month periods ended July 31, 2017 and 2016. Asset information is not reported since FREIT does not use this measure to assess performance. Nine Months Ended Three Months Ended July 31, July 31, 2017 2016 2017 2016 (In Thousands of Dollars) (In Thousands of Dollars) Real estate rental revenue: Commercial $ 17,764 $ 16,952 $ 5,694 $ 5,534 Residential 19,627 16,875 6,745 5,780 Total real estate rental revenue 37,391 33,827 12,439 11,314 Real estate operating expenses: Commercial 8,754 8,218 2,919 2,754 Residential 10,649 8,029 3,762 2,703 Total real estate operating expenses 19,403 16,247 6,681 5,457 Net operating income: Commercial 9,010 8,734 2,775 2,780 Residential 8,978 8,846 2,983 3,077 Total net operating income $ 17,988 $ 17,580 $ 5,758 $ 5,857 Recurring capital improvements - residential $ (630 ) $ (659 ) $ (251 ) $ (170 ) Reconciliation to condensed consolidated net income attributable to common equity: Segment NOI $ 17,988 $ 17,580 $ 5,758 $ 5,857 Gain on sale of property 15,395 314 15,395 314 Loan prepayment costs relating to property sale (1,139 ) — (1,139 ) — Lease termination fee (620 ) — — — Deferred rents - straight lining 552 251 241 276 Investment income 145 106 54 44 General and administrative expenses (1,672 ) (1,401 ) (515 ) (506 ) Depreciation (7,887 ) (5,263 ) (2,709 ) (1,791 ) Financing costs (11,706 ) (8,153 ) (3,984 ) (2,737 ) Net income 11,056 3,434 13,101 1,457 Net (income) loss attributable to noncontrolling interests in subsidiaries 2,062 (377 ) 653 (211 ) Net income attributable to common equity $ 13,118 $ 3,057 $ 13,754 $ 1,246 |
Income taxes
Income taxes | 9 Months Ended |
Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 11 – Income taxes: For the fiscal year ended October 31, 2016, FREIT distributed 100% of its ordinary taxable income and 100% of its capital gain from the sale of property in Rochelle Park, New Jersey (See Note 5) to its shareholders as dividends. FREIT intends to distribute 100% of its ordinary taxable income to its shareholders as dividends for the fiscal year ending October 31, 2017. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income was recorded in FREIT’s condensed consolidated financial statements. As described in Note 5, FREIT intends to complete a like-kind exchange under Section 1031 of the Internal Revenue Code with respect to the sale of property in Maywood, New Jersey, which was sold on June 12, 2017 at a gain of approximately $15.4 million. Accordingly, no provision for federal or state income taxes related to such gain was recorded in FREIT’s condensed consolidated financial statements. As of July 31, 2017, FREIT had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended October 31, 2015 remain open to examination by the major taxing jurisdictions to which FREIT is subject. |
Stock option plan
Stock option plan | 9 Months Ended |
Jul. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock option plan | Note 12 – Stock option plan: On September 4, 2014, the Board approved the grant of a total of 246,000 non-qualified share options under FREIT’s Equity Incentive Plan (“Plan”) to certain FREIT Executive Officers, the members of the Board and certain employees of Hekemian, FREIT’s managing agent. The options have an exercise price of $18.45 per share, will vest in equal annual installments over a 5-year period and will expire 10 years from the date of grant, which will be September 3, 2024. On November 10, 2016, the Board approved the grant of a total of 38,000 non-qualified share options under the Plan to two members of the Board who were appointed to the Board during Fiscal 2016. The options have an exercise price of $21.00 per share, will vest in equal annual installments over a 5-year period, and will expire 10 years from the date of grant, which will be November 9, 2026. The following table summarizes stock option activity for the nine-month period ended July 31, 2017: No. of Options Weighted Average Outstanding Exercise Price Options outstanding beginning of period 229,880 $ 18.45 Options granted during period 38,000 21.00 Options forfeited/cancelled during period (60 ) 18.45 Options outstanding end of period 267,820 $ 18.81 Options vested and expected to vest 262,280 Options exercisable at end of period 84,080 The estimated fair value of options granted during Fiscal 2017 was $3.54 per option. Such value was estimated on the grant date using a binomial lattice option pricing model using the following assumptions: · Expected volatility – 30.30% · Risk-free interest rate – 2.23% · Imputed option life – 6.3 years · Expected dividend yield – 4.66% The expected volatility over the options’ expected life was based on the historical volatility of the weekly closing price of the Company’s stock over a five (5) year period. The risk-free interest rate was based on the annual yield on the grant date of a zero-coupon U.S. Treasury Bond the maturity of which equals the option’s expected life. The imputed option life was based on the simplified expected term calculation permitted by the SEC, which defines the expected life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches. The expected dividend yield was based on the Company’s historical dividend yield, exclusive of capital gain dividends. For the nine-month periods ended July 31, 2017 and 2016, compensation expense related to stock options granted amounted to approximately $92,000 and $71,000, respectively. For the three-month periods ended July 31, 2017 and 2016, compensation expense related to stock options granted amounted to approximately $31,000 and $24,000, respectively. At July 31, 2017, there was approximately $310,000 of unrecognized compensation cost relating to outstanding non-vested stock options to be recognized over the remaining vesting period of approximately 2.1 years for the options granted on September 4, 2014 and approximately 4.3 years for the options granted on November 10, 2016. The aggregate intrinsic value of options vested and expected to vest and options exercisable at July 31, 2017 was approximately $284,000 and $106,000, respectively. |
Deferred fee plan
Deferred fee plan | 9 Months Ended |
Jul. 31, 2017 | |
Deferred Compensation Arrangements [Abstract] | |
Deferred fee plan | Note 13 – Deferred fee plan: On September 4, 2014, the Board approved amendments, effective November 1, 2014, to the FREIT Deferred Fee Plan for its Executive Officers and Trustees, one of which provides for the issuance of share units payable in FREIT shares in respect of (i) deferred amounts of all Trustee fees on a prospective basis; (ii) interest on Trustee fees deferred prior to November 1, 2014 (payable at a floating rate, adjusted quarterly, based on the average 10-year Treasury Bond interest rate plus 150 basis points); and (iii) dividends payable in respect of share units allocated to participants in the Deferred Fee Plan as a result of deferrals described above. The number of share units credited to a participant’s account will be determined by the closing price of FREIT shares on the date as set forth in the Deferred Fee Plan. All fees payable to Trustees for the nine and three-month periods ended July 31, 2017 were deferred under the Deferred Fee Plan except for fees payable to one Trustee, who elected to receive such fees in cash. All fees payable to Trustees for the nine and three-month periods ended July 31, 2016 were deferred under the Deferred Fee Plan except for the fees payable to two Trustees, who elected to receive such fees in cash. As a result of the amendment to the Deferred Fee Plan described above, for the nine-month periods ended July 31, 2017 and 2016, the aggregate amounts of deferred Trustee fees together with related interest and dividends were approximately $620,800 and $574,600, respectively, which have been paid through the issuance of 32,136 and 29,473 vested FREIT share units, respectively, based on the closing price of FREIT shares on the dates as set forth in the Deferred Fee Plan. For the nine-month periods ended July 31, 2017 and 2016, FREIT has charged as expense approximately $607,800 and $521,500 of the aggregate amounts of deferred Trustee fees and related interest and dividends for these periods, respectively, representing Trustee fees and interest to expense and the balance of approximately $13,000 and $53,100, respectively, representing dividends payable in respect of share units allocated to Plan participants, has been charged to equity. |
Anchor tenant termination and m
Anchor tenant termination and modification of lease | 9 Months Ended |
Jul. 31, 2017 | |
Lease Termination Fee Disclosure [Abstract] | |
Anchor tenant termination fee and modification of lease | Note 14 – Anchor tenant termination and modification of lease: On January 4, 2017, Macy’s, Inc. announced its intention to close several of its department stores across the United States, including the approximately 81,160 square foot Macy’s anchor store located at the Preakness Shopping Center in Wayne, New Jersey. Wayne PSC, LLC (“Wayne PSC”), a 40% owned consolidated affiliate of FREIT, owns and operates this shopping center in which Macy’s operated its store under a long-term lease and was paying annual rent of approximately $234,000 ($2.88 per square foot) with no future rent escalations for the remaining term and option periods of the lease. On April 25, 2017, Wayne PSC announced it had agreed to a termination of Macy’s lease effective as of April 15, 2017. To terminate the lease and take possession of the space, Wayne PSC paid Macy’s a termination fee of $620,000, which has been fully expensed in the second quarter of Fiscal 2017. Wayne PSC expects to re-position this space and re-lease it to a new tenant (or multiple tenants) at market rents, which are currently higher than the rent provided for under the terminated Macy’s lease. FREIT will lose total consolidated rental income, including reimbursements, of approximately $0.2 million until such time as the space is fully re-leased. FREIT anticipates increased revenue from the space when it is fully re-leased. FREIT owns and operates an 87,661 square foot shopping center located in Franklin Lakes, New Jersey, the anchor tenant of which is The Stop & Shop Supermarket Company, LLC (“Stop & Shop”). On July 26, 2017, Stop & Shop entered into a lease modification with FREIT whereby the tenant exercised its option to renew the lease for a ten year period with a right of the tenant to terminate the lease at any time during the fifth year if the store does not meet certain sales volume levels set forth in the modification. This lease modification, which provides for a $250,000 reduction in annual rent, will adversely affect FREIT’s future operating results. |
Fair value of long-term debt (T
Fair value of long-term debt (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of estimated fair value and carrying value of long-term debt | The following table shows the estimated fair value and carrying value of FREIT’s long-term debt at July 31, 2017 and October 31, 2016: ($ in Millions) July 31, 2017 October 31, 2016 Fair Value $ 319.6 $ 331.3 Carrying Value $ 322.6 $ 327.2 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment and related information | Real estate rental revenue, operating expenses, NOI and recurring capital improvements for the reportable segments are summarized below and reconciled to condensed consolidated net income attributable to common equity for the nine and three-month periods ended July 31, 2017 and 2016. Asset information is not reported since FREIT does not use this measure to assess performance. Nine Months Ended Three Months Ended July 31, July 31, 2017 2016 2017 2016 (In Thousands of Dollars) (In Thousands of Dollars) Real estate rental revenue: Commercial $ 17,764 $ 16,952 $ 5,694 $ 5,534 Residential 19,627 16,875 6,745 5,780 Total real estate rental revenue 37,391 33,827 12,439 11,314 Real estate operating expenses: Commercial 8,754 8,218 2,919 2,754 Residential 10,649 8,029 3,762 2,703 Total real estate operating expenses 19,403 16,247 6,681 5,457 Net operating income: Commercial 9,010 8,734 2,775 2,780 Residential 8,978 8,846 2,983 3,077 Total net operating income $ 17,988 $ 17,580 $ 5,758 $ 5,857 Recurring capital improvements - residential $ (630 ) $ (659 ) $ (251 ) $ (170 ) Reconciliation to condensed consolidated net income attributable to common equity: Segment NOI $ 17,988 $ 17,580 $ 5,758 $ 5,857 Gain on sale of property 15,395 314 15,395 314 Loan prepayment costs relating to property sale (1,139 ) — (1,139 ) — Lease termination fee (620 ) — — — Deferred rents - straight lining 552 251 241 276 Investment income 145 106 54 44 General and administrative expenses (1,672 ) (1,401 ) (515 ) (506 ) Depreciation (7,887 ) (5,263 ) (2,709 ) (1,791 ) Financing costs (11,706 ) (8,153 ) (3,984 ) (2,737 ) Net income 11,056 3,434 13,101 1,457 Net (income) loss attributable to noncontrolling interests in subsidiaries 2,062 (377 ) 653 (211 ) Net income attributable to common equity $ 13,118 $ 3,057 $ 13,754 $ 1,246 |
Stock option plan (Tables)
Stock option plan (Tables) | 9 Months Ended |
Jul. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the nine-month period ended July 31, 2017: No. of Options Weighted Average Outstanding Exercise Price Options outstanding beginning of period 229,880 $ 18.45 Options granted during period 38,000 21.00 Options forfeited/cancelled during period (60 ) 18.45 Options outstanding end of period 267,820 $ 18.81 Options vested and expected to vest 262,280 Options exercisable at end of period 84,080 |
Earnings per share (Details)
Earnings per share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Earnings Per Share [Abstract] | ||||
Shares arising from assumed exercise of stock options | 0 | 13,000 | 3,000 | 0 |
Interest rate swap contracts (D
Interest rate swap contracts (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 29, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | Apr. 22, 2016 | Dec. 26, 2012 | |
Mortgages and construction loan payable | $ 324,558,000 | $ 324,558,000 | $ 329,719,000 | |||||
Interest rate swap contract assets | 1,314,000 | 1,314,000 | 91,000 | |||||
Net unrealized gain (loss) on interest rate swap contracts | (88,000) | $ (774,000) | 2,518,000 | $ (1,615,000) | (725,000) | |||
Interest rate swap contract liabilities | 587,000 | $ 587,000 | 1,882,000 | |||||
Basis points, interest rate | 1.75% | |||||||
Wayne PSC swap [Member] | ||||||||
Interest rate swap contract assets | 1,177,000 | $ 1,177,000 | 91,000 | |||||
Damascus Centre Swap [Member] | ||||||||
Interest rate swap contract assets | 137,000 | 137,000 | ||||||
Interest rate swap contract liabilities | 521,000 | |||||||
Regency Swap [Member] | ||||||||
Interest rate swap contract liabilities | 587,000 | 587,000 | $ 1,361,000 | |||||
Wayne PSC, LLC Loan [Member] | ||||||||
Refinanced loan amount | $ 24,200,000 | |||||||
Loan amount | 25,300,000 | 25,300,000 | ||||||
Description of loan amendment terms | In order to minimize interest rate volatility during the term of the loan, Wayne PSC, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.625% over the term of the loan. | |||||||
Notional amount of interest rate swap | 25,300,000 | 25,300,000 | ||||||
Fixed interest rate | 3.625% | |||||||
Basis points, interest rate | 2.20% | |||||||
Maturity date of loan | Oct. 1, 2026 | |||||||
People's United Bank [Member] | ||||||||
Loan amount | $ 25,800,000 | 20,500,000 | 20,500,000 | |||||
Mortgages and construction loan payable | $ 2,320,000 | |||||||
Notional amount of interest rate swap | $ 20,500,000 | $ 20,500,000 | ||||||
People's United Bank [Member] | Tranche One [Member] | ||||||||
Loan amount | $ 20,000,000 | |||||||
Fixed interest rate | 3.81% | 3.81% | ||||||
Basis points, interest rate | 2.10% | |||||||
Maturity date of loan | Jan. 3, 2023 | |||||||
People's United Bank [Member] | Tranche Two [Member] | ||||||||
Loan amount | 2,320,000 | |||||||
Fixed interest rate | 3.53% | 3.53% | ||||||
Basis points, interest rate | 2.10% | |||||||
Amount of loan readily available | 470,000 | |||||||
Amount of loan held in escrow | $ 1,850,000 | |||||||
Maturity date of loan | Jan. 3, 2023 | |||||||
Provident Bank [Member] | ||||||||
Loan amount | $ 16,200,000 | $ 16,200,000 | ||||||
Notional amount of interest rate swap | $ 16,200,000 | $ 16,200,000 | ||||||
Fixed interest rate | 3.75% | 3.75% | ||||||
Basis points, interest rate | 1.25% | |||||||
Maturity date of loan | Dec. 15, 2024 |
Property sales (Details)
Property sales (Details) - USD ($) | Jun. 12, 2017 | Jun. 30, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | Jun. 17, 2016 |
Real Estate Properties [Line Items] | ||||||||
Agreed sales price of property held for sale | $ 9,144,000 | $ 3,059,000 | ||||||
Gain on sale of property held for sale | $ 15,395,000 | $ 314,000 | 15,395,000 | $ 314,000 | ||||
Deferral of capital gain on sale of property from qualification as like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code | $ 15,400,000 | |||||||
Lakeland Bank Property [Member] | ||||||||
Real Estate Properties [Line Items] | ||||||||
Rental properties | $ 2,700,000 | |||||||
Straight-line rent receivable on property held for sale | $ 500,000 | |||||||
Agreed sales price of property held for sale | $ 3,100,000 | |||||||
Gain on sale of property held for sale | $ 300,000 | |||||||
Maximum purchase price of property | 3,000,000 | |||||||
Lost annual rents due to sale of property | $ 241,000 | |||||||
Hammel Gardens Property [Member] | ||||||||
Real Estate Properties [Line Items] | ||||||||
Rental properties | $ 700,000 | |||||||
Agreed sales price of property held for sale | 17,000,000 | |||||||
Gain on sale of property held for sale | 15,400,000 | |||||||
Mortgage prepayment penalty | 1,100,000 | |||||||
Net proceeds from sale of property | 8,000,000 | |||||||
Net proceeds from sale of property to be held in escrow until replacement property is purchased | 7,000,000 | |||||||
Deferral of capital gain on sale of property from qualification as like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code | $ 15,400,000 |
Capitalized interest (Details)
Capitalized interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | |
Capitalized interest [Abstract] | ||||
Interest capitalized | $ 916 | $ 2,611 |
Management agreement, fees an31
Management agreement, fees and transactions with related party (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Nov. 30, 2016 | Oct. 31, 2016 | |
Related Party Transaction [Line Items] | ||||||
Asset management fees | $ 593,000 | $ 515,000 | $ 1,749,000 | $ 1,501,000 | ||
Trustee fees and related interest payable in stock units | 620,000 | |||||
Secured loans receivable | $ 5,451,000 | $ 5,451,000 | $ 5,451,000 | $ 5,451,000 | ||
Minimum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Asset management fees percentage rate | 4.00% | |||||
Maximum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Asset management fees percentage rate | 5.00% | |||||
Grande Rotunda, LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership by noncontrolling owners (percentage) | 40.00% | 40.00% | ||||
Ownership by parent (percentage) | 60.00% | 60.00% | ||||
Due to affiliate | $ 4,800,000 | $ 4,800,000 | ||||
Damascus Centre, LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership by noncontrolling owners (percentage) | 30.00% | 30.00% | ||||
Ownership by parent (percentage) | 70.00% | 70.00% | ||||
Managing Agent Hekemian & Co [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Asset management fees | $ 555,000 | 485,000 | $ 1,629,000 | 1,419,000 | ||
Leasing commissions and reimbursement of operating expenses | 305,000 | 147,000 | 702,000 | 452,000 | ||
Insurance commissions | 116,000 | 101,000 | 171,000 | 164,000 | ||
Redevelopment fees | 467,500 | 33,000 | 467,500 | 391,000 | ||
Robert S. Hekemian [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Trustee fees and related interest payable in stock units | 132,000 | 131,000 | 405,000 | 401,000 | ||
Robert S. Hekemian, Jr. [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Trustee fees and related interest payable in stock units | $ 16,000 | $ 16,000 | $ 50,000 | $ 49,000 |
Mortgage financings (Details)
Mortgage financings (Details) - USD ($) | Feb. 01, 2010 | Apr. 28, 2017 | Nov. 23, 2016 | Sep. 29, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | Apr. 22, 2016 | Dec. 26, 2012 |
Debt Instrument [Line Items] | |||||||||
Basis points, interest rate | 1.75% | ||||||||
Total loan carrying amount | $ 324,558,000 | $ 329,719,000 | |||||||
Term of the loan | 2 years | ||||||||
Construction and pre-development costs | $ 16,871,000 | ||||||||
Proceeds from credit line | $ 3,000,000 | ||||||||
Provident Bank Line of Credit [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, expiration date | Oct. 1, 2017 | ||||||||
Line of credit, current borrowing capacity | $ 12,800,000 | ||||||||
Line of credit, remaining capacity | 9,800,000 | ||||||||
Proceeds from credit line | $ 3,000,000 | ||||||||
Line of credit, interest rate description | Interest rates on draws will be set at the time of each draw for 30, 60, or 90-day periods, based on FREIT's choice of the prime rate or at 175 basis points over the 30, 60, or 90-day LIBOR rates at the time of the draws. | ||||||||
Line of credit, interest rate | 3.25% | ||||||||
People's United Bank [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Notional amount of interest rate swap | $ 20,500,000 | ||||||||
Loan amount | $ 25,800,000 | $ 20,500,000 | |||||||
Total loan carrying amount | $ 2,320,000 | ||||||||
People's United Bank [Member] | Tranche One [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan amount | $ 20,000,000 | ||||||||
Fixed interest rate | 3.81% | ||||||||
Basis points, interest rate | 2.10% | ||||||||
Maturity date of loan | Jan. 3, 2023 | ||||||||
People's United Bank [Member] | Tranche Two [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan amount | 2,320,000 | ||||||||
Amount of loan readily available | 470,000 | ||||||||
Amount of loan held in escrow | $ 1,850,000 | ||||||||
Fixed interest rate | 3.53% | ||||||||
Basis points, interest rate | 2.10% | ||||||||
Maturity date of loan | Jan. 3, 2023 | ||||||||
WestFREIT Corp [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Refinanced loan amount | $ 22,000,000 | ||||||||
Basis points, interest rate | 2.75% | ||||||||
Maturity date of loan | Apr. 28, 2019 | ||||||||
Description of loan amendment terms | This refinancing resulted in: (i) a reduction in the annual interest rate from a fixed rate of 5.55% to a variable rate of 3.74% based on the one-month LIBOR | ||||||||
Net proceeds from refinancing of debt | $ 1,100,000 | ||||||||
Wells Fargo Bank [Member] | Manufacturer's and Traders Trust Company [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan amount | $ 23,500,000 | ||||||||
Baltimore, MD [Member] | People's United Bank [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Refinanced loan amount | $ 19,500,000 | ||||||||
Loan amount | $ 22,500,000 | $ 120,000,000 | |||||||
Basis points, interest rate | 2.25% | ||||||||
Total loan carrying amount | $ 115,300,000 | ||||||||
Amount of loan drawn during period | 1,300,000 | ||||||||
Amount of loan proceeds used to repay FREIT | 19,000,000 | ||||||||
Amount of loan proceeds used toward construction of Rotunda | 96,300,000 | ||||||||
Amount of loan proceeds used as letter of credit for offsite improvements | $ 800,000 | ||||||||
Term of the loan | 4 years | ||||||||
Description of loan amendment terms | On November 23, 2016, the following terms and conditions of this loan were modified: (i) the total amount that may be drawn on this loan was decreased from $120 million to $116.1 million, allowing for an additional draw of $2.1 million over the existing balance of approximately $114 million to be used for retail tenant improvements and leasing commissions; (ii) leasing benchmarks are no longer required to be met including the waiver of the leasing benchmarks FREIT was not in compliance with as of June 30, 2016; (iii) Grande Rotunda, LLC provided an interest reserve to Wells Fargo Bank in the amount of $2 million for the purpose of funding interest payments, and is obliged to replenish the account balance to $1 million if it should fall below $500,000; (iv) the maturity date of the loan was changed from December 31, 2017 to October 31, 2017 with no option to extend; (v) the interest rate on amount outstanding on the loan was increased by 25 basis points to 250 basis points over the monthly LIBOR. | ||||||||
Wayne, PSC LLC [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Refinanced loan amount | $ 24,200,000 | ||||||||
Fixed interest rate | 3.625% | ||||||||
Basis points, interest rate | 2.20% | ||||||||
Maturity date of loan | Oct. 1, 2026 | ||||||||
Description of loan amendment terms | In order to minimize interest rate volatility during the term of the loan, Wayne PSC, LLC entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 3.625% over the term of the loan. This refinancing resulted in: (i) a reduction in interest rate from 6.04% to 3.625% and (ii) net refinancing proceeds of approximately $1 million that were distributed to the partners in Wayne PSC, LLC with FREIT receiving $0.4 million based on its 40% membership interest in Wayne PSC, LLC. |
Fair value of long-term debt (D
Fair value of long-term debt (Details) - USD ($) $ in Thousands | Jul. 31, 2017 | Oct. 31, 2016 |
Fair Value Disclosures [Abstract] | ||
Fair value of long-term debt | $ 319,600 | $ 331,300 |
Carrying value of long-term debt | $ 322,570 | $ 327,198 |
Segment information (Details)
Segment information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017USD ($)properties | Jul. 31, 2016USD ($) | Jul. 31, 2017USD ($)propertiessegments | Jul. 31, 2016USD ($)segments | |
Reportable Segments | ||||
Real estate rental revenue | $ 12,680 | $ 11,590 | $ 37,943 | $ 34,078 |
Real estate operating expenses | 9,905 | 7,754 | 29,582 | 22,911 |
Operating income | 2,775 | 3,836 | 8,361 | 11,167 |
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||||
Segment NOI | 5,758 | 5,857 | 17,988 | 17,580 |
Gain on sale of commercial property | 15,395 | 314 | 15,395 | 314 |
Loan prepayment costs relating to property sale | (1,139) | (1,139) | ||
Lease termination fee | (620) | |||
Deferred rents - straight lining | 241 | 276 | 552 | 251 |
Investment income | 54 | 44 | 145 | 106 |
General and administrative expenses | (515) | (506) | (1,672) | (1,401) |
Depreciation | (2,709) | (1,791) | (7,887) | (5,263) |
Financing costs | (3,984) | (2,737) | (11,706) | (8,153) |
Net income (loss) | 13,101 | 1,457 | 11,056 | 3,434 |
Net (income) loss attributable to noncontrolling interests in subsidiaries | 653 | (211) | 2,062 | (377) |
Net income (loss) attributable to common equity | 13,754 | 1,246 | $ 13,118 | $ 3,057 |
Number of reportable segments | segments | 2 | 2 | ||
Operating Segments [Member] | ||||
Reportable Segments | ||||
Real estate rental revenue | 12,439 | 11,314 | $ 37,391 | $ 33,827 |
Real estate operating expenses | 6,681 | 5,457 | 19,403 | 16,247 |
Operating income | 5,758 | 5,857 | 17,988 | 17,580 |
Residential [Member] | ||||
Reportable Segments | ||||
Recurring capital improvements | $ (251) | (170) | $ (630) | (659) |
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||||
Number of properties | properties | 7 | 7 | ||
Residential [Member] | Operating Segments [Member] | ||||
Reportable Segments | ||||
Real estate rental revenue | $ 6,745 | 5,780 | $ 19,627 | 16,875 |
Real estate operating expenses | 3,762 | 2,703 | 10,649 | 8,029 |
Operating income | $ 2,983 | 3,077 | $ 8,978 | 8,846 |
Commercial [Member] | ||||
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||||
Number of properties | properties | 9 | 9 | ||
Commercial [Member] | Operating Segments [Member] | ||||
Reportable Segments | ||||
Real estate rental revenue | $ 5,694 | 5,534 | $ 17,764 | 16,952 |
Real estate operating expenses | 2,919 | 2,754 | 8,754 | 8,218 |
Operating income | $ 2,775 | $ 2,780 | $ 9,010 | $ 8,734 |
Income taxes (Details)
Income taxes (Details) | 12 Months Ended |
Oct. 31, 2016USD ($) | |
Income Tax Disclosure [Abstract] | |
Ordinary taxable income distributed as dividends (percentage) | 100.00% |
Deferral of capital gain on sale of property from qualification as like-kind exchange of real estate pursuant to Section 1031 of the Internal Revenue Code | $ 15,400,000 |
Stock option plan (Narrative) (
Stock option plan (Narrative) (Details) - Employee Stock Option [Member] - USD ($) | Nov. 10, 2016 | Sep. 04, 2014 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Plan term | 10 years | 10 years | |||||
Vesting term | 4 years 3 months 19 days | 2 years 1 month 6 days | 5 years | ||||
Maturity date | Nov. 9, 2026 | ||||||
Options granted during period | 38,000 | 246,000 | 38,000 | ||||
Options granted during period | $ 21 | $ 18.45 | $ 21 | ||||
Compensation expense related to stock options | $ 31,000 | $ 24,000 | $ 92,000 | $ 71,000 | |||
Unrecognized compensation cost | 310,000 | 310,000 | $ 229,880 | ||||
Aggregate intrinsic value of options expected to vest | 284,000 | 284,000 | |||||
Aggregate intrinsic value of options exercisable | $ 106,000 | $ 106,000 |
Stock option plan (Schedule of
Stock option plan (Schedule of Stock Option Activity) (Details) - Employee Stock Option [Member] - USD ($) | Nov. 10, 2016 | Sep. 04, 2014 | Jul. 31, 2017 |
No. of Options Outstanding | |||
Options outstanding beginning of period | $ 229,880 | ||
Options granted during period | 38,000 | 246,000 | 38,000 |
Options forfeited/cancelled during period | (60) | ||
Options outstanding end of period | 267,820 | ||
Options vested and expected to vest | 262,280 | ||
Options exercisable at end of period | 84,080 | ||
Weighted Average Exercise Price | |||
Options outstanding beginning of period | $ 18.45 | ||
Options granted during period | $ 21 | $ 18.45 | 21 |
Options forfeited/cancelled during period | 18.45 | ||
Options outstanding end of period | $ 18.81 |
Stock option plan (Fair value a
Stock option plan (Fair value assumption of options granted) (Details) | 9 Months Ended |
Jul. 31, 2017$ / shares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Estimated fair value of options granted | $ 3.54 |
Expected volatility | 30.30% |
Risk-free interest rate | 2.23% |
Imputed option life | 6 years 3 months 19 days |
Expected dividend yield | 4.66% |
Deferred fee plan (Details)
Deferred fee plan (Details) - USD ($) | 9 Months Ended | ||
Jul. 31, 2017 | Jul. 31, 2016 | Oct. 31, 2016 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Trustee fee expense | $ 620,000 | ||
Dividends payable | $ 2,018,000 | $ 2,022,000 | |
Deferred Fee Plan [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Trustee fee expense | 607,800 | 521,500 | |
Deferred trustee fees | $ 620,800 | $ 574,600 | |
Basis spread on any deferred fee (percentage) | 150.00% | ||
Term of distribution to participants | 10 years | ||
Shares issued | 32,136 | 29,473 | |
Dividends payable | $ 13,000 | $ 53,100 |
Anchor tenant termination and40
Anchor tenant termination and modification of lease (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Jul. 31, 2017 | Jul. 31, 2016 | Jul. 26, 2017 | |
Lease Termination Fee Disclosure [Abstract] | |||||
FREIT's ownership percentage in Wayne PSC | 40.00% | ||||
Annual rental income paid by Macy's, Inc. for terminated leased property | $ 234,000 | ||||
Lease termination fee | 620,000 | ||||
Expected total rental income lost from termination of lease | $ 200,000 | ||||
Reduction in annual rent having adverse effect on future operating results | $ 250,000 |