Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2020 | Mar. 10, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY | |
Entity Central Index Key | 0000036840 | |
Document Type | 10-Q | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Period End Date | Jan. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 6,856,651 | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 000-25043 | |
Entity Incorporation, State or Country Code | NJ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jan. 31, 2020 | Oct. 31, 2019 |
ASSETS | ||
Real estate, at cost, net of accumulated depreciation | $ 327,549 | $ 330,108 |
Construction in progress | 469 | 395 |
Cash and cash equivalents | 31,904 | 38,075 |
Tenants' security accounts | 2,148 | 2,278 |
Receivables arising from straight-lining of rents | 4,437 | 4,374 |
Accounts receivable, net of allowance for doubtful accounts of $444 and $379 as of January 31, 2020 and October 31, 2019, respectively | 1,276 | 1,741 |
Secured loans receivable | 5,095 | 5,053 |
Prepaid expenses and other assets | 6,022 | 5,951 |
Deferred charges, net | 2,587 | 2,643 |
Total Assets | 381,487 | 390,618 |
Liabilities: | ||
Mortgages payable | 351,752 | 352,790 |
Less unamortized debt issuance costs | 2,607 | 2,886 |
Mortgages payable, net | 349,145 | 349,904 |
Due to affiliate | 5,771 | 5,705 |
Deferred trustee compensation payable | 2,791 | 7,610 |
Accounts payable and accrued expenses | 3,508 | 3,097 |
Dividends payable | 1,357 | |
Tenants' security deposits | 3,275 | 3,381 |
Deferred revenue | 1,204 | 1,390 |
Interest rate cap and swap contracts | 2,516 | 2,126 |
Total Liabilities | 368,210 | 374,570 |
Common equity: | ||
Shares of beneficial interest without par value: 8,000,000 shares authorized; 6,993,152 shares issued plus 135,406 and 192,122 vested share units granted to Trustees at January 31, 2020 and October 31, 2019, respectively | 27,669 | 28,847 |
Treasury stock, at cost: 139,667 and 206,408 shares at January 31, 2020 and October 31, 2019, respectively | (2,929) | (4,330) |
Dividends in excess of net income | (9,024) | (6,762) |
Accumulated other comprehensive loss | (2,301) | (2,040) |
Total Common Equity | 13,415 | 15,715 |
Noncontrolling interests in subsidiaries | (138) | 333 |
Total Equity | 13,277 | 16,048 |
Total Liabilities and Equity | $ 381,487 | $ 390,618 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2020 | Oct. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 444 | $ 379 |
Shares of benefical interest, no par value | ||
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 | 135,406 | 192,122 |
Treasury stock at cost, shares | 139,667 | 206,408 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Revenue: | ||
Rental income | $ 13,363 | $ 13,161 |
Reimbursements | 1,916 | 1,658 |
Sundry income | 314 | 109 |
Total revenue | 15,593 | 14,928 |
Expenses: | ||
Property operating expenses | 4,015 | 3,867 |
Special comittee expenses | 3,382 | |
Management fees | 715 | 637 |
Real estate taxes | 2,407 | 2,430 |
Depreciation | 2,932 | 2,824 |
Total expenses | 13,451 | 9,758 |
Operating income | 2,142 | 5,170 |
Investment income | 72 | 71 |
Unrealized loss on interest rate cap contract | (154) | |
Interest expense including amortization of deferred financing costs | (4,235) | (4,652) |
Net (loss) income | (2,021) | 435 |
Net (income) loss attributable to noncontrolling interests in subsidiaries | (241) | 24 |
Net (loss) income attributable to common equity | $ (2,262) | $ 459 |
(Loss) Earnings per share - basic and diluted | $ (0.32) | $ 0.07 |
Weighted average shares outstanding: | ||
Basic and diluted | 6,979 | 6,915 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (2,021) | $ 435 |
Other comprehensive loss: | ||
Unrealized loss on interest rate swap contracts before reclassifications | (420) | (2,276) |
Amount reclassified from accumulated other comprehensive loss to interest expense | 30 | (88) |
Net unrealized loss on interest rate swap contracts | (390) | (2,364) |
Comprehensive loss | (2,411) | (1,929) |
Net (income) loss attributable to noncontrolling interests | (241) | 24 |
Other comprehensive (loss) income: | ||
Unrealized loss on interest rate swap contracts attributable to noncontrolling interests | 129 | 666 |
Comprehensive (loss) income attributable to noncontrolling interests | (112) | 690 |
Comprehensive loss attributable to common equity | $ (2,523) | $ (1,239) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Thousands | Shares of Beneficial Interest [Member] | Treasury Shares at Cost [Member] | Dividends in Excess of Net Income [Member] | Accumulated Other Comprehensive Income [Member] | Total Common Equity [Member] | Noncontrolling Interests [Member] | Total | |
Balance at Oct. 31, 2018 | $ 28,288 | $ (4,941) | $ (4,376) | $ 2,517 | $ 21,488 | $ 2,856 | $ 24,344 | |
Stock based compensation expense | 34 | 34 | 34 | |||||
Vested share units granted to Trustees and consultant | 254 | 254 | 254 | |||||
Vested share units issued to consultant and retired Trustee | [1] | (20) | 20 | |||||
Distributions to noncontrolling interests | (294) | (294) | ||||||
Net (loss) income | 459 | 459 | (24) | 435 | ||||
Dividends declared, including payable in share units (per share) | (1,040) | (1,040) | (1,040) | |||||
Net unrealized loss on interest rate swaps | (1,698) | (1,698) | (666) | (2,364) | ||||
Balance at Jan. 31, 2019 | 28,556 | (4,921) | (4,957) | 819 | 19,497 | 1,872 | 21,369 | |
Balance at Oct. 31, 2019 | 28,847 | (4,330) | (6,762) | (2,040) | 15,715 | 333 | 16,048 | |
Stock based compensation expense | 12 | 12 | 12 | |||||
Vested share units granted to Trustees and consultant | 211 | 211 | 211 | |||||
Vested share units issued to consultant and retired Trustees | [2] | (1,401) | 1,401 | |||||
Distributions to noncontrolling interests | (583) | (583) | ||||||
Net (loss) income | (2,262) | (2,262) | 241 | (2,021) | ||||
Net unrealized loss on interest rate swaps | (261) | (261) | (129) | (390) | ||||
Balance at Jan. 31, 2020 | $ 27,669 | $ (2,929) | $ (9,024) | $ (2,301) | $ 13,415 | $ (138) | $ 13,277 | |
[1] | Represents the issuance of treasury shares to consultant for share units earned. | |||||||
[2] | Represents the issuance of treasury shares to consultant and retired Trustee for share units earned. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Jan. 31, 2019USD ($)$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Stock dividends payable | $ | $ 26 |
Dividends declared, per share | $ / shares | $ 0.15 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Operating activities: | ||
Net (loss) income | $ (2,021) | $ 435 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation | 2,932 | 2,824 |
Amortization | 392 | 422 |
Unrealized loss on interest rate cap contract | 154 | |
Stock based compensation expense | 12 | 34 |
Trustee fees, consultant fee and related interest paid in stock units | 211 | 228 |
Deferred rents - straight line rent | (63) | (67) |
Bad debt expense | 133 | 56 |
Changes in operating assets and liabilities: | ||
Tenants' security accounts | (106) | 71 |
Accounts receivable, prepaid expenses and other assets | 903 | 725 |
Accounts payable, accrued expenses and deferred trustee compensation payable | (4,510) | (24) |
Deferred revenue | (186) | (265) |
Due to affiliate - accrued interest | 66 | 71 |
Net cash (used in) provided by operating activities | (2,237) | 4,664 |
Investing activities: | ||
Capital improvements - existing properties | (345) | (805) |
Net cash used in investing activities | (345) | (805) |
Financing activities: | ||
Repayment of mortgages | (1,038) | (1,087) |
Dividends paid | (1,357) | (338) |
Distributions to noncontrolling interests | (583) | (294) |
Net cash used in financing activities | (2,978) | (1,719) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (5,560) | 2,140 |
Cash, cash equivalents and restricted cash, beginning of period | 42,488 | 26,394 |
Cash, cash equivalents and restricted cash, end of period | 36,928 | 28,534 |
Supplemental disclosure of cash flow data: | ||
Interest paid, net of amounts capitalized | 3,843 | 4,176 |
Investing activities: | ||
Accrued capital expenditures, construction costs, pre-development costs and interest | 273 | 172 |
Financing activities: | ||
Dividends declared but not paid | 1,014 | |
Dividends paid in share units | 26 | |
Vested share units issued to consultant and retired trustee | $ 1,401 | $ 20 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Reconciliation of Cash Reported in Balance Sheet) - USD ($) $ in Thousands | Jan. 31, 2020 | Jan. 31, 2019 |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheet: | ||
Cash and cash equivalents | $ 31,904 | $ 23,633 |
Tenants' security accounts | 2,148 | 2,212 |
Mortgage escrows (included in prepaid expenses and other assets) | 2,876 | 2,689 |
Total cash, cash equivalents and restricted cash | $ 36,928 | $ 28,534 |
Basis of presentation
Basis of presentation | 3 Months Ended |
Jan. 31, 2020 | |
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 three-month period ended January 31, 2020 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, 2019 of First Real Estate Investment Trust of New Jersey (“FREIT” or the “Company”). Certain prior year cash flow line items have been reclassified to conform to the current year presentation. |
Recently issued accounting stan
Recently issued accounting standards | 3 Months Ended |
Jan. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently issued accounting standards | Note 2 - Recently issued accounting standards: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, “ Leases (Topic 842) Leases (Topic 840) “Revenue From Contracts With Customers” Targeted Improvements Substantially all of FREIT’s revenues are within the scope of ASC 842. FREIT will continue to account for its leases as operating leases. Leases for FREIT’s apartment buildings and complexes are generally short-term in nature (one to two-years in duration), based on fixed payments and contain separate lease components within the contract for each revenue stream (i.e. base rent, garage rent, etc.). Given the nature of these leases, the adoption of ASU No. 2016-02 had no impact on the accounting for the Company’s leases within the residential segment. With respect to most of FREIT’s commercial properties, lease terms range from five years to twenty-five years with options, which if exercised would extend the terms of such leases. These lease agreements generally provide for reimbursement of real estate taxes, maintenance, insurance and certain other operating expenses of the properties (known as common area maintenance costs (“CAM”)). Some of FREIT’s leases in its commercial segment may contain lease and nonlease components. Generally, the primary lease component in most of FREIT’s commercial leases is base rent charged for the rental of space in an office complex/shopping center. Depending on the lease, the following nonlease components could be present: 1) fixed (or in substance fixed) payments related to real estate taxes and insurance; 2) variable payments that depend on an index or rate initially measured using the index or rate at the commencement date; and 3) Fixed CAM reimbursements or CAM expense reimbursements based on the tenant’s proportionate share of the allocable operating expenses and CAM capital expenditures for the property. FREIT accrues fixed lease income on a straight-line basis over the terms of the leases. FREIT accrues reimbursements from tenants for recoverable portions of real estate taxes, insurance, and CAM as variable lease consideration in the period the applicable expenditures are incurred recognizing differences between estimated recoveries and the final billed amounts in the subsequent year. Some of FREIT’s retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. FREIT recognizes this variable lease consideration only when each tenant’s sales exceed the applicable sales threshold. Given that this standard has minimal impact on real estate operating lessors, the adoption of this new accounting guidance did not have a significant impact on FREIT’s consolidated financial statements and footnote disclosures. As a result, there was no cumulative effect adjustment to opening equity. Additionally, based on this new accounting guidance, the Company will no longer be able to capitalize certain leasing costs, such as legal expenses, as it relates to activities before a lease is entered into. (See Note 15 to FREIT’s condensed consolidated financial statements for further details). In June 2016, the FASB issued ASU No. 2016-13 "Financial Instruments – Credit Losses (Topic 326)" “Codification Improvements to Topic 326, Financial Instruments—Credit Losses” Leases (Topic 842) In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities to ASC Topic 815, Derivatives and Hedging ("ASC 815")” This guidance requires that for cash flow and net investment hedges, all changes in the fair value of the hedging instrument (i.e. both the effective and ineffective portions) will be deferred in other comprehensive income and recognized in earnings at the same time that the hedged item affects earnings. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this Update. The amended presentation and disclosure guidance is required only prospectively. The adoption of ASU 2017-12 had no impact on the accounting for FREIT’s interest rate swap contracts, which were previously deemed effective cash flow hedges, on the following entities: Damascus Centre, LLC (“Damascus Centre”), Wayne PSC, LLC (“Wayne PSC”), FREIT Regency, LLC (“Regency”) and Station Place on Monmouth, LLC (“Station Place”). Accordingly, these interest rate swap contracts will continue to be accounted for by marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the swaps in comprehensive income. The adoption of this accounting guidance has an impact on the accounting for Grande Rotunda, LLC’s (“Grande Rotunda”) interest rate cap, which was previously deemed an ineffective cash flow and for which previous to the adoption of this guidance, the change in the fair value was reported in the income statement. Based on this new guidance, FREIT will record the change in the fair value of Grande Rotunda’s interest rate cap in other comprehensive income on a prospective basis. FREIT did not record an adjustment in Fiscal 2020 to the opening balance of retained earnings as the value of Grande Rotunda’s interest rate cap was $0 as of October 31, 2019. (See Note 4 to FREIT’s condensed consolidated financial statements for additional details). In October 2018, the FASB issued ASU 2018-16 “ Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic 815, Derivatives and Hedging” |
(Loss) Earnings per share
(Loss) Earnings per share | 3 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
(Loss) Earnings per share | Note 3 – (Loss) Earnings per share: Basic (loss) 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 14 to FREIT’s condensed consolidated financial statements) 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 three months ended January 31, 2020 and 2019, the outstanding stock options were anti-dilutive with no impact on (loss) earnings per share. The number of anti-dilutive shares which have been excluded from the computation of diluted earnings per share was 311,000 and 306,000 for the three months ended January 31, 2020 and 2019, respectively. Anti-dilutive shares consist of out-of-the money stock options under the Equity Incentive Plan. |
Interest rate cap and swap cont
Interest rate cap and swap contracts | 3 Months Ended |
Jan. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest rate cap and swap contracts | Note 4 - Interest rate cap and swap contracts: On February 7, 2018, Grande Rotunda, a consolidated subsidiary, refinanced its $115.3 million construction loan held by Wells Fargo with a new loan held by Aareal Capital Corporation in the amount of approximately $118.5 million with additional funding available for retail tenant improvements and leasing costs in the amount of $3,380,000. This loan bears a floating interest rate at 285 basis points over the one-month LIBOR rate and has a maturity date of February 6, 2021. At January 31, 2020, the total amount outstanding on this loan was approximately $118.5 million. As part of this transaction, Grande Rotunda purchased an interest rate cap on LIBOR for the full amount that can be drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan. At January 31, 2020, the derivative financial instrument had a notional amount of $121.9 million and a maturity date of March 5, 2020. On February 28, 2020, Grande Rotunda purchased an interest rate cap on LIBOR for the full amount that can be drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for one year. This interest rate cap has an effective date of March 5, 2020 and a maturity date of March 5, 2021. On December 7, 2017, Station Place (owned 100% by FREIT) closed on a $12,350,000 mortgage loan with Provident Bank. The loan bears a floating interest rate equal to 180 basis points over the one-month BBA LIBOR with a maturity date of December 15, 2027. At January 31, 2020, the total amount outstanding on this loan was approximately $12.3 million. In order to minimize interest rate volatility during the term of this loan, Station Place entered into an interest rate swap agreement that, in effect, converted the floating interest rate to a fixed interest rate of 4.35% over the term of the loan. At January 31, 2020, the derivative financial instrument had a notional amount of $12.3 million and a maturity date of December 2027. On September 29, 2016, Wayne PSC, a consolidated subsidiary, refinanced its $24.2 million mortgage loan held by 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 January 31, 2020, the total amount outstanding on this loan was approximately $23.6 million. In order to minimize interest rate volatility during the term of the loan, Wayne PSC 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 January 31, 2020, the derivative financial instrument had a notional amount of approximately $23.6 million and a maturity date of October 2026. On December 26, 2012, Damascus Centre 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 January 31, 2020 was approximately $19.2 million. The loan has a maturity date of January 3, 2023 and bears a floating interest rate equal to 210 basis points over the one-month BBA LIBOR. In order to minimize interest rate volatility during the term of this loan, Damascus Centre 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 January 31, 2020, the derivative financial instrument had a notional amount of approximately $19.3 million and a maturity date of January 2023. On December 29, 2014, Regency 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 January 31, 2020, the total amount outstanding on this loan was approximately $15.5 million. In order to minimize interest rate volatility during the term of the loan, Regency 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 January 31, 2020, the derivative financial instrument had a notional amount of approximately $15.5 million and a maturity date of December 2024. In accordance with ASU 2017-12, which was adopted by FREIT in the first quarter of Fiscal 2020, FREIT is accounting for the Damascus Centre, Regency, Wayne PSC and Station Place interest rate swaps and the Grande Rotunda interest rate cap as cash flow hedges marking these contracts to market, taking into account present interest rates compared to the contracted fixed rate over the life of the contract and recording the unrealized gain or loss on the swaps in comprehensive income. For the three months ended January 31, 2020, FREIT recorded an unrealized loss of approximately $390,000 in comprehensive loss representing the change in the fair value of these cash flow hedges during such period. As of January 31, 2020 there was a liability of approximately $239,000 for the Damascus Centre swaps, $238,000 for the Wayne PSC swap, $917,000 for the Regency swap, $1,122,000 for the Station Place swap and $0 for the Grande Rotunda interest rate cap. In Fiscal 2019, FREIT was accounting for its interest rate swaps and cap contract in accordance with ASC 815. For the three months ended January 31, 2019, FREIT recorded an unrealized loss of approximately $2,364,000 in comprehensive loss representing the change in the fair value of these cash flow hedges during such period. For the three months ended January 31, 2019, FREIT recorded an unrealized loss in the condensed consolidated statement of operations of approximately $154,000 for the Grande Rotunda interest rate cap representing the change in the fair value of this ineffective cash flow hedge during such period. As of October 31, 2019, FREIT recorded a liability of approximately $179,000 for the Damascus Centre swaps, $53,000 for the Wayne PSC swap, $860,000 for the Regency swap, $1,034,000 for the Station Place swap and $0 for the Grande Rotunda interest rate cap. The fair values are based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance). |
Property disposition
Property disposition | 3 Months Ended |
Jan. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Property disposition | Note 5 – Property disposition: On February 8, 2019, FREIT sold a commercial building, formerly occupied as a Pathmark supermarket in Patchogue, New York for a sales price of $7.5 million. The sale of this property, which had a carrying value of approximately $6.2 million, resulted in a gain of approximately $0.8 million net of sales fees and commissions. Net cash proceeds of approximately $2 million were realized after paying off the related mortgage on this property in the amount of approximately $5.2 million. FREIT distributed and paid approximately $676,000 of this gain by way of a one-time special dividend in connection with and in anticipation of the closing of the sale of the Patchogue property of $0.10 per share. The sale of this property eliminates an operating loss of approximately $0.8 million ($0.12 per share) incurred, annually, since Pathmark vacated the building in December 2015. As the disposal of this property 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. |
Purchase and Sale Agreement
Purchase and Sale Agreement | 3 Months Ended |
Jan. 31, 2020 | |
Business Combination, Consideration Transferred [Abstract] | |
Purchase and Sale Agreement | Note 6 – Purchase and Sale Agreement: On January 14, 2020, FREIT and certain of its affiliates (collectively, the “Sellers”), entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with an affiliate of the Kushner Companies (the “Purchaser”), pursuant to which the Sellers will sell to the Purchaser 100% of Sellers’ ownership interests in seven apartment properties held by the Sellers in exchange for the purchase price described therein, subject to the terms and conditions of the Purchase and Sale Agreement. The Purchase and Sale Agreement provides for the sale of the following seven properties: Berdan Court, located in Wayne, New Jersey; The Boulders at Rockaway, located in Rockaway, New Jersey; Pierre Towers, located in Hackensack, New Jersey; The Regency Club, located in Middletown, New York; Station Place, located in Red Bank, New Jersey; Steuben Arms, located in River Edge, New Jersey; and Westwood Hills, located in Westwood, New Jersey. FREIT has a 100% ownership interest in each of these properties, except for (i) Pierre Towers, in which FREIT has a 65% ownership interest, and (ii) Westwood Hills, in which FREIT has a 40% ownership interest. The aggregate purchase price for the 100% ownership interest in each of the properties is $266,500,000, subject to certain adjustments, including reductions for the amount of certain mortgage loans assumed by the Purchaser aggregating approximately $76,815,000. After taking into account FREIT’s 40% ownership interest in Westwood Hills and 65% ownership interest in Pierre Towers, the sale of all seven apartment properties, if consummated, would result in approximately $208,325,000 in total cash consideration paid to FREIT (subject to adjustments), and would be expected to result in a substantial gain to FREIT (as measured on a GAAP basis). In connection with the entry into the Purchase and Sale Agreement, the Purchaser delivered in escrow a deposit in the form of an unconditional, irrevocable letter of credit in the amount of $15,000,000. Such deposit is non-refundable, except in connection with the termination of the Purchase and Sale Agreement in certain circumstances. Pursuant to the Purchase and Sale Agreement, the Purchaser has agreed to assume, subject to lender approval, the outstanding mortgage loans on the Berdan Court and Pierre Towers properties. In the event one or both of such mortgage loans are not assumed, then the Purchase and Sale Agreement will be deemed to be terminated solely as to the property or properties associated with the mortgage loan or loans that are not assumed by the Purchaser, such property or properties will be excluded from the transaction, and the purchase price will be reduced by an amount equal to the amount(s) allocated to such property or properties in the Purchase and Sale Agreement. In addition, if the ownership structure of Pierre Towers is not converted into a tenancy-in-common on or prior to February 28, 2020, then the Purchase and Sale Agreement will be deemed to be terminated solely as to the Pierre Towers property, such property will be excluded from the transaction, and the purchase price will be reduced by an amount equal to the amount allocated to such property in the Purchase and Sale Agreement. Of the $266,500,000 aggregate purchase price, $42,000,000 has been allocated to Berdan Court, and $80,500,000 has been allocated to Pierre Towers. The Purchase and Sale Agreement also provides that The Regency Club may be excluded from the transaction (and the purchase price will be reduced by an amount equal to the amount(s) allocated to such property in the Purchase and Sale Agreement) if certain title matters affecting such property are not adequately addressed. Of the $266,500,000 aggregate purchase price, $27,250,000 has been allocated to The Regency Club. These title matters have been adequately addressed, and therefore, the Purchaser may no longer elect to terminate the Purchase and Sale Agreement with respect to The Regency Club pursuant to such provision. As the lender for the mortgage loan on the Pierre Towers has advised the parties that the lender would not agree to an assignment of such mortgage loan to the Purchaser, on February 28, 2020, the Sellers and the Purchaser entered into a First Amendment to the Purchase and Sale Agreement, terminating the Purchase and Sale Agreement solely with respect to the Pierre Towers property. As a result, as provided in the Purchase and Sale Agreement, the total purchase price payable under the Purchase and Sale Agreement was reduced from $266,500,000 to $186,000,000 – a reduction of $80,500,000 (the amount that was allocated to the Pierre Towers property in the Purchase and Sale Agreement) – and the total consideration to be received by FREIT under the Purchase and Sale Agreement was reduced from $208,325,000 to $156,000,000. The Board, following the recommendation of the Special Committee of the Board, unanimously approved the Purchase and Sale Agreement and the transactions contemplated thereby. The closing of the transactions contemplated by the Purchase and Sale Agreement is expected to occur in the second calendar quarter of 2020. During the quarter ended January 31, 2020, the Special Committee of the Board incurred approximately $3,382,000 of expenses related to its activities. The closing of the Purchase and Sale Agreement is subject to various conditions, including the approval of the Purchase and Sale Agreement and the transactions contemplated thereby by a majority of the votes cast by the holders of the outstanding shares of beneficial interest of the Trust (“Shares”) present in person or represented by proxy at a meeting of the Trust’s shareholders at which a quorum is present. Concurrently with the execution of the Purchase and Sale Agreement, the Trustees of the Trust entered into voting agreements with the Purchaser pursuant to which, among other things, the Trustees agreed to vote an aggregate of 872,812 Shares held by them and over which they have voting control, which represent approximately 12.7% of the issued and outstanding Shares, in favor of the approval of the Purchase and Sale Agreement and the transactions contemplated thereby. The parties’ respective obligations under the Purchase and Sale Agreement are subject to certain additional customary conditions. There is no due diligence or financing contingency. The Purchase and Sale Agreement contains customary termination rights, including the right of either the Sellers or the Purchaser to terminate the agreement if the closing has not occurred on or before June 14, 2020. In the event that the Purchase and Sale Agreement is terminated in certain circumstances, the Trust will be required to pay the Purchaser a termination fee of $3.5 million and/or reimburse the Purchaser for certain out-of-pocket expenses (subject to a cap of $2 million). The Purchase and Sale Agreement contains various representations, warranties and covenants of the parties customary for a transaction of this nature. Until the earlier of the termination of the Purchase and Sale Agreement and the closing of the Purchase and Sale Agreement, the Sellers will conduct their respective businesses with respect to the applicable properties in the ordinary course of business consistent with past practice. The Purchase and Sale Agreement provides that the Trust will convene a meeting of its shareholders for the purpose of approving the Purchase and Sale Agreement and the transactions contemplated thereby. The Purchase and Sale Agreement provides that following the closing of the Purchase and Sale Agreement, the Sellers, on the one hand, and the Purchaser, on the other hand, will indemnify one another for certain liabilities, subject to certain limitations. On January 14, 2020, in connection with entering into the Purchase and Sale Agreement, FREIT and Hekemian & Co., Inc. (“Hekemian”) entered into a First Amendment to Management Agreement (the “First Amendment”), which amends the Management Agreement dated as of November 1, 2001 between FREIT and Hekemian. The First Amendment will become effective if, and only if, the Plan of Liquidation becomes effective (See Notes 7 and 8 to FREIT’s condensed consolidated financial statements for further details). On February 28, 2020, the ownership structure of Pierre Towers was reorganized into a tenancy-in-common. (See Note 16 to FREIT’s condensed consolidated financial statements for further details.) |
Adoption of Plan of Liquidation
Adoption of Plan of Liquidation | 3 Months Ended |
Jan. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Adoption of Plan of Liquidation | Note 7 – Adoption of Plan of Liquidation: On January 14, 2020, the Board adopted a Plan of Voluntary Liquidation with respect to FREIT (the “Plan of Liquidation”), which provides for the voluntary dissolution, termination and liquidation of FREIT by the sale, conveyance, transfer or delivery of all of FREIT’s remaining assets in accordance with the terms and conditions of the Plan of Liquidation and the Internal Revenue Code of 1986, as amended, and the Treasury regulations thereunder. The Plan of Liquidation will become effective upon (i) approval by a majority of the votes cast by FREIT’s shareholders present in person or represented by proxy at a duly called meeting of FREIT’s shareholders at which a quorum is present and (ii) the consummation of the transactions contemplated by the Purchase and Sale Agreement (See Note 6 to FREIT’s condensed consolidated financial statements for further details). Upon the effectiveness of the Plan of Liquidation and pursuant thereto, FREIT is authorized to sell, or otherwise dispose of, all of FREIT’s remaining assets for cash, notes or such other assets, upon such terms as the Board may deem advisable, and without further approval of FREIT’s shareholders. The Plan of Liquidation provides that the proceeds from sales and dispositions of FREIT’s assets may be utilized to pay or create a reserve fund for the payment of, or otherwise adequately provide for, all of the liabilities and obligations of FREIT, and will pay all expenses incidental to the Plan of Liquidation, including all counsel fees, accountants’ fees, advisory fees and such other fees and taxes as are necessary to effectuate the Plan of Liquidation. In addition, FREIT will distribute the remaining assets of FREIT, either in cash or in kind, to FREIT’s shareholders in cancellation or redemption of their Shares in one or more distributions. The Plan of Liquidation further provides that upon a determination of the Board, FREIT may transfer any remaining assets, including any reserve fund or other cash on hand, and liabilities to a liquidating trust (or other liquidating entity) and simultaneously with such transfer and assignment, shares of beneficial interests in such liquidating trust (or other liquidating entity) will be deemed distributed to each of FREIT’s shareholders. Upon the adoption of the Plan of Liquidation, FREIT will cease reporting on the going concern basis of accounting and reporting, and thereafter will report on the liquidation basis of accounting and reporting. |
Management agreement, fees and
Management agreement, fees and transactions with related party | 3 Months Ended |
Jan. 31, 2020 | |
Related Party Transactions [Abstract] | |
Management agreement, fees and transactions with related party | Note 8 - 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 between FREIT and Hekemian dated as of November 1, 2001 (“Management Agreement”) expires on October 31, 2021, 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. On January 14, 2020, in connection with entering into the Purchase and Sale Agreement (See Note 6 to FREIT’s condensed consolidated financial statements for further details), FREIT and Hekemian entered into a First Amendment to Management Agreement (the “First Amendment”), which amends the Management Agreement. The First Amendment will become effective if, and only if, the Plan of Liquidation becomes effective (See Note 7 to FREIT’s condensed consolidated financial statements for further details). The First Amendment provides that upon the closing of any sale or other disposition of FREIT’s entire direct or indirect interest in each real property owned directly or indirectly, in whole or in part, by FREIT (each a “Trust Property”), whether pursuant to the Purchase and Sale Agreement or otherwise in furtherance of the Plan of Liquidation, (a) the Management Agreement will automatically terminate and be of no further force or effect with respect to such Trust Property and (b) FREIT will pay to Hekemian (i) any and all commissions and fees for management services and reimbursement required to be paid by FREIT pursuant to the Management Agreement in respect of the applicable Trust Property up to the termination date, calculated on a pro rata basis, plus (ii) a termination fee in respect to such Trust Property equal to the product of (x) the Trust’s direct or indirect percentage ownership interest in such Trust Property, multiplied by (y) 1.25, multiplied by (z) one (1) year’s Base Management Fee (as defined in the Management Agreement and First Amendment) in respect of such Trust Property. In addition, the First Amendment amends the Management Agreement to provide that upon the closing of any sale or other disposition of FREIT’s entire direct or indirect interest in each Trust Property, whether pursuant to the Purchase and Sale Agreement or otherwise in furtherance of the Plan of Liquidation, FREIT will pay to Hekemian a sales fee equal to 1.65% of the sales price for such Trust Property (reduced from the existing range of 2.5% to 4.5% in the Management Agreement); provided, however, that in the event that a Trust Property is not wholly owned, directly or indirectly, by FREIT, the sales fee payable to Hekemian will only be payable in respect of FREIT’s percentage ownership share of the applicable Trust Property. The First Amendment provides that the foregoing fees will be paid in lieu of, and will supersede in their entirety, any other payments which otherwise would be payable to Hekemian under the Management Agreement arising out of or attributable to the sale or other disposition of FREIT’s entire direct or indirect interest in each Trust Property or the termination of the Management Agreement in respect of such Trust Property (including, without limitation, any Termination Fee, M&A Termination Fee or Sale of Property Fee under the Management Agreement (each as defined in the Management Agreement)). The Management Agreement requires the payment of management fees equal to 4% to 5% of rents collected. Management fees, charged to operations, were approximately $699,000 and $619,000 for the three months ended January 31, 2020 and 2019, 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 $475,000 and $133,000 for the three months ended January 31, 2020 and 2019, respectively. 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 $51,000 and $29,000 for the three months ended January 31, 2020 and 2019, respectively. From time to time, FREIT engages Hekemian to provide additional services, such as consulting services related to development, property sales and financing activities of FREIT. Separate fee arrangements may be negotiated between Hekemian and FREIT with respect to such additional services. There we no such fees incurred during the three months ended January 31, 2020 and 2019. Robert S. Hekemian, Jr., Chief Executive Officer, President and a Trustee of the Trust, is the President and Chief Operating Officer of Hekemian. David B. Hekemian, a Trustee of the Trust, is the Principal/Broker – Salesperson and Director of Commercial Brokerage of Hekemian. Robert S. Hekemian, the former Chairman and Chief Executive Officer of the Trust, served as a consultant to the Trust and Chairman of the Board and Chief Executive Officer of Hekemian prior to his death in December 2019. Allan Tubin, Chief Financial Officer and Treasurer of the Trust, is the Chief Financial Officer of Hekemian. Trustee fee expense (including interest) incurred by FREIT for the three months ended January 31, 2020 and 2019 was approximately $21,000 and $60,000, respectively, for Robert S. Hekemian, $119,000 and $95,000, respectively, for Robert S. Hekemian, Jr., $8,000 and $0, respectively, for Allan Tubin and $16,000 and $12,000, respectively, for David Hekemian (See Note 14 to FREIT’s condensed consolidated financial statements). Effective upon the late Robert S. Hekemian’s retirement as Chairman, Chief Executive Officer and as a Trustee on April 5, 2018, FREIT entered into a Consulting Agreement with Mr. Hekemian, pursuant to which Mr. Hekemian provided consulting services to the Trust through December 2019. The Consulting Agreement obliged Mr. Hekemian to provide advice and consultation with respect to matters pertaining to the Trust and its subsidiaries, affiliates, assets and business, for no fewer than 30 hours per month during the term of the agreement. FREIT paid Mr. Hekemian a consulting fee of $5,000 per month during the term of the Consulting Agreement, which was payable in the form of Shares on a quarterly basis (i.e. in quarterly installments of $15,000). The number of Shares to be issued for each quarterly installment of the consulting fee was determined by dividing the dollar amount of the consulting fee by the closing price of one Share on the OTC Pink Open Market as of the close of trading on the last trading day of the calendar quarter with respect to which such consulting fee was payable. For the three months ended January 31, 2020 and 2019, consulting fee expense for Robert S. Hekemian was approximately $8,000 and $15,000, respectively. Rotunda 100, LLC owns a 40% minority equity interest in Grande Rotunda, LLC and FREIT owns a 60% equity interest in Grande Rotunda, LLC. Damascus 100, LLC owns a 30% minority equity interest in Damascus Centre, LLC and FREIT owns 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. These advances were in the form of secured loans that bear interest at rates that 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 are full recourse loans. The notes originally had maturity dates at the earlier of (a) ten (10) years after issue (Grande Rotunda, LLC – 6/19/2015), or, (b) at the election of FREIT, ninety (90) days after the borrower terminates employment with Hekemian, at which time all outstanding unpaid principal and interest 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. On December 7, 2017, the Board approved a further extension of the maturity dates of these loans to the date or dates upon which distributions of cash are made by Grande Rotunda, LLC to its members as a result of a refinancing or sale of Grande Rotunda, LLC or the Rotunda property. The aggregate outstanding principal balance of the Rotunda 100 notes was $4,000,000 at both January 31, 2020, and October 31, 2019. The accrued but unpaid interest related to these notes as of January 31, 2020 and October 31, 2019 amounted to approximately $1,095,000 and $1,053,000, respectively, and is included in secured loans receivable on the accompanying condensed consolidated balance sheets. In Fiscal 2017, Grande Rotunda, LLC incurred substantial expenditures at the Rotunda property related to retail tenant improvements, leasing costs and operating expenditures which, in the aggregate, exceeded revenues as the property was still in the rent up phase and the construction loan held with Wells Fargo at that time was at its maximum level, with no additional funding available to draw. Accordingly, during Fiscal 2017 the equity owners in Grande Rotunda, LLC (FREIT with a 60% ownership and Rotunda 100 with a 40% ownership) contributed their respective pro-rata share of any cash needs through loans to Grande Rotunda, LLC. As of January 31, 2020 and October 31, 2019, Rotunda 100 has funded Grande Rotunda, LLC with approximately $5.8 million and $5.7 million (including interest), respectively, which is included in “Due to affiliate” on the accompanying condensed consolidated balance sheets. |
Mortgage financings and line of
Mortgage financings and line of credit | 3 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Mortgage financings and line of credit | Note 9 – Mortgage financings and line of credit: On August 26, 2019, Berdan Court, LLC (“Berdan Court”), (owned 100% by FREIT), refinanced its $17 million loan (which matured on September 1, 2019) with the lender in the amount of $28,815,000. This loan, secured by an apartment building located in Wayne, New Jersey, has a term of ten years and bears a fixed interest rate equal to 3.54%. Interest-only payments are required each month for the first five years of the term and thereafter, principal payments plus accrued interest will be required each month through maturity. This refinancing resulted in: (i) a reduction in the annual interest rate from a fixed rate of 6.09% to a fixed rate of 3.54% and (ii) net refinancing proceeds of approximately $11.6 million which can be used for capital expenditures and general corporate purposes. On April 3, 2019, WestFREIT, Corp. (owned 100% by FREIT) exercised its option to extend its loan held by M&T Bank, with a then outstanding balance of approximately $22.5 million, for twelve months. Effective beginning on June 1, 2019, the extension of this loan secured by the Westridge Square Shopping Center, required monthly principal payments of $47,250 plus interest based on a floating interest rate equal to 240 basis points over the one-month LIBOR and has a maturity date of May 1, 2020. FREIT is currently working with the lender to extend the loan. Until such time as a definitive agreement providing for an extension of the loan is entered into, there can be no assurance the loan will be extended. On February 7, 2018, Grande Rotunda, LLC refinanced its $115.3 million construction loan held by Wells Fargo with a new loan held by Aareal Capital Corporation in the amount of approximately $118.5 million with additional funding available for retail tenant improvements and leasing costs in the amount of $3,380,000. This loan is secured by the Rotunda property, bears a floating interest rate at 285 basis points over the one-month LIBOR rate and has a maturity date of February 6, 2021 with two one-year renewal options. As part of this transaction, Grande Rotunda, LLC purchased an interest rate cap on LIBOR for the full amount that can be drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for the first two years of this loan. As of January 31, 2020, approximately $118.5 million of this loan facility was drawn down and the interest rate was approximately 4.59%. On February 28, 2020, Grande Rotunda, LLC purchased an interest rate cap on LIBOR for the full amount that can be drawn on this loan of $121.9 million, capping the one-month LIBOR rate at 3% for one year. This interest rate cap has an effective date of March 5, 2020 and a maturity date of March 5, 2021. On October 27, 2017, FREIT’s revolving line of credit provided by the Provident Bank was renewed for a three-year term ending on October 27, 2020 at which point no further advances shall be permitted and provided the line of credit is not renewed by the lender, the outstanding principal balance of the line of credit shall convert to a commercial term loan maturing on October 31, 2022. Draws against the credit line can be used for working capital needs and standby 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. The total line of credit was increased from $12.8 million to $13 million and the interest rate on the amount outstanding will be at a floating rate of 275 basis points over the 30-day LIBOR with a floor of 3.75%. As of January 31, 2020 and October 31, 2019, there was no amount outstanding and $13 million was available under the line of credit. |
Fair value of long-term debt
Fair value of long-term debt | 3 Months Ended |
Jan. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value of long-term debt | Note 10 – Fair value of long-term debt: The following table shows the estimated fair value and net carrying value of FREIT’s long-term debt at January 31, 2020 and October 31, 2019: ($ in Millions) January 31, 2020 October 31, 2019 Fair Value $353.9 $352.9 Carrying Value, Net $349.1 $349.9 Fair values are estimated based on market interest rates at January 31, 2020 and October 31, 2019 and on a 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 | 3 Months Ended |
Jan. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment information | Note 11 - 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 eight (8) properties and the residential segment is comprised of eight (8) properties. 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, 2019. 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. 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 (loss) income attributable to common equity for the three month periods ended January 31, 2020 and 2019. Asset information is not reported since FREIT does not use this measure to assess performance. Three Months Ended January 31, 2020 2019 (In Thousands of Dollars) Real estate rental revenue: Commercial $ 7,014 $ 6,627 Residential 8,516 8,234 Total real estate rental revenue 15,530 14,861 Real estate operating expenses: Commercial 2,724 2,831 Residential 3,641 3,495 Total real estate operating expenses 6,365 6,326 Net operating income: Commercial 4,290 3,796 Residential 4,875 4,739 Total net operating income $ 9,165 $ 8,535 Recurring capital improvements - residential $ (96 ) $ (124 ) Reconciliation to condensed consolidated net (loss) income attributable to common equity: Segment NOI $ 9,165 $ 8,535 Deferred rents - straight lining 63 67 Investment income 72 71 Unrealized loss on interest rate cap contract — (154 ) General and administrative expenses (772 ) (608 ) Special committee expenses (3,382 ) — Depreciation (2,932 ) (2,824 ) Financing costs (4,235 ) (4,652 ) Net (loss) income (2,021 ) 435 Net (income) loss attributable to noncontrolling interests in subsidiaries (241 ) 24 Net (loss) income attributable to common equity $ (2,262 ) $ 459 |
Income taxes
Income taxes | 3 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 12 – Income taxes: FREIT has elected to be treated as a REIT for federal income tax purposes and as such intends to distribute 100% of its ordinary taxable income to its shareholders as dividends for the fiscal year ending October 31, 2020. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income was recorded in FREIT’s condensed consolidated financial statements. FREIT distributed 100% of its ordinary taxable income and 100% of its capital gain from the sale of the Patchogue, New York property to its shareholders as dividends for the fiscal year ended October 31, 2019. Accordingly, no provision for federal or state income taxes related to such ordinary taxable income and such gain was recorded in FREIT’s condensed consolidated financial statements for the fiscal year ended October 31, 2019. As of January 31, 2020, FREIT had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended October 31, 2017 remain open to examination by the major taxing jurisdictions to which FREIT is subject. |
Stock option plan
Stock option plan | 3 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock option plan | Note 13 – Stock option plan: On September 4, 2014, the Board approved the grant of an aggregate of 246,000 non-qualified share options under FREIT’s Equity Incentive Plan (“the Plan”) to certain FREIT executive officers, the members of the Board and certain employees of Hekemian & Co., Inc., FREIT’s managing agent. The options have an exercise price of $18.45 per share, fully vested on September 3, 2019 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 an aggregate 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. On May 3, 2018, the Board approved the grant of an aggregate of 38,000 non-qualified share options under the Plan to two members of the Board who were appointed to the Board during Fiscal 2018. The options have an exercise price of $15.50 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 May 2, 2028. On March 4, 2019, the Board approved the grant of an aggregate of 5,000 non-qualified share options under the Plan to the Chairman of the Board. The options have an exercise price of $15.00 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 March 3, 2029. As of January 31, 2020, 442,060 shares are available for issuance under the Plan. The following table summarizes stock option activity for the three-month period ended January 31, 2020: No. of Options Weighted Average Outstanding Exercise Price Options outstanding beginning of period 310,740 $ 18.35 Options granted during period — — Options forfeited/cancelled during period — — Options outstanding end of period 310,740 $ 18.35 Options vested and expected to vest 308,310 Options exercisable at end of period 260,140 For the three-month periods ended January 31, 2020 and 2019, compensation expense related to stock options granted amounted to approximately $12,000 and $34,000, respectively. At January 31, 2020, there was approximately $106,000 of unrecognized compensation cost relating to outstanding non-vested stock options to be recognized over the remaining weighted average vesting period of approximately 2.9 years. The aggregate intrinsic value of options vested and expected to vest and options exercisable at January 31, 2020 was approximately $1,897,000 and $1,538,000, respectively. |
Deferred fee plan
Deferred fee plan | 3 Months Ended |
Jan. 31, 2020 | |
Deferred Compensation Arrangements [Abstract] | |
Deferred fee plan | Note 14 – 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 three-month periods ended January 31, 2020 and 2019 were deferred under the Deferred Fee Plan except for fees payable to one Trustee, who elected to receive such fees in cash. As a result of the amendment to the Deferred Fee Plan described above, for the three-month periods ended January 31, 2020 and 2019, the aggregate amounts of deferred Trustee fees together with related interest and dividends were approximately $203,000 and $238,200, respectively, which have been paid through the issuance of 9,230 and 15,204 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 three-month periods ended January 31, 2020 and 2019, FREIT has charged as expense approximately $203,000 and $212,600, respectively, representing deferred Trustee fees and interest, and the balance of approximately $0 and $25,600, respectively, representing dividends payable in respect of share units allocated to Plan participants, has been charged to equity. The Deferred Fee Plan, as amended, provides that cumulative fees together with accrued interest deferred as of November 1, 2014 will be paid in a lump sum or in annual installments over a period not to exceed 10 years, at the election of the Participant. In connection with the termination of Robert S. Hekemian’s service to the Trust under the Consulting Agreement between Mr. Hekemian and the Trust in December 2019, Mr. Hekemian’s accrued plan benefits under the Deferred Fee Plan became payable to him and were paid in a single lump sum in the amount of approximately $4.8 million. As of January 31, 2020 and October 31, 2019, approximately $1,630,000 and $4,422,000, respectively, of fees has been deferred together with accrued interest of approximately $1,161,000 and $3,188,000, respectively. |
Rental Income
Rental Income | 3 Months Ended |
Jan. 31, 2020 | |
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
Rental Income | Note 15 – Rental Income: Commercial tenants: As discussed in Note 2, fixed lease income under our operating leases generally includes fixed minimum lease consideration and fixed CAM reimbursements which are accrued on a straight-line basis over the terms of the leases. Variable lease income includes consideration based on sales, as well as reimbursements for real estate taxes, maintenance, insurance and certain other operating expenses of the properties. Minimum fixed lease consideration (in thousands of dollars) under non-cancelable tenant operating leases for each of the next five years and thereafter, excluding variable lease consideration, for the years ending October 31, as of January 31, 2020, is as follows: Year Ending October 31, Amount 2020* $ 20,010 2021 18,981 2022 15,705 2023 13,074 2024 10,928 Thereafter 46,518 Total $ 125,216 *Amount represents full fiscal year The above amounts assume that all leases which expire are not renewed and, accordingly, neither minimal rentals nor rentals from replacement tenants are included. Minimum future rentals do not include contingent rentals, which may be received under certain leases on the basis of percentage of reported tenants' sales volume. Rental income that is contingent on future events is not included in income until the contingency is resolved. Contingent rentals included in income for the three-months periods ended January 31, 2020 and 2019 were not material. Residential tenants: Lease terms for residential tenants are usually one to two years. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jan. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 – Subsequent Events: Westwood Plaza Purchase Agreement On February 13, 2020, FREIT entered into a Purchase Agreement (the “Purchase Agreement”) with an unaffiliated third party (the “Purchaser”), providing for the sale by the Trust of its Westwood Plaza shopping center located in Westwood, New Jersey (the “Property”) to the Purchaser, subject to the terms and conditions of the Purchase Agreement. The purchase price for the Property is $26,000,000, subject to certain adjustments and prorations as set forth in the Purchase Agreement. In connection with the execution of the Purchase Agreement, the Purchaser has provided a deposit in the amount of $1,000,000 (the “Deposit”), which is being held in escrow by the title company. The Purchase Agreement provides that the Purchaser has a 30-day period from the effective date of the Purchase Agreement to conduct due diligence with respect to the Property (the “Due Diligence Period”). Prior to the expiration of the Due Diligence Period, the Purchaser has the right, in the Purchaser’s sole and absolute discretion, to determine whether or not to proceed with the purchase of the Property. The Purchaser may determine not to proceed with the purchase of the Property for any reason or no reason whatsoever prior to the expiration of the Due Diligence Period. In the event that the Purchaser determines not to proceed with the purchase of the Property prior to the expiration of the Due Diligence Period, then the Purchase Agreement shall terminate and the Deposit shall be returned to the Purchaser. The Purchase Agreement contains various representations, warranties and covenants of the parties customary for a transaction of this nature. The closing of the Purchase Agreement is subject to certain customary conditions. The Purchase Agreement further provides that between the effective date of the Purchase Agreement and the closing of the Purchase Agreement, the Trust shall not list the Property with any broker or otherwise solicit, make or accept any offer to sell the Property, or engage in discussions or negotiations with any third party with respect to the sale or other disposition or financing of the Property or enter into any contract with respect to the sale or other disposition or financing of the Property. Pierre Towers Tenancy-In-Common Formation On February 28, 2020, the ownership structure of Pierre Towers was reorganized from a limited partnership into a tenancy-in-common. Based on this new structure, each tenant in common holds a separate and undivided interest in the property. |
Fair value of long-term debt (T
Fair value of long-term debt (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
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 net carrying value of FREIT’s long-term debt at January 31, 2020 and October 31, 2019: ($ in Millions) January 31, 2020 October 31, 2019 Fair Value $353.9 $352.9 Carrying Value, Net $349.1 $349.9 |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
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 (loss) income attributable to common equity for the three month periods ended January 31, 2020 and 2019. Asset information is not reported since FREIT does not use this measure to assess performance. Three Months Ended January 31, 2020 2019 (In Thousands of Dollars) Real estate rental revenue: Commercial $ 7,014 $ 6,627 Residential 8,516 8,234 Total real estate rental revenue 15,530 14,861 Real estate operating expenses: Commercial 2,724 2,831 Residential 3,641 3,495 Total real estate operating expenses 6,365 6,326 Net operating income: Commercial 4,290 3,796 Residential 4,875 4,739 Total net operating income $ 9,165 $ 8,535 Recurring capital improvements - residential $ (96 ) $ (124 ) Reconciliation to condensed consolidated net (loss) income attributable to common equity: Segment NOI $ 9,165 $ 8,535 Deferred rents - straight lining 63 67 Investment income 72 71 Unrealized loss on interest rate cap contract — (154 ) General and administrative expenses (772 ) (608 ) Special committee expenses (3,382 ) — Depreciation (2,932 ) (2,824 ) Financing costs (4,235 ) (4,652 ) Net (loss) income (2,021 ) 435 Net (income) loss attributable to noncontrolling interests in subsidiaries (241 ) 24 Net (loss) income attributable to common equity $ (2,262 ) $ 459 |
Stock option plan (Tables)
Stock option plan (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the three-month period ended January 31, 2020: No. of Options Weighted Average Outstanding Exercise Price Options outstanding beginning of period 310,740 $ 18.35 Options granted during period — — Options forfeited/cancelled during period — — Options outstanding end of period 310,740 $ 18.35 Options vested and expected to vest 308,310 Options exercisable at end of period 260,140 |
Rental Income (Tables)
Rental Income (Tables) | 3 Months Ended |
Jan. 31, 2020 | |
Rental Income Tables Abstract | |
Schedule of minimum rental income to be received from non-cancelable operating leases | Minimum fixed lease consideration (in thousands of dollars) under non-cancelable tenant operating leases for each of the next five years and thereafter, excluding variable lease consideration, for the years ending October 31, as of January 31, 2020, is as follows: Year Ending October 31, Amount 2020* $ 20,010 2021 18,981 2022 15,705 2023 13,074 2024 10,928 Thereafter 46,518 Total $ 125,216 *Amount represents full fiscal year |
Recently issued accounting st_2
Recently issued accounting standards (Details) | Oct. 31, 2019USD ($) |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Interest rate cap | $ 0 |
(Loss) Earnings per share (Deta
(Loss) Earnings per share (Details) - shares | 3 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Diluted earnings per share | 311,000 | 306,000 |
Interest rate cap and swap co_2
Interest rate cap and swap contracts (Details) - USD ($) | Feb. 07, 2018 | Dec. 07, 2017 | Sep. 29, 2016 | Feb. 28, 2020 | Jan. 31, 2020 | Jan. 31, 2019 | Oct. 31, 2019 | Apr. 22, 2016 | Dec. 26, 2012 |
Derivative [Line Items] | |||||||||
Mortgages payable | $ 351,752,000 | $ 352,790,000 | |||||||
Interest rate swap contract liability | 2,516,000 | 2,126,000 | |||||||
Unrealized loss on derivatives | $ 154,000 | ||||||||
Net unrealized gain (loss) on interest rate swap contracts | (390,000) | $ (2,364,000) | |||||||
Damascus Centre Swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 239,000 | ||||||||
Wayne PSC swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 238,000 | ||||||||
Regency Swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 917,000 | ||||||||
Station Place [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 1,122,000 | ||||||||
Grande Rotunda LLC [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 0 | ||||||||
Station Place [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 12,350,000 | 12,300,000 | |||||||
Notional amount of interest rate swap | 12,300,000 | ||||||||
Fixed interest rate | 4.35% | ||||||||
Interest rate swap contract liability | 1,034,000 | ||||||||
Basis points, interest rate | 1.80% | ||||||||
Maturity date of interest rate cap | Dec. 15, 2027 | ||||||||
Grande Rotunda LLC [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate cap contract liability | 0 | ||||||||
Unrealized loss on derivatives | 154,000 | ||||||||
Wells Fargo Bank [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 115,300,000 | ||||||||
Aareal Capital Corporation [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | 118,500,000 | ||||||||
Available to draw | $ 3,380,000 | ||||||||
Basis points, interest rate | 2.85% | ||||||||
Maturity date of loan | Feb. 6, 2021 | ||||||||
Grande Rotunda LLC [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 118,500,000 | ||||||||
Interest rate cap | 3.00% | 3.00% | |||||||
Basis points, interest rate | 2.85% | ||||||||
Maturity date of interest rate cap | Mar. 5, 2021 | ||||||||
Grande Rotunda LLC Loan [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 118,500,000 | ||||||||
Notional amount of interest rate cap | $ 121,900,000 | $ 121,900,000 | |||||||
Interest rate cap | 3.00% | 3.00% | |||||||
Maturity date of interest rate cap | Mar. 5, 2021 | Mar. 5, 2020 | |||||||
Wayne PSC, LLC Loan [Member] | |||||||||
Derivative [Line Items] | |||||||||
Refinanced loan amount | $ 24,200,000 | ||||||||
Loan amount | $ 25,800,000 | $ 23,600,000 | |||||||
Notional amount of interest rate swap | 23,600,000 | ||||||||
Fixed interest rate | 3.625% | ||||||||
Basis points, interest rate | 2.20% | ||||||||
Maturity date of interest rate cap | Oct. 1, 2026 | ||||||||
People's United Bank [Member] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | 19,200,000 | ||||||||
Mortgages payable | $ 2,320,000 | ||||||||
Notional amount of interest rate swap | $ 19,300,000 | ||||||||
People's United Bank [Member] | Tranche One [Member] | |||||||||
Derivative [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] | |||||||||
Derivative [Line Items] | |||||||||
Loan amount | $ 2,320,000 | ||||||||
Fixed interest rate | 3.53% | ||||||||
Regency Loan [Member] | |||||||||
Derivative [Line Items] | |||||||||
Refinanced loan amount | $ 16,200,000 | ||||||||
Loan amount | 15,500,000 | ||||||||
Notional amount of interest rate swap | $ 15,500,000 | ||||||||
Fixed interest rate | 3.75% | ||||||||
Basis points, interest rate | 1.25% | ||||||||
Maturity date of loan | Dec. 15, 2024 | ||||||||
Damascus Centre [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 179,000 | ||||||||
Wayne PSC swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | 53,000 | ||||||||
Regency Swap [Member] | |||||||||
Derivative [Line Items] | |||||||||
Interest rate swap contract liability | $ 860,000 |
Property disposition (Details)
Property disposition (Details) - USD ($) | Feb. 08, 2019 | Jan. 31, 2020 |
Real Estate Properties [Line Items] | ||
Special dividend paid | $ 676,000 | |
Pathmark supermarket in Patchogue [Member] | ||
Real Estate Properties [Line Items] | ||
Agreed sales price of property held for sale | $ 7,500,000 | |
Rental properties | 6,200,000 | |
Capital gain | 800,000 | |
Net cash proceeds from sale of property | 2,000,000 | |
Mortgage payoff | $ 5,200,000 | |
Dividend per share | $ 0.10 | |
Sale of property operating loss | $ 800,000 | |
Price per share operating loss eliminated from sale of property | $ 0.12 |
Purchase and Sale Agreement (De
Purchase and Sale Agreement (Details) - USD ($) | Jan. 14, 2020 | Feb. 28, 2020 | Jan. 31, 2020 | Jan. 31, 2019 |
Subsequent Event [Line Items] | ||||
Escrow deposit | $ 2,876,000 | $ 2,689,000 | ||
Management expenses | $ 3,382,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of voting shares | 872,812 | |||
Percentage of voting shares held | 12.70% | |||
Termination fee payable | $ 3,500,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Out-of-pocket expenses payable | $ 2,000,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Seven Apartment Properties [Member] | ||||
Subsequent Event [Line Items] | ||||
Percentage of ownership interest | 100.00% | |||
Aggregate purchase price | $ 266,500,000 | |||
Mortgage loans assumed | 76,815,000 | |||
Amount reduction | 80,500,000 | |||
Total cash consideration paid | 208,325,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Seven Apartment Properties [Member] | Letter of Credit [Member] | ||||
Subsequent Event [Line Items] | ||||
Escrow deposit | $ 15,000,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Seven Apartment Properties Except Pierre Towers and Westwood Hills [Member] | ||||
Subsequent Event [Line Items] | ||||
Percentage of ownership interest | 100.00% | |||
Purchase and Sale Agreement Kushner Companies [Member] | Pierre Towers, Hackensack [Member] | ||||
Subsequent Event [Line Items] | ||||
Percentage of ownership interest | 65.00% | |||
Aggregate purchase price | $ 80,500,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Pierre Towers, Hackensack [Member] | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Aggregate purchase price | $ 186,000,000 | |||
Total cash consideration paid | 156,000,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Pierre Towers, Hackensack [Member] | Maximum [Member] | ||||
Subsequent Event [Line Items] | ||||
Aggregate purchase price | 266,500,000 | |||
Total cash consideration paid | $ 208,325,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | Westwood Hills, Westwood [Member] | ||||
Subsequent Event [Line Items] | ||||
Percentage of ownership interest | 40.00% | |||
Purchase and Sale Agreement Kushner Companies [Member] | Berdan Court, Wayne [Member] | ||||
Subsequent Event [Line Items] | ||||
Aggregate purchase price | $ 42,000,000 | |||
Purchase and Sale Agreement Kushner Companies [Member] | The Regency Club, Middletown [Member] | ||||
Subsequent Event [Line Items] | ||||
Aggregate purchase price | $ 27,250,000 |
Management agreement, fees an_2
Management agreement, fees and transactions with related party (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Oct. 31, 2019 | Jan. 14, 2020 | |
Related Party Transaction [Line Items] | ||||
Asset management fees | $ 715,000 | $ 637,000 | ||
Consulting fees | 8,000 | 15,000 | ||
Secured loans receivable | 5,095,000 | $ 5,053,000 | ||
Amendment To Management Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of sales fee | 1.65% | |||
Damascus 100 members [Member] | ||||
Related Party Transaction [Line Items] | ||||
Secured notes paid off | ||||
Principal amount on notes paid off | ||||
Accrued interest payable paid off | ||||
Rotunda 100 members [Member] | ||||
Related Party Transaction [Line Items] | ||||
Secured loans receivable | 4,000,000 | 4,000,000 | ||
Unpaid accrued interest | $ 1,095,000 | 1,053,000 | ||
Grande Rotunda, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership by noncontrolling owners (percentage) | 40.00% | |||
Ownership by parent (percentage) | 60.00% | |||
Due to affiliate | $ 5,800,000 | $ 5,700,000 | ||
Damascus Centre, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership by noncontrolling owners (percentage) | 30.00% | |||
Ownership by parent (percentage) | 70.00% | |||
Managing Agent Hekemian & Co [Member] | ||||
Related Party Transaction [Line Items] | ||||
Asset management fees | $ 699,000 | 619,000 | ||
Leasing commissions and reimbursement of operating expenses | 475,000 | 133,000 | ||
Insurance commissions | 51,000 | 29,000 | ||
Robert S. Hekemian [Member] | ||||
Related Party Transaction [Line Items] | ||||
Trustee fees and related interest payable in stock units | 21,000 | 60,000 | ||
Consulting fee per month | 5,000 | |||
Consulting fee quarterly installments | 15,000 | |||
Consulting services expense | 8,000 | 15,000 | ||
Robert S. Hekemian, Jr. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Trustee fees and related interest payable in stock units | 119,000 | 95,000 | ||
Allan Tubin [Member] | ||||
Related Party Transaction [Line Items] | ||||
Trustee fees and related interest payable in stock units | 8,000 | 0 | ||
David Hekemian [Member] | ||||
Related Party Transaction [Line Items] | ||||
Trustee fees and related interest payable in stock units | $ 16,000 | $ 12,000 | ||
Minimum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Asset management fees percentage rate | 4.00% | |||
Minimum [Member] | Amendment To Management Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of sales fee | 2.50% | |||
Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Asset management fees percentage rate | 5.00% | |||
Maximum [Member] | Amendment To Management Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of sales fee | 4.50% |
Mortgage financings and line _2
Mortgage financings and line of credit (Details) - USD ($) | Apr. 03, 2019 | Feb. 07, 2018 | Jan. 08, 2018 | Aug. 26, 2019 | Oct. 27, 2017 | Feb. 28, 2020 | Jan. 31, 2020 | Oct. 31, 2019 |
M&T Bank [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 22,500,000 | |||||||
Basis points, interest rate | 2.40% | |||||||
Maturity date of loan | May 1, 2020 | |||||||
Monthly payment of loan | $ 47,250 | |||||||
Wells Fargo Bank [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 115,300,000 | |||||||
Aareal Capital Corporation [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 118,500,000 | |||||||
Basis points, interest rate | 2.85% | |||||||
Maturity date of loan | Feb. 6, 2021 | |||||||
Available to draw | $ 3,380,000 | |||||||
Grande Rotunda LLC [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan amount | $ 118,500,000 | |||||||
Basis points, interest rate | 2.85% | |||||||
Loan amount available | $ 121,900,000 | $ 121,900,000 | ||||||
Interest rate cap | 3.00% | 3.00% | ||||||
Maturity date of interest rate cap | Mar. 5, 2021 | |||||||
Mortgages [Member] | S And A Commercial Associates Limited Partnership [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Membership interest percentage | 65.00% | |||||||
Distribution of proceeds from financing | $ 11,200,000 | |||||||
Provident Bank [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis points, interest rate | 2.75% | |||||||
Maturity date of loan | Oct. 31, 2022 | |||||||
Term of the loan | 3 years | |||||||
Line of credit, prior borrowing capacity | $ 12,800,000 | |||||||
Line of credit, maximum borrowing capacity | $ 13,000,000 | $ 13,000,000 | ||||||
Berdan Court, LLC [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Fixed rate mortgage loans | $ 17,000,000 | |||||||
Loan amount | $ 28,815,000 | |||||||
Interest rate cap | 3.54% | |||||||
Term of the loan | 10 years | |||||||
Net proceeds from refinancing of debt | $ 11,600,000 | |||||||
Percentage of acquisition | 100.00% | |||||||
Berdan Court, LLC [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Fixed interest rate | 3.54% | |||||||
Berdan Court, LLC [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Fixed interest rate | 6.09% | |||||||
WestFREIT, Corp [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of acquisition | 100.00% |
Fair value of long-term debt (D
Fair value of long-term debt (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Oct. 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Fair value of long-term debt | $ 353,900 | $ 352,900 |
Carrying value of long-term debt | $ 349,145 | $ 349,904 |
Segment information (Details)
Segment information (Details) $ in Thousands | 3 Months Ended | |
Jan. 31, 2020USD ($)segmentsProperties | Jan. 31, 2019USD ($) | |
Reportable Segments | ||
Real estate rental revenue | $ 15,593 | $ 14,928 |
Real estate operating expenses | 13,451 | 9,758 |
Operating income | 2,142 | 5,170 |
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||
Segment NOI | 9,165 | 8,535 |
Deferred rents - straight lining | 63 | 67 |
Investment income | 72 | 71 |
Unrealized loss on interest rate cap contract | (154) | |
General and administrative expenses | (772) | (608) |
Special committee expenses | (3,882) | |
Depreciation | (2,932) | (2,824) |
Financing costs | (4,235) | (4,652) |
Net (loss) income | (2,021) | 435 |
Net (income) loss attributable to noncontrolling interests in subsidiaries | (241) | 24 |
Net (loss) income attributable to common equity | $ (2,262) | 459 |
Number of reportable segments | segments | 2 | |
Operating Segments [Member] | ||
Reportable Segments | ||
Real estate rental revenue | $ 15,530 | 14,861 |
Real estate operating expenses | 6,365 | 6,326 |
Operating income | $ 9,165 | 8,535 |
Commercial [Member] | ||
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||
Number of properties | Properties | 8 | |
Commercial [Member] | Operating Segments [Member] | ||
Reportable Segments | ||
Real estate rental revenue | $ 7,014 | 6,627 |
Real estate operating expenses | 2,724 | 2,831 |
Operating income | 4,290 | 3,796 |
Residential [Member] | ||
Reportable Segments | ||
Recurring capital improvements | $ (96) | (124) |
Reconciliation to condensed consolidated net income (loss) attributable to common equity: | ||
Number of properties | Properties | 8 | |
Residential [Member] | Operating Segments [Member] | ||
Reportable Segments | ||
Real estate rental revenue | $ 8,516 | 8,234 |
Real estate operating expenses | 3,641 | 3,495 |
Operating income | $ 4,875 | $ 4,739 |
Income taxes (Details)
Income taxes (Details) | 12 Months Ended |
Oct. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Ordinary taxable income distributed as dividends (percentage) | 100.00% |
Stock option plan (Narrative) (
Stock option plan (Narrative) (Details) - USD ($) | Mar. 04, 2019 | May 03, 2018 | Nov. 10, 2016 | Sep. 04, 2014 | Jan. 31, 2020 | Jan. 31, 2019 | Oct. 31, 2019 |
Equity Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for issuance | 442,060 | ||||||
Employee Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Plan term | 10 years | 10 years | 10 years | 10 years | |||
Vesting term | 5 years | 5 years | 5 years | ||||
Options granted during period | 5,000 | 38,000 | 38,000 | 246,000 | |||
Options granted during period, price per share | $ 15 | $ 15.50 | $ 21 | $ 18.45 | |||
Compensation expense related to stock options | $ 12,000 | $ 34,000 | |||||
Unrecognized compensation cost | $ 106,000 | $ 310,740 | |||||
Unrecognized compensation cost, recognition period | 2 years 10 months 25 days | ||||||
Aggregate intrinsic value of options expected to vest | $ 1,897,000 | ||||||
Aggregate intrinsic value of options exercisable | $ 1,538,000 |
Stock option plan (Schedule of
Stock option plan (Schedule of Stock Option Activity) (Details) - Employee Stock Option [Member] - USD ($) | Mar. 04, 2019 | May 03, 2018 | Nov. 10, 2016 | Sep. 04, 2014 | Jan. 31, 2020 |
No. of Options Outstanding | |||||
Options outstanding beginning of period | $ 310,740 | ||||
Options granted during period | 5,000 | 38,000 | 38,000 | 246,000 | |
Options forfeited/cancelled during period | |||||
Options outstanding end of period | 310,740 | ||||
Options vested and expected to vest | 308,310 | ||||
Options exercisable at end of period | 260,140 | ||||
Weighted Average Exercise Price | |||||
Options outstanding beginning of period | $ 18.35 | ||||
Options granted during period | $ 15 | $ 15.50 | $ 21 | $ 18.45 | |
Options forfeited/cancelled during period | |||||
Options outstanding end of period | $ 18.35 |
Deferred fee plan (Details)
Deferred fee plan (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | Oct. 31, 2019 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Dividends payable | $ 1,014,000 | $ 1,357,000 | |
Robert S. Hekemian [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Trustee fee expense | 21,000 | 60,000 | |
Deferred Fee Plan [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Trustee fee expense | 203,000 | 238,200 | |
Deferred trustee fees | 203,000 | $ 212,600 | |
Deferred accrued interest | $ 1,161,000 | 3,188,000 | |
Basis spread on any deferred fee (percentage) | 1.50% | ||
Term of distribution to participants | 10 years | ||
Shares issued | 9,230 | 15,204 | |
Dividends payable | $ 0 | $ 25,600 | |
Cumulative fees | 1,630,000 | $ 4,422,000 | |
Deferred Fee Plan [Member] | Robert S. Hekemian [Member] | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Lump sum accrued plan benefits payable related party | $ 4,800,000 |
Rental Income (Narrative) (Deta
Rental Income (Narrative) (Details) | 3 Months Ended |
Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease terms for residential tenants, periods | 2 years |
Rental Income (Schedule of Mini
Rental Income (Schedule of Minimum Rental Income) (Details) $ in Thousands | Jan. 31, 2020USD ($) | |
Operating Leases, Future Minimum Payments Receivable [Abstract] | ||
2020 | $ 20,010 | [1] |
2021 | 18,981 | |
2022 | 15,705 | |
2023 | 13,074 | |
2024 | 10,928 | |
Thereafter | 46,518 | |
Total | $ 125,216 | |
[1] | Amount represents full fiscal year |
Subsequent events (Details)
Subsequent events (Details) - USD ($) | Feb. 13, 2020 | Jan. 31, 2020 | Jan. 31, 2019 |
Subsequent Event [Line Items] | |||
Escrow deposit | $ 2,876,000 | $ 2,689,000 | |
Subsequent Event [Member] | Westwood Plaza Purchase Agreement [Member] | |||
Subsequent Event [Line Items] | |||
Aggregate purchase price | $ 26,000,000 | ||
Escrow deposit | $ 1,000,000 |