First Real Estate Investment Trust of New Jersey Reports Revenue Increase but Significant Net Income Decline

First Real Estate Investment Trust of New Jersey, Inc. (FREIT) reported its financial results for the nine and three months ended July 31, 2025, revealing a modest increase in revenue but a significant decline in net income compared to the previous fiscal period. Total revenue for the nine months reached $21.77 million, a 1.6% increase from $21.42 million in the same period last year. The three-month revenue also saw a 1.4% rise, totaling $7.24 million compared to $7.15 million in the prior year. However, net income attributable to common equity fell sharply to $2.39 million, or $0.32 per share, down from $14.81 million, or $1.99 per share, in the same nine-month period last year.

The decline in net income was attributed to several factors, including a significant litigation settlement recorded in the prior year, which contributed $15.71 million to net income in that period. Additionally, the commercial segment experienced a revenue drop of approximately $350,000, primarily due to decreased occupancy rates at the Preakness and Westwood Plaza shopping centers. In contrast, the residential segment performed better, with revenue increasing by about $700,000, driven by higher base rents and a slight increase in occupancy.

Operationally, FREIT's average occupancy across its residential properties improved slightly from 96.2% to 96.9%, while the commercial properties saw a decline in average occupancy from 50.9% to 48.0%. The company continues to face challenges in its commercial segment, particularly at the Westwood Plaza and Preakness shopping centers, where management is actively seeking to attract new tenants and explore redevelopment options. The overall cash flow from operating activities decreased significantly to $3.93 million from $19.98 million in the prior year, reflecting the impact of increased financing costs and reduced income from property operations.

In terms of strategic developments, FREIT has been proactive in managing its debt, with total outstanding mortgage debt reported at $121.8 million as of July 31, 2025. The company has successfully extended several loan agreements, including a significant mortgage on the Regency property, which was modified to a fixed interest rate of 6.05%. Additionally, FREIT's revolving line of credit was renewed for a three-year term, providing $13 million for working capital needs. The company declared a dividend of approximately $748,000, or $0.10 per share, to be paid on September 12, 2025, indicating its commitment to maintaining shareholder returns.

Looking ahead, FREIT anticipates that cash generated from operations and existing cash reserves will be sufficient to cover mandatory debt service payments and other operational needs for at least the next year. However, the company remains cautious about the potential impacts of elevated interest rates and economic conditions on its commercial properties. Management is focused on enhancing operational efficiencies and exploring opportunities for growth, particularly in the residential segment, which continues to show resilience despite broader market challenges.