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net loss: FREVS reported a net loss of approximately $512,000, down from net income of $419,000 a year ago.
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Earnings per share: Basic and diluted loss per share was $0.07, compared with earnings per share of $0.06 in the prior-year period.
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revenue: Total real estate revenue increased slightly by 0.3% year over year to approximately $6,999,000.
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occupancy rate: The residential occupancy rate remained high at 95.3%, but the commercial occupancy rate dropped significantly to 50.1%.
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AFFO:Adjusted operating funds per share decreased from $0.17 to $0.04 compared to the same period last year.
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dividend:The company maintained its dividend at $0.05 per share.
On March 15, 2024, First Real Estate Investment Trust of New Jersey (FREVS) released its 8-K report detailing its financial results for the first fiscal quarter ended January 31, 2024. The company specializes in home ownership and management. Commercial real estate, primarily in New Jersey and New York, faced a difficult quarter with a slight increase in revenue but a sharp decline in net income.
Performance overview
The company's total real estate revenue increased to approximately $6,999,000, an increase of 0.3% from $6,979,000 in the prior year. This was primarily due to an approximately $340,000 increase in base rents in the residential sector, which helped offset the decline in average occupancy from 96.8% to 95.3%. However, in the commercial sector, revenue decreased by approximately $273,000, mainly due to a significant drop in occupancy rate from 66.4% to 50.1% due to Kmart's withdrawal from Westwood Plaza Shopping Center.
Net loss was approximately $512,000, or $0.07 per share, compared with net income of $419,000, or $0.06 per share, in the prior year period. The decrease in net income was primarily due to an increase in general and administrative expenses, which increased by approximately $981,000. The increase was primarily due to costs related to our financial advisory firm and legal costs related to the ongoing litigation between FREIT and Sinatra Properties, LLC.
Financial highlights and challenges
Segment Real Estate Reflecting the challenges facing the commercial real estate market, residential real estate net operating income (NOI) showed a slight increase, while commercial real estate NOI decreased. The company also reported financing updates, including the full repayment of his $7.5 million loan on a residential property. This is expected to reduce debt service by approximately $558,000 per year.
Adjusted funds from operations (AFFO), a key metric for REITs, decreased to $0.04 per share from $0.17 a year earlier. This reduction in his AFFO is significant because it could impact the company's ability to pay dividends, manage its funds, and sustain its growth strategy.
The Board of Directors has declared a first quarter dividend on common stock of $0.05, the same amount as last year's dividend, and intends to continue evaluating dividends on a quarterly basis.
Looking to the future
While the company's residential segment remains strong, a significant decline in commercial occupancy poses challenges to future revenue streams. Management's efforts to negotiate loan terms and manage financing costs are critical to navigating the current real estate market conditions.
While First Real Estate Investment Trust of New Jersey's portfolio diversification between residential and commercial real estate has provided some stability, the company has improved its financial performance and There is a need to address the challenges of the commercial sector to maintain confidence in the home.
To learn more and stay up to date on FREIT's performance, investors are encouraged to visit the company's website and review its SEC filings.
For more information, please see First Real Estate Investment Trust of New Jersey Inc's full 8-K earnings release here.
This article first appeared on GuruFocus.
