FREVS First Real Estate Investment Trust of New Jersey - 10-K

Filed Jan 29, 2026 for fiscal period ending Oct 31, 2025. See issuer overview · financials · original on SEC.gov ↗

Accession

0001174947-26-000102

Signal

Neutral

YoY shift: Neutral

Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.09pp more bearish than last year's.

Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.

Tone shift by section

The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.

Risk Factors

-0.03pp

Flat

Net-tone change vs last year's 10-K.

MD&A

-0.15pp

Flat

Net-tone change vs last year's 10-K.

Per-snippet highlights

Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.

Language change vs prior 10-K

Risk Factors (Item 1A) - words with the biggest YoY frequency increase

Negative rising

adversely+1

Positive rising

No words rose this year.

Risk Factors (Item 1A)

2,659 words

ITEM 1A

RISK FACTORS

Almost all of FREIT’s income and cash flow are derived from the net rental income (revenues after expenses) from our properties. FREIT’s business and financial results are affected by the following fundamental factors:

public health crises, epidemics and pandemics;

the national and regional economic climate;

occupancy rates at the properties;

tenant turnover rates;

rental rates;

operating expenses;

tenant improvement and leasing costs;

cost of and availability of capital;

failure of banking institutions;

failure of insurance carriers;

new acquisitions and development projects;

cybersecurity breaches; and

changes in governmental regulations, real estate tax rates and similar matters.

A negative or adverse quality change in the above factors could potentially cause a detrimental effect on FREIT’s revenue, earnings and cash flow. If rental revenues decline, we would expect to have less cash available to pay our indebtedness and distribute to our stockholders.

Adverse impact resulting from the public health crises, epidemics and pandemics: FREIT is subject to risks related to the effects of public health crises, epidemics and pandemics, including COVID-19. Such events could inhibit global, national and local economic activity; constrain our access to capital and other sources of funding, which could adversely affect the availability and terms of future borrowings or refinancings; adversely affect our residential tenants’ financial condition due to a sustained loss of income, which could affect their ability to pay rent; adversely affect our commercial tenants’ financial condition by limiting foot traffic and staffing at their businesses, which could affect their ability to pay rent and willingness to make new leasing commitments; reduce our cash flow, which could impact our ability to pay dividends or to service our debt; temporarily or permanently reduce the demand for retail space; reduce the value of our real estate assets, which may result in material non-cash impairment charges in future periods; and have other direct and indirect effects that are difficult to predict. Such risks depend upon the nature and severity of the public health concern, as well as the extent and duration of government-mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be predicted with confidence.

Adverse Changes in General Economic Climate : FREIT derives the majority of its revenues from renting apartments to individuals or families, and from retailers renting space at its shopping centers. Over the past several years, there have been many factors aiding in economic growth in the United States such as: (a) improvement in the housing market; (b) increased consumer confidence to push spending modestly higher; (c) improvements in private sector employment; and (d) improved credit availability. However, there have been many factors impacting long-term economic growth, including, without limitation: (i) continued political gridlock in the federal government; (ii) regulatory uncertainties; (iii) continued infrastructure deterioration; (iv) increasing concerns regarding terrorism; (v) rising healthcare costs; (vi) the impact of trade policies and tariffs; and (vii) rising energy, wages and consumer prices which previously resulted in an increase in inflation along with an increase in interest rates.

FREIT receives a substantial portion of its operating income as rent under long-term leases with commercial tenants. At any time, any of our commercial tenants could experience a downturn in its business that might weaken its financial condition. These tenants might defer or fail to make rental payments when due, delay lease commencement, voluntarily vacate the premises or declare bankruptcy, which could result in the termination of the tenant’s lease, and could result in material losses to us and harm to our results of operations. Also, it might take time to terminate leases of underperforming or nonperforming tenants and FREIT might incur costs to remove such tenants. In addition, if tenants are unable to comply with the terms of their leases, FREIT might modify lease terms in ways that are less favorable to FREIT.

Tenants unable to pay rent: Financially distressed tenants may be unable to pay rents and expense recovery charges, where applicable, and may default on their leases. Enforcing FREIT’s rights as landlord could result in substantial costs and may not result in a full recovery of unpaid rent. If a tenant files for bankruptcy, the tenant’s lease may be terminated. In each such instance FREIT’s income and cash flow would be negatively impacted.

Costs of re-renting space : If tenants fail to renew leases, fail to exercise renewal options, or terminate their leases early, the lost rents due to vacancy and the costs of re-renting the space could prove costly to FREIT. In addition to cleaning and renovating the vacated space, we may be required to grant concessions to a new tenant, and may incur leasing brokerage commissions. The lease terms to a new tenant may be less favorable than the prior tenant’s lease terms, and will negatively impact FREIT’s income and cash flow and adversely affect FREIT’s ability to pay mortgage debt and interest or make distributions to its stockholders.

Inflation may adversely affect our financial condition and results of operations: Increased inflation could have a pronounced negative impact on FREIT’s operating and administrative expenses, as these costs may increase at a higher rate than FREIT’s rents. While increases in most operating expenses at FREIT’s commercial properties can be passed on to retail tenants, increases in expenses at its residential properties cannot be passed on to residential tenants. Unreimbursed increased operating expenses may reduce cash flow available for payment of mortgage debt and interest and for distributions to stockholders.

Development and construction risks : From time to time, FREIT engages in the development and construction of property. Development and construction activities are challenged with the following risks, which may adversely affect FREIT’s cash flow:

financing may not be available in the amounts FREIT seeks, or may not be on favorable terms;

long-term financing may not be available upon completion of the construction;

failure to complete construction on schedule or within budget may increase debt service costs and construction costs; and

abandoned project costs could result in an impairment loss.

Debt financing could adversely affect income and cash flow: FREIT relies on debt financing to fund its operations and development activities. To the extent third party debt financing is not available on acceptable terms, FREIT’s operations and development and construction activities will be adversely affected.

As of October 31, 2025, FREIT had approximately $121.3 million of non-recourse fixed interest rate mortgage debt, and no non-recourse variable interest rate mortgage debt. These mortgages are being repaid over periods (amortization schedules) that are longer than the terms of the mortgages. Accordingly, when the mortgages become due (at various times), significant balloon payments (the unpaid principal amounts) will be required. FREIT expects to refinance the individual mortgages with new mortgages or exercise extension options available to FREIT or its subsidiaries when their terms expire. To this extent, FREIT has exposure to capital availability and interest rate risk. If interest rates, at the time any individual mortgage note is due, are higher than the current fixed interest rate, higher debt service may be required and/or refinancing proceeds may be less than the amount of the mortgage debt being retired. To the extent FREIT is unable to refinance its indebtedness on acceptable terms, FREIT might need to dispose of one or more of its properties upon disadvantageous terms.

FREIT’s revolving $13 million credit line (of which $13 million was available as of October 31, 2025), and several of its loan agreements require FREIT or its subsidiaries to meet or maintain certain financial covenants that could restrict FREIT’s acquisition activities and result in a default on these loans if FREIT fails to satisfy these covenants. (See Note 5 to FREIT’s consolidated financial statements.)

Failure of banking and financing institutions: Banking and financing institutions such as insurance companies provide FREIT with credit lines and construction financing. The credit lines available to FREIT may be used for a variety of business purposes, including general corporate purposes, acquisitions, construction, and letters of credit. Construction financing enables FREIT to develop new properties, or renovate or expand existing properties. A failure of the banking institution making credit lines available may render the line unavailable and adversely affect FREIT’s liquidity, and negatively impact FREIT’s operations in a number of ways. A failure of a financial institution unable to fund its construction financing obligations to FREIT may cause the construction to halt or be delayed. Substitute financing may be significantly more expensive, and construction delays may subject FREIT to delivery penalties.

Failure of insurance carriers: FREIT’s properties are insured against unforeseen liability claims, property damages, and other hazards. The insurance companies FREIT uses have good ratings at the time the policies are put into effect. Substantially all of FREIT’s insurance coverage is provided by one carrier. Financial failure of FREIT’s carriers may result in their inability to pay current and future claims. This inability to pay claims may have an adverse impact on FREIT’s financial condition. In addition, a failure of a FREIT insurance carrier may cause FREIT’s insurance renewal or replacement policy costs to increase.

Real estate is a competitive business: FREIT is subject to normal competition with other investors to acquire real property and profitably manage such property. Numerous other REITs, banks, insurance companies and pension funds, as well as corporate and individual developers and owners of real estate, compete with FREIT in seeking properties for acquisition and for tenants. Many of these competitors have significantly greater financial resources than FREIT. In addition, retailers at FREIT's commercial properties face increasing competition from online shopping, outlet malls and discount shopping clubs. In many markets, the trade areas of FREIT's commercial properties overlap with the trade areas of other shopping centers. Renovations and expansions at those competing shopping centers and malls could negatively affect FREIT's commercial properties by encouraging shoppers to make their purchases at such new, expanded or renovated shopping centers and malls. Increased competition through these various sources could adversely affect the viability of FREIT's tenants, and any new commercial real estate competition developed in the future could potentially have an adverse effect on the revenues of and earnings from FREIT's commercial properties.

FREIT also faces competition with respect to its residential properties based on a variety of factors, including perception by residential tenants of the safety, convenience and attractiveness of an apartment building or complex; the proximity and the number of competing apartment complexes; the proximity of commercial shopping centers; the availability of recreational and

other amenities and the willingness and ability of the owner to provide capable management and adequate maintenance. Certain of these factors, such as the availability of amenities in the area surrounding a residential property, are not within FREIT’s control.

Illiquidity of real estate investment: Real estate investments are relatively difficult to buy and sell quickly. Accordingly, the ability of FREIT to diversify its portfolio in response to changing economic, market or other conditions is limited. Also, FREIT’s interests in its partially owned subsidiaries are subject to transfer constraints imposed under the operating agreements that govern FREIT’s investment in these partially owned subsidiaries.

Environmental problems may be costly: Both federal and state governments are concerned with the impact of real estate construction and development programs upon the environment. Environmental legislation affects the cost of selling real estate, the cost to develop real estate, and the risks associated with purchasing real estate.

Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). Such laws often impose such liability without regard to whether the owners knew of, or were responsible for, the presence or disposal of such substances. Such liability may be imposed on the owner in connection with the activities of any operator of, or tenant at the property. The cost of any required remediation, removal, fines or personal injury or property damages and the property owner's liability for same could exceed the value of the property and/or the aggregate assets of the owner. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. If FREIT incurred any such liability, it could reduce FREIT's revenues and ability to make distributions to its stockholders. During the fiscal year ended October 31, 2019, FREIT conducted environmental audits for all of its properties. The environmental reports secured by FREIT have not revealed any environmental conditions on its properties which require any further remediation pursuant to any applicable federal or state law or regulations.

A property can also be negatively impacted by either physical contamination or by virtue of an adverse effect upon value attributable to the migration of hazardous or toxic substances, or other contaminants that have or may have emanated from other properties.

Qualification as a REIT: Since its inception in 1961, FREIT has elected to qualify as a REIT for federal income tax purposes, and will continue to operate in such a manner as to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of highly technical and complex provisions of the Internal Revenue Code. Governmental legislation, new regulations, and administrative interpretations may significantly change the tax laws with respect to the requirements for qualification as a REIT, or the federal income tax consequences of qualifying as a REIT. Although FREIT intends to continue to operate in a manner to allow it to qualify as a REIT, future economic, market, legal, tax or other considerations may cause it to revoke the REIT election or fail to qualify as a REIT. Such a revocation would subject FREIT’s income to federal income tax at regular corporate rates, and failure to qualify as a REIT would eliminate the requirement that FREIT pay dividends to its stockholders.

Change of investment and operating policies: FREIT’s investment and operating policies, including indebtedness and dividends, are exclusively determined by the Board, and not subject to stockholder approval.

Cybersecurity Risks : Our business operations rely heavily on digital technologies and information systems which are maintained by our external manager, Hekemian & Co., Inc. (“Hekemian & Co.”), and which are essential for our day-to-day activities and strategic initiatives. We are exposed to various cybersecurity risks, including but not limited to:

Data Breaches and Unauthorized Access: We collect, process, and store significant amounts of sensitive data, including Personally Identifiable Information (PII) of our tenants and employees. Unauthorized access to our systems could result in data breaches, leading to potential financial losses, reputational damage, and legal liabilities.

Cyber Attacks and Malware: We face the risk of cyber attacks, including phishing, ransomware, and other forms of malware, which could disrupt Hekemian & Co.’s operations, compromise our data integrity, and result in significant remediation costs.

Third-Party Vulnerabilities: Hekemian & Co. relies on third-party vendors and service providers for various aspects of its operations. These third parties may also be vulnerable to cyber threats, which could indirectly affect our business if their systems are compromised.

Regulatory Compliance: We are subject to various laws and regulations regarding data protection and cybersecurity. Non-compliance with these regulations could result in substantial fines, penalties, and legal actions.

To mitigate these risks within the ever changing IT environment, Hekemian & Co. has implemented cybersecurity policies that include regular risk assessments, advanced security technologies, continuous monitoring and incident response plans. Despite these measures, we cannot guarantee that these efforts will be completely effective in preventing cyber incidents. Any significant cybersecurity event could have a material adverse effect on our business, financial condition, and results of operations.

Language change vs prior 10-K

MD&A (Item 7) - words with the biggest YoY frequency increase

Negative rising

decline+7
bankruptcy+2
declined+1
persistent+1
slower+1

Positive rising

improving+1
rebounded+1
stable+1
strength+1
stability+1

MD&A (Item 7)

11,304 words

ITEM 7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Identifying Important Factors That Could Cause FREIT’s Actual Results to Differ From Those Projected in Forward Looking Statements.

Readers of this discussion are advised that the discussion should be read in conjunction with the consolidated financial statements of FREIT (including related notes thereto) appearing elsewhere in this Form 10-K. Certain statements in this discussion may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect FREIT’s current expectations and are based on estimates, projections, beliefs, data, methods and assumptions of management of FREIT at the time of such statements regarding future results of operations, economic performance, financial condition and achievements of FREIT, and do not relate strictly to historical or current facts. These forward-looking statements are identified through the use of words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning. Forward-looking statements involve risks and uncertainties in predicting future results and conditions.

Although FREIT believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which may cause the actual results to differ materially from those projected. Such factors include, but are not limited to the following: general economic and business conditions, including the purchase of retail products over the Internet, which will, among other things, affect demand for rental space, the availability of prospective tenants, lease rents, the financial condition of tenants and the default rate on leases, operating and administrative expenses and the availability of financing; adverse changes in FREIT’s real estate markets, including, among other things, competition with other real estate owners, competition confronted by tenants at FREIT’s commercial properties, governmental actions and initiatives; environmental/safety requirements; and risks of real estate development and acquisitions. The risks with respect to the development of real estate include: increased construction costs, inability to obtain construction financing, or unfavorable terms of financing that may be available, unforeseen construction delays and the failure to complete construction within budget.

OVERVIEW

FREIT is an equity real estate investment trust ("REIT") that is self-administered and externally managed. FREIT owns a portfolio of residential apartment and commercial properties. FREIT’s revenues consist primarily of rental income and other related revenues from its residential and commercial properties and additional rents derived from operating commercial properties. FREIT’s properties are primarily located in northern New Jersey and New York.

The economic and financial environment: The U.S. unemployment and inflation rates have risen from 4.1% and 2.6% in October 2024 to 4.4% and 3.0% in October 2025, reflecting a cooling labor market and persistent price pressures. Inflation has been driven partly by tariff-related cost increases, which have raised prices for goods such as apparel and durable goods, while services inflation remains elevated. Mortgage rates, though still high compared to pre-2022 levels, have eased from their January peak of about 7% to roughly 6.0% to 6.3% for 30-year fixed rate loans, improving affordability slightly. Economic growth has been uneven: real GDP contracted by 0.6% in the first quarter of 2025 but rebounded to 3.8% in the second quarter of 2025, supported by consumer spending and reduced imports, though forecasts point to slower growth near 1.7% to 1.9% for the full year. During the latter portion of 2025, the Federal Reserve cut its policy rate three times—from 4.5% to 3.75%, marking the first reductions since December 2024, in response to labor market softening and tariff uncertainty.

Residential Properties: Our residential portfolio continues to generate positive cash flow. While average rents on turned units and existing renewals remain generally stable across much of the portfolio, we are seeing a modest but noticeable easing in market strength compared to prior quarters. This stability should meaningfully contribute to FREIT’s income over time but it is uncertain what impact elevated interest rates and tariffs may have on these properties over the next year.

Commercial Properties: While the Franklin Crossing and Glen Rock shopping centers continue to maintain higher occupancies and stronger net operating incomes, the vacancy rates at the Westwood Plaza and Preakness shopping centers remain elevated. Management, along with third-party advisors, is actively working to attract quality tenants and explore redevelopment options to revitalize these spaces. Additionally, the elevated interest rates and uncertainty around tariffs could have an adverse impact on the operating and financial performance of our existing commercial tenants.

Debt Financing Availability: Financing has been available to FREIT and its affiliates. Certain recent refinancings and loan modifications/extensions have been at higher interest rates and for shorter terms. In accordance with certain loan agreements, FREIT may be required to meet or maintain certain financial covenants throughout the term of the loan. (See Note 5 to FREIT’s consolidated financial statements for additional details.)

bearing interest at a fixed rate of 8.5%. Additionally, FREIT funded the interest reserve escrow account for this loan (“Escrow”) with an additional $112,556, increasing the Escrow balance to $2,000,722, which represented the annualized principal and interest payments for one (1) year under this loan extension. Effective February 1, 2025, Valley National Bank extended this loan for 90 days from a maturity date of February 1, 2025 to a maturity date of May 1, 2025 under the same terms and conditions of the existing loan agreement.

Effective May 1, 2025, FREIT entered into a loan extension and modification agreement with Valley National Bank and paid down this loan by approximately $5.7 million (including deferred interest of approximately $0.2 million) bringing the loan balance to $10 million. Under the terms and conditions of this loan extension and modification, the maturity date of this loan is extended for one year to May 1, 2026, the interest rate on the outstanding debt is based on a fixed interest rate of 8.5% and monthly installments of principal and interest of approximately $107,978 are required. The pay down of this loan will result in annual debt service savings of approximately $705,000. Additionally, the Escrow balance was reduced from $2,000,722 to $1,295,739 resulting in a refund to FREIT of $704,983. This Escrow is held at Valley National Bank and in the event of a default on this loan, the bank shall be permitted to use the proceeds from the Escrow to make monthly debt service payments on the loan. (See Note 5 to FREIT’s consolidated financial statements for further details.)

On December 15, 2024, the mortgage secured by an apartment building located in Middletown, New York and the corresponding interest rate swap contract on its underlying loan came due with no settlement of the swap contract due at maturity. Effective December 15, 2024, FREIT Regency, LLC entered into a loan extension and modification agreement with the lender of this loan, Provident Bank, with a then outstanding loan balance of approximately $13.9 million. Under the terms and conditions of this loan extension and modification, the maturity date of this loan is extended for three years to December 15, 2027, the interest rate on the outstanding debt is based on a fixed interest rate of 6.05% and monthly installments of principal and interest of approximately $84,521 are required. (See Note 5 to FREIT’s consolidated financial statements for additional details.)

On August 1, 2025, the mortgage in the amount of $25,000,000, secured by the Preakness Shopping Center located in Wayne, New Jersey, reached its maturity date. Wayne PSC, LLC is working with the current lender, ConnectOne Bank, on a potential modification and extension of the loan. ConnectOne Bank has issued several extensions of the loan’s maturity date while discussions are ongoing, with each extension made under the same terms and conditions of the existing loan agreement. Wayne PSC, LLC continues to evaluate all options for refinancing or replacing the loan. Management expects this loan to be further extended, however, until such time as a definitive agreement providing for a modification, extension or replacement of this loan is entered into, there can be no assurance that such an agreement will be reached. (See Note 5 to FREIT’s consolidated financial statements for additional details.)

FREIT’s revolving line of credit provided by Provident Bank was renewed for a three-year term ending on October 31, 2026. 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 located in Franklin Lakes, New Jersey and retail space in Glen Rock, New Jersey. The total line of credit is $13 million and the interest rate on the amount outstanding will be based on a floating interest rate of prime minus 25 basis points with a floor of 6.75%. As of October 31, 2025 and 2024, there was no amount outstanding and $13 million was available under the line of credit. (See Note 5 to FREIT’s consolidated financial statements for additional details.)

Operating Cash Flow: FREIT expects that cash provided by operating activities and cash reserves will be adequate to cover mandatory debt service payments (including payments of interest, but excluding balloon payments, which are expected to be refinanced and/or extended), real estate taxes, recurring capital improvements at its properties and other needs to maintain its status as a REIT for at least a period of one year from the date of filing of this annual report on Form 10-K.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Pursuant to the SEC disclosure guidance for "Critical Accounting Policies," the SEC defines Critical Accounting Policies as those that require the application of management's most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, the preparation of which takes into account estimates based on judgments and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from these estimates. The accounting policies and estimates used, which are outlined in Note 1 to our Consolidated Financial Statements which is presented elsewhere in this Form 10-K, have been applied consistently as of October 31, 2025 and 2024, and for the fiscal years ended October 31, 2025, 2024 and 2023. We believe that the following accounting policies or estimates require the application of management's most difficult, subjective, or complex judgments.

Revenue Recognition: Base rents, additional rents based on tenants' sales volume and reimbursement of the tenants' share of certain operating expenses are generally recognized when due from tenants. The straight-line basis is used to recognize base rents under leases if they provide for varying rents over the lease terms. Straight-line rents represent unbilled rents receivable to the extent straight-line rents exceed current rents billed in accordance with lease agreements. Before FREIT can recognize revenue, it is required to assess, among other things, its collectability.

Valuation of Long-Lived Assets: FREIT assesses the carrying value of long-lived assets periodically, or whenever events or changes in circumstances indicate that the carrying amounts of certain assets may not be recoverable. When FREIT determines that the carrying value of long-lived assets may be impaired, the measurement of any impairment is based on a projected discounted cash flow method determined by FREIT's management. While we believe that our discounted cash flow methods are reasonable, different assumptions regarding such cash flows may significantly affect the measurement of impairment.

Real Estate Development Costs: It is FREIT’s policy to capitalize pre-development costs, which generally include legal and professional fees and other directly related third-party costs. Real estate taxes and interest costs incurred during the development and construction phases are also capitalized. FREIT ceases capitalization of these costs when the project or portion thereof becomes operational, or when construction has been postponed. In the event of postponement, capitalization of these costs will recommence once construction on the project resumes.

See Note 1 to FREIT’s consolidated financial statements for recently issued accounting standards.

Results of Operations:

Fiscal Years Ended October 31, 2025 and 2024

Summary revenues and net income for the fiscal years ended October 31, 2025 (“Fiscal 2025”) and October 31, 2024 (“Fiscal 2024”) are as follows:

Years Ended October 31,

Change

(in thousands, except per share amounts)

Real estate revenues:

Commercial properties

Residential properties

Total real estate revenues

Operating expenses:

Real estate operating expenses

General and administrative expenses

Depreciation

Total operating expenses

Investment income

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Loss on investment in tenancy-in-common

Financing costs

Net income

Net loss (income) attributable to noncontrolling interests in subsidiaries

Net income attributable to common equity

Earnings per share:

Basic and diluted

Weighted average shares outstanding:

Basic

Diluted

Real estate revenue for Fiscal 2025 increased 2.2% to $29,317,000 compared to $28,678,000 for Fiscal 2024. The increase in revenue for Fiscal 2025 of approximately $650,000 was attributable to an increase from the residential segment of approximately $900,000 driven primarily by an increase in base rents across most properties while the average occupancy increased slightly from 96.1% in Fiscal 2024 to 96.6% in Fiscal 2025 offset by a decrease from the commercial segment of approximately $250,000. The decline in the commercial segment was primarily driven by the following: (a) a decline in revenue of approximately $350,000 at the Preakness shopping center attributed to a decline in the average occupancy from 46.3% in Fiscal 2024 to 44.7% in Fiscal 2025; (b) a decline in revenue of approximately $200,000 at the Westwood Plaza shopping center attributed to a $150,000 real estate tax refund received in Fiscal 2024 and a $125,000 decrease in revenue resulting from the decline in the average occupancy from 34.8% in Fiscal 2024 to 29.1% in Fiscal 2025; offset by a $75,000 increase in revenue attributed to the expiration of TJ Maxx’s one-year co-tenancy clause in March 2025. This decline in revenue at the Preakness and Westwood Plaza shopping centers was offset by the following: (a) an increase of approximately $150,000 at the Franklin Crossing shopping center primarily resulting from an increase in revenue from common area maintenance charges due to an increase in reimbursable costs in Fiscal 2025 while the average occupancy declined slightly from 97.2% in Fiscal 2024 to 96.8% in Fiscal 2025; and (b) an increase of approximately $150,000 as a result of amounts received from the bankruptcy proceedings related to a former tenant, Cobb Theatre, at the Rotunda property located in Maryland and sold in a prior year.

Net income attributable to common equity (“net income-common equity”) for Fiscal 2025 was $3,509,000 ($0.47 per share basic and diluted), compared to $15,852,000 ($2.13 per share basic and diluted) for Fiscal 2024.

The schedule below provides a non-GAAP detailed analysis of the major changes that impacted net income-common equity for Fiscal 2025 and Fiscal 2024:

NON-GAAP NET INCOME COMPONENTS

Years Ended October 31,

Change

(In Thousands)

Income from real estate operations:

Commercial properties

Residential properties

Total income from real estate operations

Financing costs:

Fixed rate mortgages

Mortgage cost amortization

Total financing costs

Investment income

General & administrative expenses:

Accounting fees

Legal and professional fees

Directors fees

Stock compensation expense

Corporate expenses

Total general & administrative expenses

Depreciation

Loss on investment in tenancy-in-common

Adjusted net income

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Net income

Net loss (income) attributable to noncontrolling interests in subsidiaries

Net income attributable to common equity

Adjusted net income for Fiscal 2025 was $3,146,000 ($0.42 per share basic and diluted) compared to $1,616,000 ($0.22 per share basic and diluted) for Fiscal 2024. Adjusted net income is a non-GAAP measure, which management believes is a useful and meaningful gauge to investors of our operating performance, since it excludes the impact of unusual and infrequent items specifically: the litigation settlement, net of fees and a net loss on sale of Maryland Properties.

The increase in adjusted net income for Fiscal 2025 of approximately $1,550,000 was primarily driven by the following: (a) a decline in general and administrative expenses of approximately $1,550,000 driven by a decrease in corporate expenses of approximately $750,000 related to costs incurred in Fiscal 2024 for work performed for the Company by a financial advisory firm and a decline in legal and professional expenses of approximately $700,000 due to the settlement of the Sinatra litigation in Fiscal 2024; (b) an increase in revenue of approximately $650,000 (FREIT’s share is approximately $550,000); offset by (c) an increase in insurance costs of approximately $300,000 (FREIT’s share is approximately $200,000); (d) an increase in repairs and maintenance costs of approximately $200,000 (FREIT’s share is approximately $250,000); and (e) a decrease in investment income of approximately $200,000 (FREIT’s share is approximately $150,000) primarily attributed to lower interest rates in Fiscal 2025.

(Refer to the segment disclosure below for a more detailed discussion of the financial performance of FREIT’s commercial and residential segments.)

SEGMENT INFORMATION

The following table sets forth comparative net operating income ("NOI") data for FREIT’s real estate segments and reconciles the NOI to consolidated net income-common equity for Fiscal 2025, as compared to Fiscal 2024 (See below for definition of NOI):

Commercial

Residential

Combined

Years Ended

October 31,

Increase (Decrease)

October 31,

Increase (Decrease)

October 31,

(In Thousands)

Rental income

Reimbursements

Other

Total revenue

Operating expenses

Net operating income

Average Occupancy %

Reconciliation to consolidated net income-common equity:

Deferred rents - straight lining

Investment income

Loss on investment in tenancy-in-common

General and administrative expenses

Depreciation

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Financing costs

Net income

Net loss (income) attributable to noncontrolling interests in subsidiaries

Net income attributable to common equity

NOI 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. FREIT assesses and measures segment operating results based on NOI.

Same Property NOI: FREIT considers same property net operating income (“Same Property NOI”) to be a useful supplemental non-GAAP measure of its operating performance. FREIT defines same property within both the commercial and residential segments to be those properties that FREIT has owned and operated for both the current and prior periods presented, excluding those properties that FREIT acquired, sold or redeveloped during those periods. Any newly acquired property that has been in operation for less than a year, any property that is undergoing a major redevelopment but may still be in operation at less than full capacity, and/or any property that has been sold or deconsolidated is not considered same property.

NOI and Same Property NOI are non-GAAP financial measures and are not measures of operating results or cash flow as measured by GAAP, and are 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.

COMMERCIAL SEGMENT

The commercial segment contains five (5) separate properties. Four of these properties are multi-tenanted retail centers and one is single tenanted on land located in Rockaway, New Jersey owned by FREIT from which it receives monthly rental income from a tenant which has built and operates a bank branch on the land.

As indicated in the table above under the caption Segment Information, total revenue and NOI from FREIT’s commercial segment for Fiscal 2025 decreased by 3.2% and 17%, respectively, as compared to Fiscal 2024. Average occupancy for all commercial properties for Fiscal 2025 decreased by 2.6% as compared to Fiscal 2024.

The decline in revenue for Fiscal 2025 of approximately $250,000 was primarily driven by the following: (a) a decline in revenue of approximately $350,000 at the Preakness shopping center attributed to a decline in the average occupancy from 46.3% in Fiscal 2024 to 44.7% in Fiscal 2025; (b) a decline in revenue of approximately $200,000 at the Westwood Plaza shopping center attributed to a $150,000 real estate tax refund received in Fiscal 2024 and a $125,000 decrease in revenue resulting from the decline in the average occupancy from 34.8% in Fiscal 2024 to 29.1% in Fiscal 2025; offset by a $75,000 increase in revenue attributed to the expiration of TJ Maxx’s one-year co-tenancy clause in March 2025. This decline in revenue at the Preakness and Westwood Plaza shopping centers was offset by the following: (a) an increase of approximately $150,000 at the Franklin Crossing shopping center primarily resulting from an increase in revenue from common area maintenance charges due to an increase in the reimbursable costs in Fiscal 2025 while the average occupancy declined slightly from 97.2% in Fiscal 2025 to 96.8% in Fiscal 2024; and (b) an increase of approximately $150,000 as a result of amounts received from the bankruptcy proceedings related to a former tenant, Cobb Theatre, at the Rotunda property located in Maryland and sold in a prior year.

The decline in NOI for Fiscal 2025 of approximately $500,000 was primarily attributed to a decline in revenue of approximately $250,000 and an increase in insurance costs of approximately $250,000 due to increased policy costs in Fiscal 2025.

Same Property Operating Results: FREIT’s commercial segment currently contains five (5) same properties. (See definition of same property under Segment Information above.) The Rotunda Property, the Westridge Square Property and the Damascus Property were excluded from same property results for all periods presented because these properties were sold in Fiscal 2022. Same property revenue and NOI for Fiscal 2025 decreased by 4.6% and 21.9%, respectively, as compared to Fiscal 2024. The changes resulted from the factors discussed in the immediately preceding paragraph.

Leasing: The following table reflects leasing activity at FREIT’s commercial properties for comparable leases (leases executed for spaces in which there was a tenant at some point during the previous twelve-month period) and non-comparable leases for Fiscal 2025.

RETAIL:

Number of

Leases

Lease Area

Weighted

Average

Lease Rate

(per Sq. Ft.)

Weighted

Average Prior

Lease Rate

(per Sq. Ft.)

% Increase

(Decrease)

Tenant

Improvement

Allowance

(per Sq. Ft.)

Lease

Commissions

(per Sq. Ft.)

Comparable leases (b)

Non-comparable leases

Total leasing activity

(a) These leasing costs are presented as annualized costs per square foot and are allocated uniformly over the lease term.

(b) This includes new tenant leases and/or modifications/extensions/renewals of existing tenant leases.

RESIDENTIAL SEGMENT

FREIT currently operates six (6) multi-family apartment buildings or complexes totaling 792 apartment units, excluding the Pierre Towers property, which was converted to a TIC (see Note 3 to FREIT’s consolidated financial statements).

As indicated in the table above under the caption Segment Information, total revenue and NOI from FREIT’s residential segment for Fiscal 2025 increased by 4.2% and 5.3%, respectively, as compared to Fiscal 2024. Average occupancy for all residential properties for Fiscal 2025 increased by 0.5% as compared to Fiscal 2024.

The increase in revenue for Fiscal 2025 of approximately $900,000 was primarily attributable an increase in base rents across most properties while the average occupancy increased slightly from 96.1% in Fiscal 2024 to 96.6% in Fiscal 2025. The increase in NOI of approximately $650,000 was primarily attributed to the increase in revenue of approximately $900,000 offset by an increase in repairs and maintenance expense of approximately $100,000 and an increase in operating expenses of approximately $100,000 resulting from an increase in snow removal and landscaping costs in Fiscal 2025.

Same Property Operating Results: FREIT’s residential segment currently contains six (6) same properties. (See definition of same property under Segment Information above.) Since all of FREIT’s residential properties are considered same properties in the current fiscal year, refer to the preceding paragraph for discussion of changes in same property results.

FREIT’s residential revenue is principally composed of monthly apartment rental income. Total rental income is a factor of occupancy and monthly apartment rents. Monthly average residential rents at the end of Fiscal 2025 and Fiscal 2024 were $2,414 and $2,320, respectively. A 1% decline in annual average occupancy, or a 1% decline in average rents from current levels, results in an annual revenue decline of approximately $229,000 and $217,000, respectively.

Capital expenditures: FREIT tends to spend more in any given year on maintenance and capital improvements at its residential properties which were constructed more than 25 years ago (Steuben Arms, Berdan Court and Westwood Hills properties) than on its newer properties (Boulders, Regency and Station Place properties). Funds for these capital projects are available from cash flow from the property's operations and cash reserves.

INTEREST EXPENSE INCLUDING AMORTIZATION OF DEFERRED FINANCING COSTS (“NET FINANCING COSTS”)

Years Ended October 31,

(In Thousands of Dollars)

Fixed rate mortgages (a):

1st Mortgages

Existing

New

Total gross financing costs

Amortization of mortgage costs

Total net financing costs

(a) Includes the effect of interest rate swap contracts which effectively convert the floating interest rate to a fixed interest rate over the term of the loan.

Total net financing costs for Fiscal 2025 decreased slightly by approximately $27,000 or 0.4%, compared to Fiscal 2024 which was primarily attributable to the following: (a) a decrease of approximately $225,000 resulting from the $5.7 million pay down of the loan on the Westwood Plaza shopping center in May 2025; and (b) a decrease of approximately $100,000 resulting from the pay-off of the loan on the Boulders property in January 2024; offset by (c) an increase of approximately $270,000 resulting from the increase in the interest rate from 3.75% to 6.05% due to the extension and modification of the loan on the Regency property in December 2024; and (d) an increase of approximately $100,000 resulting from the increase in the interest rate from 4.54% to 6.75% due to the extension and modification of the loan on the Steuben Arms property in June 2024.

INVESTMENT INCOME

Investment income for Fiscal 2025 was $1,351,000 as compared to $1,560,000 for Fiscal 2024. Investment income is principally derived from interest earned from cash on deposit in institutional money market funds and short-term U.S. treasury securities. The decrease in investment income was primarily driven by lower interest rates in Fiscal 2025.

GENERAL AND ADMINISTRATIVE EXPENSES (“G&A”)

G&A expense for Fiscal 2025 was $2,892,000 as compared to $4,419,000 for Fiscal 2024. The primary components of G&A are legal and professional fees, directors’ fees, corporate expenses and accounting/auditing fees. The decline in G&A of approximately $1,550,000 was driven by a decrease in corporate expenses of approximately $750,000 related to costs incurred in Fiscal 2024 for work performed for the Company by a financial advisory firm and a decline in legal and professional expenses of approximately $700,000 due to the settlement of the Sinatra litigation in Fiscal 2024.

DEPRECIATION

Depreciation expense from operations for Fiscal 2025 was $2,965,000 as compared to $2,981,000 for Fiscal 2024.

Results of Operations:

Fiscal Years Ended October 31, 2024 and 2023

Summary revenues and net income for Fiscal 2024 and for the fiscal year ended October 31, 2023 (“Fiscal 2023”) are as follows:

Years Ended October 31,

Change

(in thousands, except per share amounts)

Real estate revenues:

Commercial properties

Residential properties

Total real estate revenues

Operating expenses:

Real estate operating expenses

General and administrative expenses

Depreciation

Total operating expenses

Investment income

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Loss on investment in tenancy-in-common

Financing costs

Net income (loss)

Net (income) loss attributable to noncontrolling interests in subsidiaries

Net income attributable to common equity

Earnings per share:

Basic and diluted

Weighted average shares outstanding:

Basic

Diluted

Real estate revenue for Fiscal 2024 increased 1.2% to $28,678,000 compared to $28,344,000 for Fiscal 2023. The increase in revenue was primarily attributable to the following: (a) an increase from the residential segment of approximately $1,200,000 driven by an increase in base rents across most properties while the average occupancy rate declined slightly from 96.8% in Fiscal 2023 to 96.1% in Fiscal 2024; offset by (b) a decrease from the commercial segment of approximately $900,000 primarily driven by a decline in revenue of approximately $1,100,000 at the Westwood Plaza Shopping Center resulting from Kmart vacating its space in October 2023 offset by an increase in revenue of approximately $100,000 attributed to the increase in occupancy at the Franklin Crossing Shopping Center from 94.8% in Fiscal 2023 to 97.2% in Fiscal 2024 and an increase in revenue of approximately $100,000 attributed to a lease termination fee received from European Wax at the Wayne Preakness Shopping Center in Fiscal 2024.

Net income attributable to common equity (“net income-common equity”) for Fiscal 2024 was $15,852,000 ($2.13 per share basic and diluted), compared to $760,000 ($0.10 per share basic and diluted) for Fiscal 2023.

The schedule below provides a non-GAAP detailed analysis of the major changes that impacted net income-common equity for Fiscal 2024 and Fiscal 2023:

NON-GAAP NET INCOME COMPONENTS

Years Ended October 31,

Change

(In Thousands)

Income from real estate operations:

Commercial properties

Residential properties

Total income from real estate operations

Financing costs:

Fixed rate mortgages

Floating rate mortgages

Other - Corporate interest

Mortgage cost amortization

Total financing costs

Investment income

General & administrative expenses:

Accounting fees

Legal and professional fees

Directors fees

Stock compensation expense

Corporate expenses

Total general & administrative expenses

Depreciation

Loss on investment in tenancy-in-common

Adjusted net income

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Net income (loss)

Net (income) loss attributable to noncontrolling interests in subsidiaries

Net income attributable to common equity

Adjusted net income for Fiscal 2024 was $1,616,000 ($0.22 per share basic and diluted) compared to $428,000 ($0.06 per share basic and diluted) for Fiscal 2023. Adjusted net income is a non-GAAP measure, which management believes is a useful and meaningful gauge to investors of our operating performance, since it excludes the impact of unusual and infrequent items specifically: the litigation settlement, net of fees; a net loss on sale of Maryland Properties.

The increase in adjusted net income for Fiscal 2024 was primarily driven by the following: (a) an increase in investment income of approximately $547,000 resulting from higher interest rates in Fiscal 2024; (b) a decline in net interest expense of approximately $410,000 (FREIT’s share is approximately $187,000) primarily attributed to the refinancing of the loan on the Westwood Hills property in the prior year’s period from a variable interest rate of approximately 9.21% (at the time of the refinancing) to a fixed interest rate of 6.05%; (c) an increase in revenue of approximately $334,000 (FREIT’s share is approximately $138,000) as described elsewhere herein; (d) a decline in repairs and maintenance expense related to the commercial segment of approximately $165,000; (e) a decline in payroll expense related to the commercial segment of approximately $123,000 (FREIT’s share is approximately $73,000) primarily attributed to the completion in early Fiscal 2024 of the majority of the tenant fit-ups at the Rotunda property; (f) an increase in income from investment in TIC of approximately $101,000; offset by (g) an increase in general and administrative expenses (“G&A”) of approximately $176,000 driven by an increase in corporate expenses of approximately $222,000 primarily related to work performed for the Company by a financial advisory firm in Fiscal 2024; and (h) an increase in total operating expenses related to the residential segment of approximately

$245,000 (FREIT’s share is approximately $238,000) primarily attributed to an increase in real estate tax expense and insurance costs.

(Refer to the segment disclosure below for a more detailed discussion of the financial performance of FREIT’s commercial and residential segments.)

SEGMENT INFORMATION

The following table sets forth comparative net operating income ("NOI") data for FREIT’s real estate segments and reconciles the NOI to consolidated net income-common equity for Fiscal 2024, as compared to Fiscal 2023 (See below for definition of NOI):

Commercial

Residential

Combined

Years Ended

October 31,

Increase (Decrease)

October 31,

Increase (Decrease)

October 31,

(In Thousands)

Rental income

Reimbursements

Other

Total revenue

Operating expenses

Net operating income

Average Occupancy %

Reconciliation to consolidated net income-common equity:

Deferred rents - straight lining

Investment income

Loss on investment in tenancy-in-common

General and administrative expenses

Depreciation

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Financing costs

Net income (loss)

Net (income) loss attributable to noncontrolling interests in subsidiaries

Net income attributable to common equity

COMMERCIAL SEGMENT

As indicated in the table above under the caption Segment Information, total revenue and NOI from FREIT’s commercial segment for Fiscal 2024 decreased by 10.2% and 17.3%, respectively, as compared to Fiscal 2023. Average occupancy for all commercial properties for Fiscal 2024 decreased by 13.5% as compared to Fiscal 2023.

The decline in revenue for Fiscal 2024 was primarily driven by the decline in revenue of approximately $1,100,000 at the Westwood Plaza Shopping Center attributed to Kmart vacating its space in October 2023 offset by an increase in revenue of approximately $100,000 attributed to the increase in occupancy at the Franklin Crossing Shopping Center from 94.8% in Fiscal 2023 to 97.2% in Fiscal 2024 and an increase in revenue of approximately $100,000 attributed to a lease termination fee received from European Wax at the Wayne Preakness Shopping Center in Fiscal 2024. The decrease in NOI for Fiscal 2024 was primarily attributable to the decline in revenue of approximately $894,000 offset by a decline in repairs and

maintenance expense of approximately $165,000 and a decline in payroll expense of approximately $123,000 primarily attributed to the completion in early Fiscal 2024 of the majority of the tenant fit-ups at the Rotunda property.

Same Property Operating Results: FREIT’s commercial segment currently contains five (5) same properties. (See definition of same property under Segment Information above.) The Rotunda Property, the Westridge Square Property and the Damascus Property were excluded from same property results for all periods presented because these properties were sold in Fiscal 2022. Same property revenue and NOI for Fiscal 2024 decreased by 9.5% and 19.9%, respectively, as compared to Fiscal 2023. The changes resulted from the factors discussed in the immediately preceding paragraph.

RETAIL:

Number of

Leases

Lease Area

Weighted

Average

Lease Rate

(per Sq. Ft.)

Weighted

Average Prior

Lease Rate

(per Sq. Ft.)

% Increase

(Decrease)

Tenant

Improvement

Allowance

(per Sq. Ft.)

Lease

Commissions

(per Sq. Ft.)

Comparable leases (b)

Non-comparable leases

Total leasing activity

(a) These leasing costs are presented as annualized costs per square foot and are allocated uniformly over the lease term.

(b) This includes new tenant leases and/or modifications/extensions/renewals of existing tenant leases.

RESIDENTIAL SEGMENT

As indicated in the table above under the caption Segment Information, total revenue and NOI from FREIT’s residential segment for Fiscal 2024 increased by 6.3% and 9.1%, respectively, as compared to Fiscal 2023. Average occupancy for all residential properties for Fiscal 2024 decreased by 0.7% as compared to Fiscal 2023.

The increase in revenue for Fiscal 2024 was primarily attributable to an increase in base rents across most properties while the average occupancy rate declined slightly from 96.8% in Fiscal 2023 to 96.1% in Fiscal 2024. The increase in NOI for Fiscal 2024 was primarily attributed to the increase in revenue of approximately $1,246,000 offset by an increase in total operating expenses of approximately $245,000 primarily attributed to an increase in real estate tax expense and insurance costs.

FREIT’s residential revenue is principally composed of monthly apartment rental income. Total rental income is a factor of occupancy and monthly apartment rents. Monthly average residential rents at the end of Fiscal 2024 and Fiscal 2023 were $2,320 and $2,214, respectively. A 1% decline in annual average occupancy, or a 1% decline in average rents from current levels, results in an annual revenue decline of approximately $220,000 and $211,000, respectively.

INTEREST EXPENSE INCLUDING AMORTIZATION OF DEFERRED FINANCING COSTS (“NET FINANCING COSTS”)

Years Ended October 31,

(In Thousands of Dollars)

Fixed rate mortgages (a):

1st Mortgages

Existing

New

Variable rate mortgages:

1st Mortgages

Existing

New

Other - Corporate interest

Total gross financing costs

Amortization of mortgage costs

Total net financing costs

(a) Includes the effect of interest rate swap contracts which effectively convert the floating interest rate to a fixed interest rate over the term of the loan.

Total net financing costs for Fiscal 2024 decreased by approximately $410,000 or 5.3%, compared to Fiscal 2023 which was primarily attributable to the following: (a) a decrease of approximately $372,000 attributed to the refinancing of the loan on the Westwood Hills property in August 2023 from a $25 million variable interest rate loan with an interest rate of approximately 9.21% (at the time of the refinancing) to a $25.5 million fixed interest rate loan with an interest rate of 6.05%; (b) a decrease of approximately $279,000 resulting from the pay-off of the loan on the Boulders property in January 2024; offset by (c) an increase of approximately $201,000 attributed to the extension and modification of the loan on the Westwood Plaza Shopping Center modified effective February 2023 from a fixed interest rate of 4.75% to 7.5% and further extended effective February 2024 from a fixed interest rate of 7.5% to 8.5%.

INVESTMENT INCOME

Investment income for Fiscal 2024 was $1,560,000 as compared to $1,013,000 for Fiscal 2023. Investment income is principally derived from interest earned from cash on deposit in institutional money market funds and short-term U.S. treasury securities. The increase in investment income was primarily driven by higher interest rates in Fiscal 2024.

GENERAL AND ADMINISTRATIVE EXPENSES (“G&A”)

G&A expense for Fiscal 2024 was $4,419,000 as compared to $4,243,000 for Fiscal 2023. The primary components of G&A are legal and professional fees, directors’ fees, corporate expenses and accounting/auditing fees. The increase in G&A for Fiscal 2024 was driven by an increase in corporate expenses of approximately $222,000 primarily related to work performed for the Company by a financial advisory firm in Fiscal 2024.

DEPRECIATION

Depreciation expense from operations for Fiscal 2024 was $2,981,000 as compared to $2,944,000 for Fiscal 2023.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $6,248,000 for Fiscal 2025 compared to $20,163,000 for Fiscal 2024. FREIT expects that cash provided by operating activities and cash reserves will be adequate to cover mandatory debt service payments (including payments of interest, but excluding balloon payments, which are expected to be refinanced and/or extended), real estate taxes, dividends, recurring capital improvements at its properties and other needs to maintain its status as a REIT for at least a period of one year from the date of filing of this annual report on Form 10-K.

As of October 31, 2025, FREIT had cash, cash equivalents and restricted cash totaling $21,528,000, compared to $19,223,000 at October 31, 2024. The increase in cash, cash equivalents and restricted cash in Fiscal 2025 of approximately $2,305,000 was primarily attributable to $11,543,000 in net cash provided by investing activities and $6,248,000 in net cash provided by operating activities offset by $15,486,000 in net cash used in financing activities. The change in cash, cash equivalents and restricted cash was primarily attributed to the following: (a) the purchase of investments in U.S. Treasury securities of approximately $48,184,000; (b) repayment of mortgages of approximately $7,349,000 (which includes the pay down of the loan on the Westwood Plaza shopping center); (c) dividends paid in excess of cash provided by operating activities of approximately $919,000; (d) distributions to noncontrolling interests in subsidiaries of approximately $794,000; and (e) payments made toward capital improvements on existing properties of approximately $759,000; offset by (f) proceeds received from maturities of U.S. Treasury securities of approximately $60,082,000; and (g) a distribution from the investment in Pierre TIC of approximately $455,000.

Credit Line: FREIT’s revolving line of credit provided by the Provident Bank was renewed for a three-year term expiring on October 31, 2026. 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 located in Franklin Lakes, New Jersey and retail space in Glen Rock, New Jersey. The total line of credit is $13 million and the interest rate on the amount outstanding is based on a floating interest rate of prime minus 25 basis points with a floor of 6.75%. As of October 31, 2025, there was no amount outstanding and $13 million was available under the line of credit. (See Note 5 to FREIT’s consolidated financial statements for additional details.)

Dividend: On October 8, 2025, the Board of Directors of FREIT declared a dividend in the fourth quarter of Fiscal 2025 of $0.10 per share on the common stock of FREIT based on FREIT’s operating results for the full fiscal year, which was paid on December 15, 2025 to holders of record of said shares at the close of business on December 1, 2025. This brings total dividends declared for Fiscal 2025 to $0.36 per share on the common stock of FREIT. The Board of Directors will continue to evaluate the dividend on a quarterly basis and there can be no assurance that dividends will be declared for any future period. In addition, the amount of the dividend declared on October 8, 2025 is not necessarily indicative of the amount of any dividends that may be declared in the future.

As of October 31, 2025, FREIT’s aggregate outstanding mortgage debt was $121.3 million, which bears a weighted average interest rate of 5.34% and an average life of approximately 1.6 years. FREIT’s mortgages are subject to amortization schedules that are longer than the terms of the mortgages. As such, balloon payments (unpaid principal amounts at mortgage due date) for all mortgage debt will be required as follows:

Fiscal Year

($ in millions)

Mortgage "Balloon" Payments

Includes the following:

The loan on the Preakness shopping center located in Wayne, New Jersey in the amount of $25 million which had a maturity date of August 1, 2025. Wayne PSC is working with the current lender, ConnectOne Bank, on a potential modification and extension of the loan. ConnectOne Bank has issued several extensions of this loan’s maturity date while discussions are ongoing, with each extension made under the same terms and conditions of the existing loan agreement. Wayne PSC, LLC continues to evaluate all options for refinancing or replacing the loan. Management expects this loan to be further extended, however, until such time as a definitive agreement providing for a modification, extension or replacement of this loan is entered into, there can be no assurance that such an agreement will be reached. (See Note 5 to FREIT's consolidated financial statements for additional details.)

The following table shows the estimated fair value and carrying value of FREIT’s long-term debt, net at October 31, 2025 and 2024:

($ in Millions)

October 31, 2025

October 31, 2024

Fair Value

Carrying Value, Net

Fair values are estimated based on market interest rates at the end of each fiscal year 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).

FREIT expects to refinance the individual mortgages with new mortgages or exercise extension options when their terms expire. To this extent, FREIT has exposure to interest rate risk. If interest rates, at the time any individual mortgage note is due, are higher than the current fixed interest rate, higher debt service may be required, and/or refinancing proceeds may be less than the amount of mortgage debt being retired. For example, at October 31, 2025, a 1% interest rate increase would reduce the fair value of FREIT’s debt by $1.8 million, and a 1% decrease would increase the fair value by $1.9 million.

On October 31, 2023, FREIT exercised its right, pursuant to the loan agreement, to extend the term of its loan secured by the Westwood Plaza shopping center located in Westwood, New Jersey for one additional year from an initial maturity date of February 1, 2024 to a new maturity date of February 1, 2025. The outstanding balance of this loan as of February 1, 2024 was approximately $16,458,000, payable based on monthly installments of principal and interest of approximately $166,727, and bearing interest at a fixed rate of 8.5%. Additionally, FREIT funded the interest reserve escrow account for this loan (“Escrow”) with an additional $112,556, increasing the Escrow balance to $2,000,722, which represented the annualized principal and interest payments for one (1) year under this loan extension. Effective February 1, 2025, Valley National Bank extended this loan for 90 days from a maturity date of February 1, 2025 to a maturity date of May 1, 2025 under the same terms and conditions of the existing loan agreement.

On October 31, 2023, FREIT exercised its right, pursuant to the loan agreement, to extend the term of its $7.5 million loan on its property located in Rockaway, New Jersey, for an additional one year from an initial maturity date of January 1, 2024 to a new maturity date of January 1, 2025. The loan extension would have been based on a fixed interest rate of approximately 7.44%. On January 11, 2024, FREIT used cash on hand to fully repay this loan with a balance of $7.5 million. This has resulted in annual debt service savings of approximately $558,000. (See Note 5 to FREIT’s consolidated financial statements for further details.)

On December 1, 2023, the mortgage secured by an apartment building located in River Edge, New Jersey came due. Provident Bank extended the initial maturity date of this loan for a 90-day period with a maturity date of March 1, 2024 and further extended this loan for another 60-day period with a new maturity date of June 1, 2024, based on the same terms and conditions of the existing loan agreement. On May 1, 2024, FREIT entered into a loan extension and modification agreement with Provident Bank, effective June 1, 2024, with a then outstanding loan balance of approximately $8.9 million. Under the terms and conditions of this loan extension and modification, the maturity date of this loan is extended for three years to May 31, 2027, the interest rate on the outstanding debt is based on a fixed interest rate of 6.75% and monthly installments of principal and interest of approximately $58,016 are required. (See Note 5 to FREIT’s consolidated financial statements for further details.)

Interest rate swap contracts: To reduce interest rate volatility, FREIT uses a “pay fixed, receive floating” interest rate swap to convert floating interest rates to fixed interest rates over the term of a certain loan. FREIT enters into an interest rate swap contract with a counterparty that is usually a high-quality commercial bank. In essence, FREIT agrees to pay its counterparty a fixed rate of interest on a dollar amount of notional principal (which generally corresponds to FREIT’s mortgage debt) over a term equal to the term of the mortgage notes. FREIT’s counterparty, in return, agrees to pay FREIT a short-term rate of interest - generally SOFR (“Secured Overnight Financing Rate”) - on that same notional amount over the same term as the mortgage notes.

FREIT has a variable interest rate loan secured by its Station Place property. To reduce interest rate fluctuations, FREIT entered into an interest rate swap contract for this loan, which effectively converted variable interest rate payments to fixed interest rate payments. The interest rate swap contract was based on a notional amount of approximately $12,350,000 ($11,030,000 at October 31, 2025). FREIT had a variable interest rate loan secured by its Regency property. On December 15, 2024, the Regency loan and its corresponding interest rate swap contract matured with no settlement due at maturity. (See Note 6 to FREIT’s consolidated financial statements for further details.)

In accordance with ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities to Accounting Standards Codification Topic 815, Derivatives and Hedging ("ASC 815")” , FREIT marks-to-market its interest rate swap contract. As the floating interest rate varies from time-to-time over the term of the contract, the value of the contract will change upward or downward. If the floating rate is higher than the fixed rate, the value of the contract goes up and there is a gain and an asset. If the floating rate is less than the fixed rate, there is a loss and a liability. The interest rate swap contract is accounted for as a cash flow hedge with the corresponding gain or loss on this contract not affecting FREIT’s consolidated statement of income; changes in the fair value of this cash flow hedge will be reported in other comprehensive income (loss) and appear in the equity section of the consolidated balance sheet. This gain or loss represents the economic consequence of liquidating fixed interest rate swap and replacing it with like-duration funding at current market rates, something we would likely never do. Periodic cash settlements of this contract will be accounted for as an adjustment to interest expense.

FREIT has the following derivative-related risks with its interest rate swap contract (“contract”): 1) early termination risk, and 2) counterparty credit risk.

Early Termination Risk : If FREIT wants to terminate its contract before maturity, it would be bought out or terminated at market value; i.e., the difference in the present value of the anticipated net cash flows from each of the contract’s parties. If current variable interest rates are significantly below FREIT’s fixed interest rate payments, this could be costly. Conversely, if interest rates rise above FREIT’s fixed interest payments and FREIT elected early termination, FREIT would realize a gain on termination. At October 31, 2025, the contract for Station Place was in FREIT’s favor. If FREIT had terminated this contract at that date, it would have realized a gain of approximately $210,000 for the Station Place swap, which amount has been included in FREIT’s consolidated balance sheet as of October 31, 2025. The change in the fair value for the contract (gain or loss) during such period has been included in comprehensive income and for the fiscal years ended October 31, 2025, 2024 and 2023, FREIT recorded an unrealized loss of approximately $296,000, $830,000 and $73,000, respectively, in the consolidated statements of comprehensive income.

Counterparty Credit Risk : Each party to a contract bears the risk that its counterparty will default on its obligation to make a periodic payment. FREIT reduces this risk by entering into a contract only with major financial institutions that are experienced market makers in the derivatives market.

FREIT’s total contractual obligations under its line of credit and mortgage loans in place as of October 31, 2025 are as follows:

CONTRACTUAL OBLIGATIONS-PRINCIPAL

(in thousands of dollars)

Within

Total

One Year

Years

Long-Term Debt

Annual Amortization

Balloon Payments

Total Long-Term Debt

Includes the following:

FREIT’s annual estimated cash requirements related to interest on its line of credit and mortgage loans in place as of October 31, 2025 are as follows:

INTEREST OBLIGATIONS

(in thousands of dollars)

Within

Total

One Year

Years

Interest on Fixed Rate Debt

ADJUSTED FUNDS FROM OPERATIONS

Funds From Operations (“FFO”) is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”). FREIT does not include distributions from equity/debt/capital gain sources in its computation of FFO. Although many consider FFO as the standard measurement of a REIT’s performance, FREIT modified the NAREIT computation of FFO to include other adjustments to GAAP net income that are not considered by management to be the primary drivers of its decision making process. These adjustments to GAAP net income are straight-line rents and recurring capital improvements on FREIT’s residential apartments. The modified FFO computation is referred to as Adjusted Funds From Operations (“AFFO”). FREIT believes that AFFO is a superior measure of its operating performance. FREIT computes FFO and AFFO as follows:

Years Ended October 31,

(In Thousands, Except Per Share)

Funds From Operations ("FFO") (a)

Net income (loss)

Depreciation of consolidated properties

Amortization of deferred leasing costs

Distributions to non-controlling interests

Net loss on sale of Maryland properties

Litigation settlement, net of fees

Adjustment to loss in investment in tenancy-in-common for depreciation

FFO

Per Share - Basic and Diluted

(a) As prescribed by NAREIT.

(b) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $0.2 million related to the sale of the Rotunda and Damascus properties located in Maryland in a prior year. See Note 2 to FREIT's consolidated financial statements for further details.

(c) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $0.6 million related to the sale of the Rotunda property located in Maryland in a prior year. See Note 2 to FREIT's consolidated financial statements for further details.

(d) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $3.3 million related to the sale of the Damascus and Rotunda properties located in Maryland in a prior year. See Note 2 to FREIT's consolidated financial statements for further details.

Adjusted Funds From Operations ("AFFO")

FFO

Deferred rents (Straight lining)

Capital Improvements - Apartments

AFFO

Per Share - Basic and Diluted

Weighted Average Shares Outstanding:

Basic

Diluted

FFO and AFFO do not represent cash generated from operating activities in accordance with GAAP, and therefore should not be considered a substitute for net income as a measure of results of operations or for cash flow from operations as a measure of liquidity. Additionally, the application and calculation of FFO and AFFO by certain other REITs may vary materially from that of FREIT, and therefore FREIT’s FFO and AFFO may not be directly comparable to those of other REITs.

DISTRIBUTIONS TO STOCKHOLDERS

Since its inception in 1961, FREIT has elected to be treated as a REIT for federal income tax purposes. In order to qualify as a REIT, FREIT must satisfy a number of highly technical and complex operational requirements of the Internal Revenue Code, including a requirement that FREIT must distribute to its stockholders at least 90% of its REIT taxable income. Although cash used to make distributions reduces amounts available for capital investment, FREIT generally intends to distribute not less than the minimum of REIT taxable income necessary to satisfy the applicable REIT requirement as set forth in the Internal Revenue Code. With respect to the Jobs and Growth Tax Relief Reconciliation Act of 2003, the reduction of the tax rate on dividends does not apply to FREIT dividends other than capital gains dividends, which are subject to capital gains rates. FREIT’s policy is to pass on at least 90% of its ordinary taxable income to stockholders. FREIT’s taxable income is untaxed at the FREIT level to the extent distributed to stockholders. FREIT’s dividends of ordinary taxable income will be taxed as ordinary income to its stockholders and FREIT’s capital gains dividends will be taxed as capital gains to its stockholders. FREIT’s Board evaluates the dividend to be declared/paid (if any) on a quarterly basis.

The following tables list the quarterly dividends declared for the three most recent fiscal years and the dividends as a percentage of taxable income for those periods.

Fiscal Years Ended October 31,

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total For Year

(in thousands of dollars)

Dividends

Fiscal

Per

Total

Ordinary

Capital Gain

Taxable

Year

Dividends

Income-Tax Basis

Income

Taxable Income

*Estimated

INFLATION

Inflation can impact the financial performance of FREIT in various ways. FREIT’s commercial tenant leases normally provide that the tenants bear all or a portion of most operating expenses, which can reduce the impact of inflationary increases on FREIT. Apartment leases are generally for a one-year term, which may allow FREIT to seek increased rents as leases renew or when new tenants are obtained, subject to prevailing market conditions.

FREVS First Real Estate Investment Trust of New Jersey - 10-K

Tone shift by section

Language change vs prior 10-K

Risk Factors (Item 1A)

Language change vs prior 10-K

MD&A (Item 7)

External resources

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