Quarterly Report for Quarter Ending April 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

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. FREIT's properties are primarily located in northern New Jersey and New York.

The economic and financial environment: While the U.S. unemployment rate has increased slightly from 4.1% in October 2024 to 4.2% in April 2025, the U.S. inflation rate has decreased from 2.6% in October 2024 to 2.3% in April 2025, which is the lowest since February 2021. Mortgage rates continue to hold at the highest levels in more than a decade. After previously having lowered interest rates at three consecutive meetings in the latter half of 2024 from a previous interest rate of 5.5%, which was the highest rate level since 2001, the Federal Reserve has continued to hold the interest rate steady at 4.5%. The slightly elevated inflation rate, which is above the Federal Reserve's 2% target, coupled with uncertainty around the tariffs and the potential impact on economic growth and inflation has resulted in the Federal Reserve not adjusting its interest rates at its meeting in May 2025.

Residential Properties: Our residential portfolio continues to generate positive cash flow. While average rents on turned units (apartments which were vacated and then re-leased to new tenants) and existing tenant renewals continue to increase across most of the portfolio, the rates of these increases has indicated a slight softening of the market. These increases 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 attain higher occupancies and realize stronger net operating incomes, the vacancy rates at the Westwood Plaza and Wayne 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.

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 9 to FREIT's condensed 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 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 9 to FREIT's condensed consolidated financial statements for further details.)

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. This loan extension of its outstanding balance as of February 1, 2024 of approximately $16,458,000 was based on a fixed interest rate of 8.5% and was payable based on monthly installments of principal and interest of approximately $166,727. 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 approximately $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 9 to FREIT's condensed consolidated financial statements for further 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 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 April 30, 2025 and October 31, 2024, there was no amount outstanding and $13 million was available under the line of credit.

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 quarterly report on Form 10-Q.

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 included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024, have been applied consistently as of April 30, 2025, and for the six and three months ended April 30, 2025 and 2024. 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 earned 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 receivable 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 2 to FREIT's condensed consolidated financial statements for recently issued accounting standards.

RESULTS OF OPERATIONS

Real estate revenue for the six months ended April 30, 2025 ("Current Six Months") increased 1.8% to $14,527,000 compared to $14,274,000 for the six months ended April 30, 2024 ("Prior Year's Six Months"). Real estate revenue for the three months ended April 30, 2025 ("Current Quarter") decreased 0.2% to $7,258,000 compared to $7,275,000 for the three months ended April 30, 2024 ("Prior Year's Quarter").

The increase in revenue of approximately $253,000 for the Current Six Months was primarily attributable to the following: (a) an increase from the residential segment of approximately $535,000 driven by an increase in base rents across most properties and an increase in the average occupancy from 95.9% in the Prior Year's Six Months to 96.9% in the Current Six Months; offset by (b) a decrease from the commercial segment of approximately $282,000 primarily driven by a decline in revenue at the Westwood Plaza shopping center of approximately $206,000 resulting from TJ Maxx invoking in March of 2024 its one-year co-tenancy clause allowing for a reduction in its rent as a result of the termination of the K-Mart lease and a decline in revenue at the Preakness shopping center of approximately $155,000 attributed to a decline in the average occupancy from 45.2% in the Prior Year's Six Months to 43.4% in the Current Six Months.

The decrease in revenue of approximately $17,000 for the Current Quarter was primarily attributable to the following: (a) a decrease from the commercial segment of approximately $237,000 driven by a decline in revenue at the Westwood Plaza shopping center of approximately $109,000 attributed to a decrease in the average occupancy from 36.5% in the Prior Year's Quarter to 31.1% in the Current Quarter and TJ Maxx invoking in March of 2024 its one-year co-tenancy clause and a decline in revenue at the Preakness shopping center of approximately $109,000 attributed to a decline in the average occupancy from 45.0% in the Prior Year's Quarter to 43.4% in the Current Quarter; offset by (b) an increase from the residential segment of approximately $220,000 driven by an increase in base rents across most properties and an increase in the average occupancy from 96.5% in the Prior Year's Quarter to 97.1% in the Current Quarter.

Net income attributable to common equity ("net income-common equity") for the Current Six Months and Current Quarter was $1,508,000 ($0.20 per share basic and diluted) and $894,000 ($0.12 per share basic and diluted), compared to $21,000 ($0.00 per share basic and diluted) and $533,000 ($0.07 per share basic and diluted), for the Prior Year's comparable periods.

The schedule below provides a detailed analysis of the major changes that impacted net income-common equity for the six and three months ended April 30, 2025 and 2024:

NON-GAAP NET INCOME COMPONENTS		Six Months Ended												Three Months Ended
		April 30,												April 30,
		2025				2024				Change				2025				2024				Change
		(In Thousands of Dollars)												(In Thousands of Dollars)
Income from real estate operations:
Commercial properties		$	1,074			$	1,413			$	(339	)		$	535			$	788			$	(253	)
Residential properties			6,252				5,813				439				3,258				2,948				310
Total income from real estate operations			7,326				7,226				100				3,793				3,736				57
Financing costs:
Fixed rate mortgages			(3,489	)			(3,343	)			(146	)			(1,738	)			(1,656	)			(82	)
Mortgage cost amortization			(235	)			(281	)			46				(113	)			(126	)			13
Total financing costs			(3,724	)			(3,624	)			(100	)			(1,851	)			(1,782	)			(69	)
Investment income			750				686				64				350				279				71
General & administrative expenses:
Accounting fees			(220	)			(238	)			18				(102	)			(103	)			1
Legal and professional fees			(306	)			(621	)			315				(59	)			(246	)			187
Directors fees			(733	)			(734	)			1				(436	)			(437	)			1
Stock compensation expense			-				(1	)			1				-				-				-
Corporate expenses			(377	)			(1,229	)			852				(194	)			(229	)			35
Total general & administrative expenses			(1,636	)			(2,823	)			1,187				(791	)			(1,015	)			224
Depreciation			(1,457	)			(1,514	)			57				(734	)			(789	)			55
Income (loss) on investment in tenancy-in-common			23				(47	)			70				14				62				(48	)
Adjusted net income (loss)			1,282				(96	)			1,378				781				491				290
Net loss on sale of Maryland properties			-				(171	)			171				-				(92	)			92
Net income (loss)			1,282				(267	)			1,549				781				399				382
Net loss attributable to noncontrolling interests in subsidiaries			226				288				(62	)			113				134				(21	)
Net income attributable to common equity		$	1,508			$	21			$	1,487			$	894			$	533			$	361

The condensed consolidated results of operations for the Current Six Months and Current Quarter are not necessarily indicative of the results to be expected for the full year or any other period. The table above includes income from real estate operations, which is a non-GAAP financial measure and is not a measure of operating results or cash flow as measured by GAAP, and is not necessarily indicative of cash available to fund cash needs.

Adjusted net income (loss) for the Current Six Months and Current Quarter was net income of $1,282,000 ($0.17 per share basic and diluted) and $781,000 ($0.10 per share basic and diluted) compared to net loss of $96,000 (($0.01) per share basic and diluted) and net income of $491,000 ($0.07 per share basic and diluted) for the Prior Year's comparable periods. Adjusted net income (loss) 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: a net loss on sale of Maryland Properties.

The increase in adjusted net income of approximately $1,378,000 for the Current Six Months was primarily attributable to the following: (a) a decline in general and administrative expenses ("G&A") of approximately $1,187,000 driven by a decrease in corporate expenses of approximately $852,000 primarily related to costs incurred in the Prior Year's Six Months for work performed for the Company by a financial advisory firm and a decline in legal and professional expenses of approximately $315,000; (b) an increase in revenue of approximately $253,000 (FREIT's share is approximately $222,000); and (c) an increase in income from the investment in the Pierre TIC of approximately $70,000; offset by (d) an increase in interest expense including amortization of deferred financing costs of approximately $146,000 (FREIT's share is approximately $153,000) primarily resulting from the extension and modification of the loans on the Regency and Steuben Arms properties, increasing the interest rates from 3.75% to 6.05% and 4.54% to 6.75%, respectively; and (e) an increase in total operating expenses in the residential segment of approximately $96,000 (FREIT's share is approximately $71,000) primarily attributed to an increase in snow removal and utilities expenses.

The increase in adjusted net income of approximately $290,000 for the Current Quarter was primarily attributable to a decline in G&A of approximately $224,000 driven by a decline in legal and professional expenses.

(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 tables set forth comparative net operating income ("NOI") data for FREIT's real estate segments and reconciles the NOI to condensed consolidated net income-common equity for the Current Six Months and Current Quarter as compared to the Prior Year's comparable periods (see below for definition of NOI):

		Commercial																Residential																Combined
		Six Months Ended																Six Months Ended																Six Months Ended
		April 30,								Increase (Decrease)								April 30,								Increase (Decrease)								April 30,
		2025				2024				$				%				2025				2024				$				%				2025				2024
		(In Thousands)																(In Thousands)																(In Thousands)
Rental income		$	2,773			$	2,991			$	(218	)			-7.3%			$	10,610			$	10,107			$	503				5.0%			$	13,383			$	13,098
Reimbursements			980				1,045				(65	)			-6.2%				6				(11	)			17				154.5%				986				1,034
Other			27				28				(1	)			-3.6%				187				172				15				8.7%				214				200
Total revenue			3,780				4,064				(284	)			-7.0%				10,803				10,268				535				5.2%				14,583				14,332
Operating expenses			2,650				2,593				57				2.2%				4,551				4,455				96				2.2%				7,201				7,048
Net operating income		$	1,130			$	1,471			$	(341	)			-23.2%			$	6,252			$	5,813			$	439				7.6%				7,382				7,284
Average Occupancy %			48.2%				50.4%								-2.2%				96.9%				95.9%								1.0%

	Reconciliation to condensed consolidated net income-common equity:
	Deferred rents - straight lining			(56	)			(58	)
	Investment income			750				686
	Net loss on sale of Maryland properties			-				(171	)
	General and administrative expenses			(1,636	)			(2,823	)
	Income (loss) on investment in tenancy-in-common			23				(47	)
	Depreciation			(1,457	)			(1,514	)
	Financing costs			(3,724	)			(3,624	)
	Net income (loss)			1,282				(267	)
	Net loss attributable to noncontrolling interests in subsidiaries			226				288
	Net income attributable to common equity		$	1,508			$	21

		Commercial																Residential																Combined
		Three Months Ended																Three Months Ended																Three Months Ended
		April 30,								Increase (Decrease)								April 30,								Increase (Decrease)								April 30,
		2025				2024				$				%				2025				2024				$				%				2025				2024
		(In Thousands)																(In Thousands)																(In Thousands)
Rental income		$	1,423			$	1,484			$	(61	)			-4.1%			$	5,340			$	5,131			$	209				4.1%			$	6,763			$	6,615
Reimbursements			420				572				(152	)			-26.6%				1				4				(3	)			-75.0%				421				576
Other			3				27				(24	)			-88.9%				99				86				13				15.1%				102				113
Total revenue			1,846				2,083				(237	)			-11.4%				5,440				5,221				219				4.2%				7,286				7,304
Operating expenses			1,283				1,266				17				1.3%				2,182				2,273				(91	)			-4.0%				3,465				3,539
Net operating income		$	563			$	817			$	(254	)			-31.1%			$	3,258			$	2,948			$	310				10.5%				3,821				3,765
Average Occupancy %			48.2%				50.7%								-2.5%				97.1%				96.5%								0.6%

	Reconciliation to condensed consolidated net income-common equity:
	Deferred rents - straight lining			(28	)			(29	)
	Investment income			350				279
	Net loss on sale of Maryland properties			-				(92	)
	General and administrative expenses			(791	)			(1,015	)
	Income on investment in tenancy-in-common			14				62
	Depreciation			(734	)			(789	)
	Financing costs			(1,851	)			(1,782	)
	Net income			781				399
	Net loss attributable to noncontrolling interests in subsidiaries			113				134
	Net income attributable to common equity		$	894			$	533

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 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 who has built and operates a bank branch on the land.

As indicated in the tables above under the caption Segment Information, total revenue from FREIT's commercial segment for the Current Six Months and Current Quarter decreased by 7.0% and 11.4%, respectively, and NOI decreased by 23.2% and 31.1%, respectively, as compared to the Prior Year's comparable periods. Average occupancy for all commercial properties for the Current Six Months and Current Quarter decreased by 2.2% and 2.5%, respectively, as compared to the Prior Year's comparable periods.

The decrease in revenue and NOI for the Current Six Months was primarily driven by a $206,000 decline in revenue at the Westwood Plaza shopping center attributed to TJ Maxx invoking in March of 2024 its one-year co-tenancy clause allowing for a reduction in its rent as a result of the termination of the K-Mart lease and a $155,000 decline in revenue at the Preakness shopping center attributed to a decline in the average occupancy from 45.2% in the Prior Year's Six Months to 43.4% in the Current Six Months.

The decrease in revenue and NOI for the Current Quarter was primarily driven by a $109,000 decline in revenue at the Westwood Plaza shopping center attributed to a decline in the average occupancy from 36.5% in the Prior Year's Quarter to 31.1% in the Current Quarter and TJ Maxx invoking in March of 2024 its one-year co-tenancy clause and a $109,000 decline in revenue at the Preakness shopping center attributed to a decline in the average occupancy from 45.0% in the Prior Year's Quarter to 43.4% in the Current Quarter.

Same Property Operating Results: FREIT's commercial segment currently contains five (5) same properties. (See definition of same property under Segment Information above.) Since all of FREIT's commercial properties are considered same properties in the current fiscal year, refer to the preceding paragraph for discussion of changes in same property results.

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 the Current Six Months:

RETAIL:		Number of Leases				Lease Area (Sq. Ft.)				Weighted Average Lease Rate (per Sq. Ft.)				Weighted Average Prior Lease Rate (per Sq. Ft.)				% Increase (Decrease)				Tenant Improvement Allowance (per Sq. Ft.) (a)				Lease Commissions (per Sq. Ft.) (a)
Comparable leases (b)			8				106,188			$	17.69			$	17.34				2.0%			$	-			$	0.06
Non-comparable leases			-				-			$	-				N/A				N/A			$	-			$	-
Total leasing activity			8				106,188

(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 5 to FREIT's condensed consolidated financial statements).

As indicated in the tables above under the caption Segment Information, total revenue from FREIT's residential segment for the Current Six Months and Current Quarter increased by 5.2% and 4.2%, respectively, and NOI increased by 7.6% and 10.5%, respectively, as compared to the Prior Year's comparable periods. Average occupancy for all residential properties for the Current Six Months and Current Quarter increased by 1.0% and 0.6%, respectively, as compared to the Prior Year's comparable periods.

The increase in revenue for the Current Six Months was primarily attributable to an increase in base rents across most properties and an increase in the average annual occupancy from 95.9% in the Prior Year's Six Months to 96.9% in the Current Six Months. The increase in NOI for the Current Six Months was primarily attributed to the increase in revenue of approximately $535,000 offset by an increase in operating expenses of approximately $96,000 resulting from an in increase in snow removal and utilities expenses.

The increase in revenue for the Current Quarter was primarily attributable to an increase in base rents across most properties and an increase in the average occupancy rate from 96.5% in the Prior Year's Quarter to 97.1% in the Current Quarter. The increase in NOI for the Current Quarter was primarily attributed to the increase in revenue of approximately $219,000 in conjunction with a decline in operating expenses of approximately $91,000 resulting from a decrease in utilities expense.

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 the Current Quarter and the Prior Year's Quarter were $2,361 and $2,255, 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 $224,000 and $218,000, 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")

		Six Months Ended April 30,								Three Months Ended April 30,
		2025				2024				2025				2024
		(In Thousands of Dollars)								(In Thousands of Dollars)
Fixed rate mortgages (a):
1st Mortgages
Existing		$	3,489			$	3,343			$	1,738			$	1,656
New			-				-				-				-
Total gross financing costs			3,489				3,343				1,738				1,656
Amortization of deferred financing costs			235				281				113				126
Total net financing costs		$	3,724			$	3,624			$	1,851			$	1,782

(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 the Current Six Months increased by approximately $100,000 or 2.8%, compared to Prior Year's Six Months which was primarily attributable to the following: (a) an increase of approximately $111,000 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 (b) an increase of approximately $102,000 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; offset by (c) a decrease of approximately $86,000 resulting from the pay-off of the loan on the Boulders property in January 2024.

Total net financing costs for the Current Quarter increased by approximately $69,000 or 3.9%, compared to Prior Year's Quarter which was primarily attributable to the following: (a) an increase of approximately $71,000 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 (b) an increase of approximately $52,000 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 the Current Six Months and Current Quarter was approximately $750,000 and $350,000, respectively, compared to $686,000 and $279,000, respectively, for the Prior Year's comparable periods. 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 an increase in the cash balance compared to the Prior Year's comparable periods.

GENERAL AND ADMINISTRATIVE EXPENSES ("G&A")

G&A for the Current Six Months and Current Quarter was approximately $1,636,000 and $791,000, respectively, compared to $2,823,000 and $1,015,000, respectively, for the Prior Year's comparable periods. The primary components of G&A are legal and professional fees, directors' fees, corporate expenses and accounting/auditing fees. The decrease in G&A for the Current Six Months was driven by a decline in corporate expenses of approximately $852,000 primarily related to costs incurred in the Prior Year's Six Months for work performed for the Company by a financial advisory firm and a decline in legal and professional expenses of approximately $315,000. The decline in G&A for the Current Quarter was primarily driven by a decrease in legal and professional expenses.

DEPRECIATION

Depreciation expense for the Current Six Months and Current Quarter was approximately $1,457,000 and $734,000, respectively, compared to $1,514,000 and $789,000, respectively, for the Prior Year's comparable periods.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was approximately $2,262,000 for the Current Six Months as compared to approximately $1,507,000 for the Prior Year's Six Months. 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 quarterly report on Form 10-Q.

As of April 30, 2025, FREIT had cash, cash equivalents and restricted cash totaling approximately $15,965,000, compared to approximately $19,223,000 at October 31, 2024. The decrease in cash, cash equivalents and restricted cash in the Current Six Months of approximately $3,258,000 was primarily attributable to net cash used in financing activities of $7,535,000, offset by net cash provided by investing activities of approximately $2,015,000 and net cash provided by operating activities of approximately $2,262,000. The decrease 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 $28,247,000; (b) dividends paid of approximately $5,821,000; and (c) repayment of mortgages of approximately $968,000; offset by (d) proceeds received from maturities of U.S. Treasury securities of approximately $30,205,000.

Credit Line: 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 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 April 30, 2025 and October 31, 2024, there was no amount outstanding and $13 million was available under the line of credit.

Dividend: FREIT's Board of Directors ("Board") declared a dividend of approximately $598,000 ($0.08 per share) in the second quarter of Fiscal 2025, which will be paid on June 13, 2025 to stockholders of record on May 30, 2025. FREIT's Board will continue to evaluate the dividend on a quarterly basis.

As of April 30, 2025, FREIT's aggregate outstanding mortgage debt was $127.9 million, which bears a weighted average interest rate of 5.49% and an average life of approximately 1.9 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 the mortgage due date) for all mortgage debt will be required as follows:

Fiscal Year		2025	2026	2027	2028	2029
($ in millions)
Mortgage "Balloon" Payments		$30.7 (A) (C)	$34.1 (B)	$8.6	$23.8	$26.0

Includes the following:

(A)

The $5.7 million (including deferred interest of approximately $0.2 million) pay down of the loan on the Westwood Plaza shopping center paid in May 2025 when FREIT entered into a loan extension and modification agreement with Valley National Bank. (See Note 9 to FREIT's condensed consolidated financial statements for additional details.)

(B)

The $10 million remaining loan balance on the Westwood Plaza shopping center, which per the loan extension and modification agreement the maturity date of this loan is extended for one year to May 1, 2026. (See Note 9 to FREIT's condensed consolidated financial statements for additional details.)

(C)

The loan on the Preakness shopping center located in Wayne, New Jersey, in the amount of approximately $25 million which has a maturity date of August 1, 2025. Management expects this loan to be extended, however, until such time as a definitive agreement providing for an extension of this loan is entered into, there can be no assurance this loan will be extended. (See Note 9 to FREIT's condensed consolidated financial statements for additional details.)

The following table shows the estimated fair value and net carrying value of FREIT's long-term debt at April 30, 2025 and October 31, 2024:

($ in Millions)		April 30, 2025		October 31, 2024
Fair Value		$124.5		$124.7
Carrying Value, Net		$127.2		$128.1

Fair values are estimated based on market interest rates at April 30, 2025 and October 31, 2024 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 April 30, 2025, a 1% interest rate increase would reduce the fair value of FREIT's debt by $2.1 million, and a 1% decrease would increase the fair value by $2.2 million.

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 9 to FREIT's condensed 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 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 9 to FREIT's condensed consolidated financial statements for further details.)

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. This loan extension of its outstanding balance as of February 1, 2024 of approximately $16,458,000 was based on a fixed interest rate of 8.5% and was payable based on monthly installments of principal and interest of approximately $166,727. 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 approximately $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 9 to FREIT's condensed 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 these interest rate swap contracts with a counterparty that is usually a high-quality commercial bank. In essence, FREIT agrees to pay its counterparties 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 counterparties, in return, agree 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 ($11,157,000 at April 30, 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 9 to FREIT's condensed 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 condensed 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 condensed consolidated balance sheet. This gain or loss represents the economic consequence of liquidating a 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 April 30, 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 $237,000 for the Station Place swap, which amount has been included in FREIT's condensed consolidated balance sheet as at April 30, 2025. The change in the fair value for the contract (gain or loss) during such period has been included in comprehensive income (loss) and for the six and three months ended April 30, 2025 and 2024, FREIT recorded an unrealized loss of approximately $269,000 and $227,000, respectively, in the condensed consolidated statements of comprehensive income. For the six and three months ended April 30, 2024, FREIT recorded an unrealized loss of approximately $273,000 and an unrealized gain of $257,000, respectively, in the condensed consolidated statements of comprehensive (loss) 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.

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:

		For the Six Months Ended April 30,								For the Three Months Ended April 30,
		2025				2024				2025				2024
		(In Thousands, Except Per Share)								(In Thousands Except Per Share)
Funds From Operations ("FFO") (a)
Net income (loss)		$	1,282			$	(267	)		$	781			$	399
Depreciation of consolidated properties			1,457				1,514				734				789
Amortization of deferred leasing costs			45				64				19				38
Distributions to non-controlling interests			(480	)(b)			(180	)(c)			(120	)(b)			-	(c)
Net loss on sale of Maryland properties			-				171				-				92
Adjustment to loss on investment in tenancy-in-common for depreciation			732				725				367				363
FFO		$	3,036			$	2,027			$	1,781			$	1,681
Per Share - Basic and Diluted		$	0.41			$	0.27			$	0.24			$	0.23
(a) As prescribed by NAREIT.
(b) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $163,000 and $80,000 for the six and three months ended April 30, 2025, respectively, related to the sale of the Rotunda and Damascus properties located in Maryland in a prior year.
(c) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $0.6 million for the six and three months ended April 30, 2024 related to the sale of the Rotunda property located in Maryland in a prior year.
Adjusted Funds From Operations ("AFFO")
FFO		$	3,036			$	2,027			$	1,781			$	1,681
Deferred rents (Straight lining)			56				58				28				29
Capital Improvements - Apartments			(203	)			(265	)			(126	)			(169	)
AFFO		$	2,889			$	1,820			$	1,683			$	1,541
Per Share - Basic and Diluted		$	0.39			$	0.24			$	0.23			$	0.21
Weighted Average Shares Outstanding:
Basic			7,466				7,451				7,469				7,453
Diluted			7,466				7,455				7,469				7,457

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.

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 normally for one to two-years in term, which may allow FREIT to seek increased rents as leases renew or when new tenants are obtained, subject to prevailing market conditions.