FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY - Quarter Report: 2006 July (Form 10-Q)

Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended July 31, 2006

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to ___________________.

Commission File No.: 2-27018

FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

(Exact name of registrant as specified in its charter)

	New Jersey		22-1697095
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	505 Main Street, P.O. Box 667, Hackensack, New Jersey		07602
	(Ad-dress of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code 201-488-6400

Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing require-ments for the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨

Accelerated Filer x

Non-Accelerated Filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes x No

As of September 8, 2006 there were 6,552,152 shares of beneficial interest issued and outstanding.

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FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

INDEX

Part I: Financial Information			Page

Item 1: Unaudited Condensed Consolidated Financial Statements

	a.)	Condensed Consolidated Balance Sheets as at July 31, 2006 and October 31, 2005;	3

	b.)	Condensed Consolidated Statements of Income, Comprehensive Income and Undistributed Earnings for the Nine and Three Months Ended July 31, 2006 and 2005;	4

	c.)	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended July 31, 2006 and 2005;	5

	d.)	Notes to Condensed Consolidated Financial Statements.	6

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations			11

Item 3: Quantitative and Qualitative Disclosures About Market Risk.			20

Item 4: Controls and Procedures.			21

Part II: Other Information			21

Item 6: Exhibits

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FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	July 31,		October 31,
	2006		2005
	(Unaudited)		(See Note 1)
	(In Thousands of Dollars)
ASSETS
Real estate, at cost, net of accumulated depreciation	$	188,210	$	188,416
Construction in progress		16,521		4,770
Cash and cash equivalents		6,083		5,672
Tenants' security accounts		2,044		1,908
Sundry receivables		4,254		4,460
Secured loans receivable		1,658		1,658
Prepaid expenses and other assets		5,281		4,198
Deferred charges, net		3,631		3,820
Interest rate swap contract		122		96
Totals	$	227,804	$	214,998

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages payable	$	178,552	$	166,874
Notes payable		1,500
Accounts payable and accrued expenses		5,598		6,288
Dividends payable		1,638		2,916
Tenants' security deposits		2,721		2,487
Below market value leases and deferred revenue		2,028		274
Total liabilities		192,037		178,839

Minority interest		7,597		7,585

Commitments and contingencies

Shareholders' equity:
Shares of beneficial interest without par value: 8,000,000 shares authorized; 6,552,152 and 6,481,152 shares issued and outstanding		21,661		21,129
Undistributed earnings		6,387		7,349
Accumulated other comprehensive income		122		96
Total shareholders' equity		28,170		28,574

Totals	$	227,804	$	214,998

See Notes to Consolidated Financial Statements.

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FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND

UNDISTRIBUTED EARNINGS

NINE AND THREE MONTHS ENDED JULY 31, 2006 AND 2005

(Unaudited)

	Nine Months Ended						Three Months Ended
	July 31,						July 31,
	2006			2005			2006			2005
INCOME	(In Thousands Of Dollars, Except Per Share Amounts)
Revenue:
Rental income	$	24,497		$	21,408		$	8,255		$	7,180
Reimbursements		3,767			2,980			1,349			1,110
Sundry income		183			133			74			38
Totals		28,447			24,521			9,678			8,328

Expenses:
Operating expenses		7,079			5,502			2,089			1,947
Management fees		1,274			1,089			445			376
Real estate taxes		4,079			3,510			1,360			1,199
Depreciation		3,466			3,138			1,199			1,053
Minority interest		432			493			225			161
Totals		16,330			13,732			5,318			4,736

Operating income		12,117			10,789			4,360			3,592

Investment income		150			173			37			54
Interest expense including amortization of deferred financing costs		(8,291	)		(7,327	)		(2,784	)		(2,420	)
Net income	$	3,976		$	3,635		$	1,613		$	1,226

Earnings per share:
Basic	$	0.61		$	0.57		$	0.25		$	0.19
Diluted	$	0.59		$	0.54		$	0.23		$	0.18

Weighted average shares outstanding:
Basic		6,530			6,430			6,548			6,436
Diluted		6,787			6,750			6,888			6,870

COMPREHENSIVE INCOME
Net income	$	3,976		$	3,635		$	1,613		$	1,226
Other comprehensive income:
Unrealized gain (loss) on interest rate swap contract		26			209			(2	)		45
Comprehensive income	$	4,002		$	3,844		$	1,611		$	1,271

UNDISTRIBUTED EARNINGS
Balance, beginning of period	$	7,349		$	10,633		$	6,413		$	9,830
Net income		3,976			3,635			1,613			1,226
Less dividends		(4,938	)		(4,824	)		(1,639	)		(1,612	)
Balance, end of period	$	6,387		$	9,444		$	6,387		$	9,444
Dividends per share	$	0.75		$	0.75		$	0.25		$	0.25

See Notes to Consolidated Financial Statements.

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FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED JULY 31, 2006 AND 2005

(Unaudited)

	2006			2005

Operating activities:	(In Thousands of Dollars)
Net income	$	3,976		$	3,635
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,466			3,138
Amortization		359			259
Deferred revenue		(629	)		(223	)
Minority interest		432			493
Changes in operating assets and liabilities:
Tenants' security accounts		(136	)		(20	)
Sundry receivables, prepaid expenses and other assets		(352	)		(3,144	)
Accounts payable and accrued expenses		(690	)		1,615
Tenants' security deposits		234			205
Net cash provided by operating activities		6,660			5,958
Investing activities:
Capital improvements - existing properties		(1,572	)		(2,408	)
Construction - new properties		(11,751	)
Contract deposit					(8,390	)(a)

Net cash used in investing activities		(13,323	)		(10,798	)
Financing activities:
Repayment of mortgages		(1,414	)		(3,521	)
Construction and other loan proceeds		14,592
Proceeds from exercise of stock options		532			195
Dividends paid		(6,216	)		(6,424	)
Distribution to minority interest		(420	)		(558	)
Contribution by minority interest					5,582
Secured loans to minority interest					(1,658	)
Net cash provided by (used in) financing activities		7,074			(6,384	)
Net increase (decrease) in cash and cash equivalents		411			(11,224	)
Cash and cash equivalents, beginning of period		5,672			18,843
Cash and cash equivalents, end of period	$	6,083		$	7,619

Supplemental disclosure of cash flow data:
Interest paid	$	8,438		$	7,200
Income taxes paid	$	18		$	28
Supplemental schedule of non cash financing activities:
Dividends declared but not paid	$	1,638		$	1,612

(a) In July 2005, Grande Rotunda, LLC, a 60% owned affiliate of FREIT, completed the acquisition of The Rotunda, a 216,000 square foot office and retail building in Baltimore, MD. The acquisition cost of approximately $30,890,000, was paid for in part with the proceeds of a $22,500,000 acquisition loan.

See Notes to Consolidated Financial Statements.

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FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Basis of presentation:

The accompanying condensed consolidated financial statements of First Real Estate Investment Trust of New Jersey (“FREIT”) have been prepared without audit, in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements have been omitted. It is the opinion of management that all adjustments considered necessary for a fair presentation have been included, and that all such adjustments are of a normal recurring nature.

The consolidated results of operations for the nine and three months ended July 31, 2006 are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in FREIT’s Annual Report on Form 10-K for the year ended October 31, 2005.

Reclassification:

Certain accounts in the 2005 financial statements have been reclassified to conform to the current presentation.

Note 2 - Earnings per share:

FREIT has presented "basic" and "diluted" earnings per share in the accompanying condensed consolidated statements of income in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share” ("SFAS 128"). Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during each period. The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the denominator is increased to include the number of additional shares that would have been outstanding if all potentially dilutive shares, such as those issuable upon the exercise of stock options and warrants, were issued during the period.

In computing diluted earnings per share for each of the nine and three month periods ended July 31, 2006 and 2005, the assumed exercise of all of FREIT’s outstanding stock options, adjusted for application of the treasury stock method, would have increased the weighted average number of shares outstanding as shown in the table below.

	Nine Months Ended				Three Months Ended
	July 31,				July 31,
	2006		2005		2006		2005
Basic weighted average shares outstanding		6,529,527		6,429,652		6,547,902		6,436,152

Shares arising from assumed exercise of stock options		257,145		320,217		340,734		433,920

Diluted weighted average shares outstanding		6,786,672		6,749,869		6,888,636		6,870,072

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Basic and diluted earnings per share, based on the weighted average number of shares outstanding during each period, are comprised of ordinary income.

Note 3- Equity incentive plan:

All references to the amount of stock options granted, option price, fair value, or shares exercised have been adjusted to reflect stock splits. On September 10, 1998, the Board of Trustees approved FREIT’s Equity Incentive Plan (the "Plan") which was ratified by FREIT's shareholders on April 7, 1999, whereby up to 920,000 of FREIT's shares of beneficial interest may be granted to key personnel in the form of stock options, restricted share awards and other share-based awards.

Upon ratification of the Plan on April 7,1999, FREIT issued 754,000 stock options (adjusted for stock splits) which it had previously granted to key personnel on September 10, 1998. The fair value of the options on the date of grant was $7.50 per share. All of the options vested within three years from the date of grant and expire ten years from the date of grant. The following table summarizes stock option activities for the periods indicated:

	Nine Months Ended July 31,
	2006					2005
	No. of Options Outstanding			Average Exercise Price		No. of Options Outstanding			Average Exercise Price

Balance beginning of period		512,000		$	7.50		570,000		$	7.50

Grants during period		-					-

Options exercised		(71,000	)	$	7.50		(26,000	)	$	7.50

Options cancelled							-

Balance at end of period		441,000		$	7.50		544,000		$	7.50

Note 4- Segment information:

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information”, established standards for reporting financial information about operating segments in interim and annual financial reports and provides for a "management approach" in identifying the reportable segments.

FREIT has determined that it has two reportable segments: commercial properties and residential properties. These reportable segments offer different products, have different types of customers, and are managed separately because each requires different operating strategies and management expertise. The commercial segment contains eight separate properties during fiscal 2006 and seven separate properties during the first eight months of fiscal 2005. Beginning in mid June 2006, as a result of construction activities in Rockaway, NJ, the residential segment contains ten properties. Prior to June 2006, the residential segment contained nine properties. The accounting policies of the segments are the same as those described in Note 1 in FREIT’s Annual Report on Form 10-K.

The chief operating and decision-making group of FREIT's commercial segment, residential segment and corporate/other is comprised of the Board of Trustees.

FREIT assesses and measures segment operating results based on net operating income ("NOI"). NOI, a standard used by real estate professionals, is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), lease amortization, depreciation, and financing costs. NOI is not a measure of operating results or cash flows from operating activities as measured by accounting principles generally accepted in the United States of America, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

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Real estate rental revenue, operating expenses, NOI and recurring capital improvements for the reportable segments are summarized below and reconciled to consolidated net income for the nine and three months ended July 31, 2006 and 2005. Asset information is not reported since FREIT does not use this measure to assess performance.

	Nine Months Ended						Three Months Ended
	July 31,						July 31,
	2006			2005			2006			2005
	(in thousands of dollars)
Real estate revenue:
Commercial	$	15,941		$	12,657		$	5,440		$	4,367
Residential		11,985			11,630			4,090			3,882
Totals		27,926			24,287			9,530			8,249
Real estate operating expenses:
Commercial		6,116			4,211			2,020			1,431
Residential		5,537			5,158			1,621			1,794
Totals		11,653			9,369			3,641			3,225
Net operating income:
Commercial		9,825			8,446			3,420			2,936
Residential		6,448			6,472			2,469			2,088
Totals	$	16,273		$	14,918		$	5,889		$	5,024

Recurring capital improvements:
Residential	$	942		$	650		$	484		$	221


Reconciliation to consolidated net income:
Segment NOI	$	16,273		$	14,918		$	5,889		$	5,024
Deferred rents - straight-lining		250			227			79			77
Amortization of acquired above and below market value leases		271						69
Net investment income		150			173			37			54
Minority interest in earnings of subsidiaries		(432	)		(493	)		(225	)		(161	)
General and administrative expenses		(779	)		(725	)		(253	)		(295	)
Depreciation		(3,466	)		(3,138	)		(1,199	)		(1,053	)
Financing costs		(8,291	)		(7,327	)		(2,784	)		(2,420	)
Net income	$	3,976		$	3,635		$	1,613		$	1,226

Note 5 - Acquisition:

On July 19, 2005, FREIT’s 60% owned affiliate, Grande Rotunda, LLC, completed the acquisition of The Rotunda, a mixed-use property in Baltimore, Maryland. The Rotunda site is approximately 11.5 acres and is in close proximity to Johns Hopkins University. Its current configuration contains about 138,000 sq. ft. of office space, primarily in the four-story main building, and 78,000 sq. ft. of retail space on the lower level of the main building. A Giant Supermarket anchors the retail space.

The acquisition cost was approximately $31 million (inclusive of transaction costs), which was financed in part from an acquisition loan in the amount of $22.5 million, and the balance in cash. The acquisition mortgage loan bears interest at 150 basis points over LIBOR and has an initial term of three years, which makes the loan repayment date July 19, 2008.

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FREIT contributed 60% of the cash required, with the balance contributed by its joint venture partner, Rotunda 100, LLC, whose equity investors are principally employees of Hekemian & Co., Inc. (“Hekemian”). Hekemian is the managing agent for FREIT’s other properties. In order to incentivize the employees of Hekemian to identify and provide real estate investment opportunities for FREIT, FREIT agreed to advance, only to the employees of Hekemian, up to 50% of the amount of the equity capital required to be contributed by them to Rotunda 100, LLC, for this transaction. FREIT has advanced $1.7 million to the Hekemian employees (certain of whom are members of the family of FREIT’s Chairman of the Board), and these loans bear a floating rate of interest payable (resets quarterly at 225 basis points above the 90-day LIBOR rate) quarterly and are secured by the Hekemian employees’ membership equity interest in Rotunda 100, LLC.

The acquisition price of The Rotunda had been preliminarily allocated as follows: $14.6 million to the building and $16.3 million to the land. This purchase price allocation was based on an independent appraisal of the fair value of the property components at the acquisition date, with minimal value assigned to the leases.

It is FREIT’s policy that initial valuations are finalized, in accordance with the guidelines outlined in SFAS No. 141 and SFAS No. 142, no later than six months from the acquisition date. Accordingly, as of January 31, 2006, based on the above independent appraisal and FREIT’s evaluation of the acquired in-place leases, the purchase price was re-allocated as follows: approximately $16 million has been allocated to the building, $16.5 million to the land, $.9 million to leases-in-place at above market rents, and approximately $2.6 million of value was allocated to leases at below market rents was recorded as a liability.

The capitalized above-market lease values, classified as other assets, are amortized as a reduction of base rent rental revenue over the remaining term of the leases, and the capitalized below-market leases values are amortized as an increase to base rental revenue over the remaining terms plus renewal options of the leases. This restatement did not have a material affect on FREIT’s net income for the nine and three months ended July 31, 2006.

The following unaudited pro forma information shows the results of operations for the nine and three months ended July 31, 2005 for FREIT and Subsidiaries as though The Rotunda had been acquired at the beginning of fiscal 2005.

	Nine Months Ended 7/31/05		Three Months Ended 7/31/05
	(thousands, except per share amounts)

Revenues	$	27,196	$	9,118
Expenses		23,790		7,958
Net Income	$	3,406	$	1,160

Earnings Per Share:
Basic	$	0.53	$	0.18
Diluted	$	0.50	$	0.17

Weighted Average
Shares Outstanding:
Basic		6,430		6,438
Diluted		6,750		6,870

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The unaudited pro forma results include adjustments for depreciation based on the purchase price and increased interest expense based on the mortgage placed on the property at the acquisition date.

The unaudited pro forma results of operations set forth above are not necessarily indicative of the results that would have occurred had the acquisition been made at the beginning of fiscal 2005 or of future results of operations of FREIT’s combined properties.

Note 6 - Credit line:

On February 4, 2005, FREIT replaced its expired $14 million line of credit with an $18 million line of credit. The line of credit is for three years but can be cancelled by the bank, at its will, at each anniversary date. Draws against the credit line can be used for general corporate purposes, for property acquisitions, construction activities, and letters of credit. Draws against the credit line are secured by mortgages on FREIT’s Franklin Crossing Shopping Center, Franklin Lakes, NJ, retail space in Glen Rock, NJ, Lakewood Apartments, Lakewood, NJ, and Grandview Apartments, Hasbrouck Heights, NJ. Interest rates on draws will be set at the time of each draw for 30, 60, or 90-day periods, based on FREIT’s choice of the prime rate or at 175 basis points over the 30, 60, or 90-day LIBOR rates at the time of the draws.

In connection with its construction and development activities in Rockaway, NJ, FREIT has drawn $1.5 million and has further utilized the credit line for the issuance of a $2 million Letter of Credit to guaranty the completion of on-site and off-site improvements that have been substantially completed.

***

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Item 2: 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 unaudited condensed consolidated financial statements of FREIT (including related notes thereto) appearing elsewhere in this Form 10-Q, and the consolidated financial statements included in FREIT’s most recently filed 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 regarding future results of operations, economic performance, financial condition and achievements of FREIT, and do not relate strictly to historical or current facts. FREIT has tried, wherever possible, to identify these forward-looking statements by using words such as “believe,” “expect,” “anticipate,” “intend, “ “plan,” “ estimate,” or words of similar meaning.

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, which will, among other things, affect demand for rental space, the availability of prospective tenants, lease rents and the availability of financing; adverse changes in FREIT’s real estate markets, including, among other things, competition with other real estate owners, risks of real estate development and acquisitions; governmental actions and initiatives; and environmental/safety requirements.

Overview

FREIT is an equity real estate investment trust ("REIT") that owns a portfolio of residential apartment and commercial properties. Our revenues consist primarily of fixed rental income from our residential and commercial properties and additional rent in the form of expense reimbursements derived from our income producing commercial properties. Our properties are primarily located in northern New Jersey and Maryland. We acquire existing properties for investment. We also acquire properties which we feel have redevelopment potential and make changes and capital improvements to these properties. We develop and construct properties on our vacant land. Our policy is to acquire and develop real property for long-term investment.

Almost all of FREIT’s income and cash flow is 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:

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;

new acquisitions and development projects; and

governmental regulations.

A negative quality change in the above factors could potentially cause a detrimental effect in FREIT’s revenue, earnings and cash flow.

Effects of recent accounting pronouncements:

In December 2003, the FASB issued revised FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51." (“FIN 46R"). FIN 46R requires the consolidation of an entity in which an enterprise absorbs a majority of the entity's expected losses, receives a majority of the entity's expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity (variable interest entities, or "VIEs"). Previously, entities were generally consolidated by an enterprise when it had a controlling financial interest through ownership or a majority voting interest in the entity. FIN 46R was applicable for financial statements of public entities that have interests in VIEs or potential VIEs referred to as special-purpose entities for periods ending after December 31, 2003. Applications by public entities for all other types of entities were required in financial statements for periods ending after March 15, 2004.

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In accordance with the definition of related parties as defined in paragraph 16 of FIN 46R and the guidance in paragraph 4h, it is the belief of the management of FREIT that FIN 46R is applicable to Westwood Hills, LLC and Wayne PSC, LLC, both 40% owned by FREIT. Because of this determination, FREIT has consolidated these two entities in addition to its majority owned subsidiaries.

In December 2004, the FASB issued SFAS No.123 (R) "Accounting for Stock-Based Compensation." SFAS 123 (R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123 (R) requires that the fair value of such equity instruments be recognized as an expense in the historical financial statements as services are performed. Prior to SFAS 123 (R), only certain pro forma disclosures of fair value were required. SFAS 123 (R) became effective for FREIT for periods beginning August 1, 2005. The adoption of this new accounting pronouncement did not have a material impact on FREIT's consolidated financial statements.

The FASB had issued certain other accounting pronouncements as of July 31, 2006; however, FREIT’s management does not believe that any of those pronouncements would have significantly affected our financial accounting measurements or disclosures had they been in effect during the nine and three months ended July 31, 2006.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Pursuant to 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 year ended October 31, 2005, have been applied consistently as at July 31, 2006 and October 31, 2005, and for the nine and three months ended July 31, 2006 and 2005. 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 collectibility. If we incorrectly determine the collectibility of revenue, our net income and assets could be overstated.

Valuation of Long-Lived Assets: We periodically assess the carrying value of long-lived assets whenever we determine that events or changes in circumstances indicate that their carrying amount 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.

All references to per share amounts are on a diluted basis unless otherwise indicated.

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RESULTS OF OPERATIONS:

Nine and Three Months Ended July 31, 2006 and 2005

Condensed Income Statement:
	Nine Months Ended				Three Months Ended
	July 31,				July 31,
	2006		2005		2006		2005
	(in thousands of dollars)
Revenues:
Commercial Revenues:
Same properties (1)	$	13,444	$	12,780	$	4,553	$	4,335
New properties		3,018		111		1,036		111
Total Commercial		16,462		12,891		5,589		4,446

Residential Revenues:
Same properties (1)		11,985		11,630		4,089		3,882
Total residential		11,985		11,630		4,089		3,882

Total real estate revenues		28,447		24,521		9,678		8,328
Investment income		150		173		37		54
Total revenues		28,597		24,694		9,715		8,382

Operating expenses:
Real estate operating expenses
Same properties (1)		13,558		12,942		4,404		4,376
New properties		1,993		65		661		65
Gen'l and administrative expenses		779		725		253		295
Financing costs		8,291		7,327		2,784		2,420
Total expenses		24,621		21,059		8,102		7,156

Net Income	$	3,976	$	3,635	$	1,613	$	1,226

(1) Properties operated since the beginning of fiscal 2005.

Revenue for the nine months ended July 31, 2006 (“Current Nine Months”) increased 15.8% to $28,597,000 compared to $24,694,000 for the nine months ended July 31, 2005 (“Prior Nine Months”). Revenue for the three months ended July 31, 2006 (“Current Year’s Quarter”) increased 15.9% to $9,715,000 compared to $8,382,000 for the three months ended July 31, 2005 (“Prior Year’s Quarter”). FREIT’s acquisition of The Rotunda in July 2005 (see Note 5-Acquisition, to the consolidated financial statements) accounted for the major increase in revenues.

Net income for the Current Nine Months increased 9.4% to $3,976,000 from $3,635,000 for the Prior Nine Months. Net income for the Current Year’s Quarter increased 31.6% to $1,613,000 from $1,226,000 for the Prior Year’s Quarter. The increase in net income for the current year’s periods compared to prior year’s periods is attributable to improved operating results at FREIT’s Same Properties (principally residential properties) and the operations at The Rotunda during the Current Year’s Quarter.

The consolidated results of operations for the nine and three months ended July 31, 2006 are not necessarily indicative of the results to be expected for the full year.

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SEGMENT INFORMATION

The following table sets forth comparative operating data (Net Operating Income-“NOI”) for FREIT’s real estate segments:

	Commercial
	Nine Months Ended											Three Months Ended
	July 31,						Increase (Decrease)					July 31,						Increase (Decrease)
	2006			2005			$		%			2006			2005			$		%
	(in thousands)											(in thousands)
Rental income	$	12,141		$	9,663		$	2,478		25.6	%	$	4,080		$	3,257		$	824		25.3	%
Reimbursements		3,767			2,979			788		26.5	%		1,349			1,110			239		21.5	%
Other		33			15			18		120.0	%		11			-			11
Total Revenues		15,941			12,657			3,284		25.9	%		5,440			4,367			1,074		24.6	%

Operating expenses		6,116			4,211			1,905		45.2	%		2,020			1,431			589		41.2	%

Net operating income	$	9,825		$	8,446		$	1,379		*16.3*	%	$	3,420		$	2,936		$	485		*16.5*	%
Average
Occupancy %		*90.5*	%		*92.6*	%				*-2.1*	%		*90.2*	%		*92.4*	%				*-2.2*	%

	Residential
	Nine Months Ended												Three Months Ended
	July 31,						Increase (Decrease)						July 31,						Increase (Decrease)
	2006			2005			$			%			2006			2005			$			%
	(in thousands)												(in thousands)
Rental Revenues:
Rental income	$	11,835		$	11,518		$	317			2.8	%	$	4,027		$	3,843		$	183			4.8	%
Other income		150			112			38			33.9	%		63			39			24			62	%
Total Revenues		11,985			11,630		$	355			3.1	%		4,090			3,882		$	207			5.3	%

Operating expenses		5,537			5,158		$	379			7.3	%		1,621			1,794		$	(173	)		-9.6	%

Net operating income	$	6,448		$	6,472		$	(24	)		*-0.4*	%	$	2,469		$	2,088		$	380			*18.2*	%
Average
Occupancy %		*95.4*	%		*94.6*	%					*0.8*	%		*95.9*	%		*94.7*	%					*1.2*	%

	Nine Months Ended						Three Months Ended
	July 31,						July 31,
	2006			2005			2006			2005
Reconciliation to consolidated net income:
Segment NOI:
Commercial	$	9,825		$	8,446		$	3,420		$	2,936
Residential		6,448			6,472			2,469			2,088
Total		16,273			14,918			5,889			5,024
Deferred rents		250			227			79			77
Amortization of acquired above and below market value leases		271						69
Net investment income		150			173			37			54
General and administrative expenses		(779	)		(725	)		(253	)		(295	)
Depreciation		(3,466	)		(3,138	)		(1,199	)		(1,053	)
Financing costs		(8,291	)		(7,327	)		(2,784	)		(2,420	)
Minority interest		(432	)		(493	)		(225	)		(161	)
Net income	$	3,976		$	3,635		$	1,613		$	1,226

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The above table details the comparative NOI for FREIT’s Commercial and Residential Segments, and reconciles the combined NOI to consolidated net income. NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), lease amortization, depreciation, and financing costs. FREIT assesses and measures segment operating results based on NOI. NOI is not a measure of operating results or cash flow as measured by generally accepted accounting principles, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

COMMERCIAL SEGMENT

The commercial segment contains eight separate properties during fiscal 2006 and seven separate properties during the first eight months of fiscal 2005. FREIT’s commercial properties consist of eight (8) properties totaling approximately 1,127,000 sq. ft. of retail space and 138,000 sq. ft. of office space. Seven are multi-tenanted retail or office centers, and one is a single tenanted store. In addition, FREIT has leased land and receives rental income from a tenant who has built and operates a bank branch on land FREIT owns in Rockaway, NJ.

The occupancy percentages indicated on the above chart are weighted averages of all our commercial properties. The occupancy percentage of our properties by same properties, newly acquired properties and properties undergoing expansion and/or renovations are as follows:

	Average Occupancy Percentage
	Nine Months Ended						Three Months Ended
	July 31,						July 31,
	2006			2005			2006			2005

Same operating properties		95.2	%		98.6	%		94.9	%		95.7	%

Properties Undergoing
Expansion / Renovation:
Damascus Center		70.8	%		71.1	%		70.3	%		71.1	%
The Rotunda		83.3	%		(a	)		82.9	%		(a	)
(a) Acquired July 19, 2005.

For a discussion of occupancy at our properties undergoing renovation or expansion, see discussion below.

As indicated in the above Segment Information table, revenues and NOI from our commercial segment for the Current Nine Months and Current Year’s Quarter have increased 16.3% and 16.5% respectively over the comparable prior year’s periods. The contribution made by The Rotunda (acquired July 19, 2005), during the Current Nine Months and Current Year’s Quarter to revenue and NOI is reflected in the following chart:

	Nine Months Ended
	July 31, 2006						July 31, 2005
	(in thousands)
	Commercial Combined		Rotunda		Same Properties		Commercial Combined		Rotunda		Same Properties
Revenues	$	15,941	$	2,694	$	13,247	$	12,657	$	111	$	12,546
Expenses		6,116		1,305		4,811		4,211		76		4,135
NOI	$	9,825	$	1,389	$	8,436	$	8,446	$	35	$	8,411

	Three Months Ended
	July 31, 2006						July 31, 2005
	(in thousands)
	Commercial Combined		Rotunda		Same Properties		Commercial Combined		Rotunda		Same Properties
Revenues	$	5,441	$	957	$	4,484	$	4,367	$	111	$	4,256
Expenses		2,020		574		1,446		1,431		76		1,355
NOI	$	3,421	$	383	$	3,038	$	2,936	$	35	$	2,901

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NOI for same properties has increased 0.3% and 4.7% respectively, during the current year’s periods compared to the prior year’s periods.

Development Activities:

The Rotunda: Acquired in July 2005, the property is on 11.5 acres of land and is currently configured into about 138,000 sq. ft. of office space and 78,000 sq. ft. of retail space on the lower level of the main building. We are planning a modernization and expansion of the retail space, as well as the development of residential apartment units as allowed by the current zoning. Final development plans, however, are subject to approval by local governmental authorities.

Damascus Center, Damascus, MD: FREIT is planning a modernization and expansion of Damascus Center. Building plans for Phase I are completed and have been submitted for governmental approvals. It is anticipated that Phase I construction will begin during fiscal year 2006. Because of this expansion, current leases for certain tenants are being allowed to expire and are not being renewed. This has caused occupancy to decline, on a temporary basis, during the construction phase.

Tenant Improvement Reserve (“TIR”): A former Tenant located at FREIT’s Westridge Square shopping center entered into a lease termination agreement whereby the Tenant paid FREIT, among other payments, a lump sum payment of approximately $1,035,000 in February 2004, for repairing and refurbishing space vacated by Tenant. This TIR is being held by the mortgage lender in an interest bearing escrow account held for the benefit of the mortgage lender. This TIR will be disbursed to FREIT in $250,000 increments as comparable amounts of TI’s are incurred, or in full at the earlier of when a Certificate of Occupancy is obtained and the space vacated by the Tenant is leased and re-occupied, or when the mortgage loan is fully repaid.

RESIDENTIAL SEGMENT

During most of the Current Year’s Quarter FREIT operated nine (9) multi-family apartment communities totaling 986 apartment units. During the later part of June 2006, tenants began taking occupancy at completed buildings at FREIT’s 129-unit Rockaway, NJ project, The Boulders (see discussion below). Since operations at The Boulders during the Current Year’s Quarter was immaterial, the NOI discussion below concerns FREIT’s same residential properties.

During the Current Year’s Quarter NOI increased 18.2% to $2,468,000 from $2,088,000 for the Prior Year’s Quarter. Operations during the Current Year’s Quarter raised year-to-date NOI to $6,448,000 compared to $6,472,000 for the Prior Nine Months. The favorable results at FREIT’s residential segment for the Current Year’s Quarter is a combination of higher occupancy levels, higher rents, and lower operating expenses. As a result of the continuing firming of the apartment rental markets in FREIT’s operating areas, we expect favorable operating results at our residential segment over the balance of this fiscal year.

Our residential revenue is principally composed of monthly apartment rental income. Total rental income is a factor of occupancy and monthly apartment rents. 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 $164,000 and $158,000 respectively.

Capital expenditures: Since our apartment communities were constructed more than 25 years ago, we tend to spend more in any given year on maintenance and capital improvements than may be spent on newer properties. At The Pierre, a major renovation program has been started. We intend to modernize, where required, all apartments and to modernize some of the buildings mechanical services. This renovation is expected to cost approximately $2 million and take, at least, several years to complete. These costs will be financed from operating cash flow and cash reserves. Through July 31, 2006, we expended approximately $1 milliion in capital improvements at The Pierre.

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The Boulders, Rockaway Township, NJ

Construction started in July 2005 on 129 garden apartment units on FREIT’s property in Rockaway, NJ. Development costs estimated at $17.7 million (about $14.4 million expended through July 31, 2006) are being financed from construction financing and funds available from our cash and cash equivalents. Construction will be completed by August 2006. Certificates of Occupancy for ten (of a total of eleven) buildings have been received, and tenants started taking occupancy during June 2006. As of August 25, 2006 73 units have been leased with tenants having taken occupancy of 53 units. We expect The Boulders to add to earnings, cash flow and shareholder value.

FINANCING COSTS

	Nine Months Ended					Three Months Ended
	July 31,					July 31,
	2006			2005		2006			2005
	($000)					($000)
Fixed rate mortgages
1st Mortgages
Existing	$	6,492		$	6,617	$	2,156		$	2,228
Prepaid					46		-			0
New (1)		1,055					383			-
Construction Loan (1)		402					247
2nd Mortgages
Existing		407			403		135			125
New (1)							-			-
Other		145			67		47			26
		8,501			7,133		2,968			2,379
Amortization of
mortgage costs		192			127		63			41
Prepayment fee					67		-			-

Total financing costs		8,693			7,327		3,031			2,420
Less amount capitalized		(402	)				(247	)
Financing costs expensed	$	8,291		$	7,327	$	2,784		$	2,420

(1) Mortgages not in place at beginning of fiscal 2005.

Financing Costs charged against operations for the Current Nine Months and Current Quarter increased 13.2% and 15.0% respectively, over the prior year’s reporting periods. The increases are principally attributable to The Rotunda acquisition financing costs of $1,055,000 and $383,000 respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our financial condition remains strong. Net Cash Provided By Operating Activities was $6.7 million for the Current Nine Months compared to $6.0 million for the Prior Nine Months. We expect that cash provided by operating activities will be adequate to cover mandatory debt service payments, recurring capital improvements and dividends necessary to retain qualification as a REIT (90% of taxable income).

Credit Line:

On February 4, 2005, FREIT replaced its expired $14 million line of credit with an $18 million line of credit. The line of credit is for three years but can be cancelled by the bank, at its will, at each anniversary date. Draws against the credit line can be used for general corporate purposes, for property acquisitions, construction activities, and letters of credit (see below). Draws against the credit line are secured by mortgages on FREIT’s Franklin Crossing Shopping Center, Franklin Lakes, NJ, retail space in Glen Rock, NJ, Lakewood Apartments, Lakewood, NJ, and Grandview Apartments, Hasbrouck Heights, NJ. Interest rates on draws will be set at the time of each draw for 30, 60, or 90-day periods, based on our choice of the prime rate or at 175 basis points over the 30, 60, or 90-day LIBOR rates at the time of the draws.

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In connection with its construction and development activities at Rockaway, NJ, FREIT has drawn down $1.5 million and has further utilized the credit line for the issuance of a $2 million Letter of Credit to guaranty the completion of on-site and off-site improvements that have now been substantially completed.

As described in the segment analysis above, we are building 129 apartment units in Rockaway Township, NJ. Construction costs at Rockaway are estimated at $17.7 million, with about $14.4 million expended through July 31, 2006. Construction costs are being funded from draws against a construction loan. Upon completion of construction, the construction loan will be converted to a 15-year permanent loan with additional funding to bring the permanent loan balance up to $20.7 million. We also are planning the rebuilding of the Damascus Shopping Center, in Damascus, MD, and an expansion and redevelopment of The Rotunda in Baltimore, MD. The total capital required for these projects is estimated at $13 million, and $70 million, respectively. We expect to finance these costs, in part, from construction and mortgage financing and, in part, from funds available from our cash and cash equivalents. We expect these development projects to add to revenues, income, cash flow, and shareholder value.

At July 31, 2006, FREIT’s aggregate outstanding mortgage debt was $178.6 million comprised as follows:

	$Millions		Weighted Average Interest
Fixed rate mortgages	$	142.9		6.39	%
Variable rate mortgages:
Construction loan		13.2		6.75	%
Acquisition loan		22.5		7.06	%
	$	178.6		6.50	%

These mortgages bear a weighted average interest rate of 6.5%, and an average life of approximately 6 years. These 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	$ Millions
2007	$	28.8	*
2008	$	28.4
2010	$	12.3
2013	$	8.0
2014	$	26.1
2016	$	24.7
2019	$	28.3

* Includes $13.2 million of construction financing that will be converted to long-term financing (see above).

The following table shows the estimated fair value and carrying value of our long-term debt at July 31, 2006 and October 31, 2005:

	July 31,		October 31,
(In Millions)	2006		2005

Fair Value	$	180.6	$	171.9
Carrying Value	$	178.6	$	166.9

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Fair values are estimated based on market interest rates at July 31, 2006 and October 31, 2005 and on discounted cash flow analysis. Changes in assumptions or estimation methods may significantly affect these fair value estimates.

FREIT expects to re-finance the individual mortgages with new mortgages when their terms expire. To this extent we have exposure to interest rate risk on our fixed rate debt obligations. 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 re-financing proceeds may be less than the amount of mortgage debt being retired. For example, at July 31, 2006, a 1% interest rate increase would reduce the fair value of our debt by $4.9 million, and a 1% decrease would increase the fair value by $5.2 million.

We believe that the values of our properties will be adequate to command re-financing proceeds equal to or higher than the mortgage debt to be re-financed. We continually review our debt levels to determine if additional debt can prudently be utilized for property acquisition additions to our real estate portfolio that will increase income and cash flow to shareholders.

Interest rate swap contract: To reduce interest rate volatility, FREIT uses “pay fixed, receive floating” interest rate swaps to convert floating interest rates to fixed interest rates over the terms of certain loans. We enter into these swap contracts with a counterparty that is usually a high-quality commercial bank.

In essence, we agree to pay our counterparty a fixed rate of interest on a dollar amount of notional principal (which corresponds to our mortgage debt) over a term equal to the term of the mortgage note. Our counterparty, in return, agrees to pay us a short-term rate of interest - generally LIBOR - on that same notional amount over the same term as our mortgage note.

FASB 133 requires us to mark-to-market fixed pay interest rate swaps. 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. These gains or losses will not affect our income statement. Changes in the fair value of these swap contracts will be reported in earnings of other comprehensive income and appear in the equity section of our balance sheet.

This gain or loss represents the economic consequence of liquidating our fixed rate swap contracts and replacing them with like-duration funding at current market rates, something we would likely never do.

FREIT had a variable interest rate mortgage securing its Patchogue, NY property. To reduce interest rate fluctuations FREIT, entered into an interest rate swap contract. This rate swap contract effectively converted variable interest rate payments to fixed interest rate payments. The contract was initially based on a notional amount of approximately $6,769,000 ($6,174,000 at July 31, 2006). FREIT has the following derivative-related risks with its swap contract: 1) early termination risk, and 2) counterparty credit risk.

Early Termination Risk: If FREIT wants to terminate its swap contract before maturity, it has to 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 swap’s parties. If current variable interest rates are below FREIT’s fixed interest rate payments, this could be costly. Conversely, if interest rates rise above FREIT’s fixed interest payments and FREIT wished early termination, FREIT would realize a gain on termination. At July 31, 2006, FREIT’s swap contract was in the money. If FREIT had terminated its contract at that date, it would have realized a gain of about $122,000. This amount has been included as an asset in FREIT’s balance sheet as at July 31, 2006, and the change (gain or loss) between reporting periods included in comprehensive income.

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

FUNDS FROM OPERATIONS (“FFO”):

Many consider FFO as the standard measurement of a REIT’s performance. We compute FFO as follows:

	Nine Months Ended						Three Months Ended
	July 31,						July 31,
	2006			2005			2006			2005
	(In thousands of dollars, except per share amounts)
Net income	$	3,976		$	3,635		$	1,613		$	1,226
Depreciation		3,466			3,138			1,199			1,053
Amortization of deferred mortgage costs		197			127			63			41
Mortgage prepayment penalty					67
Deferred rents - straight-lining		(250	)		(227	)		(79	)		(77	)
Amortization of acquired above and below market value leases		(271	)					(69	)
Capital improvements- Apartments		(942	)		(650	)		(484	)		(221	)
Minority interest:
Equity in earnings of affiliates		432			493			225			161
Distributions to minority interest		(420	)		(558	)		(60	)		(271	)
Funds From Operations	$	6,188		$	6,025		$	2,408		$	1,912

*Per Share - Basic*	$	*0.95*		$	*0.94*		$	*0.37*		$	*0.30*
*Per Share - Diluted*	$	*0.91*		$	*0.89*		$	*0.35*		$	*0.28*

Weighted Average Shares outstanding:
Basic		6,530			6,430			6,548			6,436
Diluted		6,787			6,750			6,888			6,870

FFO does not represent cash generated from operating activities in accordance with accounting principles generally accepted in the United States of America, 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 by certain other REITs may vary materially from that of FREIT’s, and therefore FREIT’s FFO and the FFO of other REITs may not be directly comparable.

INFLATION

Inflation can impact the financial performance of FREIT in various ways. Our 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 a one-year term, which may allow us to seek increased rents as leases renew or when new tenants are obtained.

Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Liquidity and Capital Resources” above.

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Item 4: CONTROLS AND PROCEDURES

At the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of FREIT’s disclosure controls and procedures. This evaluation was carried out under the supervision and with participation of FREIT’s management, including FREIT’s Chairman and Chief Executive Officer and Chief Financial Officer, who concluded that FREIT’s disclosure controls and procedures were effective. There has been no change in FREIT’s internal control over financial reporting during the three months ended July 31, 2006 that has materially affected, or is reasonably likely to materially affect, FREIT’s internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in FREIT’s reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in FREIT’s reports filed under the Exchange Act is accumulated and communicated to management, including FREIT’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Part II Other Information

Item 6. Exhibits

Reference is made to the Exhibit index below.

Exhibit Index

Exhibit 31.1 Section 302 Certification of Chief Executive Officer

Exhibit 31.2 Section 302 Certification of Chief Financial Officer

Exhibit 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Exhibit 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST REAL ESTATE INVESTMENT
	TRUST OF NEW JERSEY
	(Registrant)

Date: September 11, 2006
	/s/ Robert S. Hekemian

	(Signature)
	Robert S. Hekemian
	Chairman of the Board and Chief Executive
	Officer


	/s/ Donald W. Barney

	(Signature)
	Donald W. Barney
	President, Treasurer and Chief Financial Officer
	(Principal Financial/Accounting Officer)

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