Annual Report for Fiscal Year Ending October 31, 2025 (Form 10-K)

ITEM 7

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

Cautionary Statement Identifying Important Factors That Could Cause FREIT's Actual Results to Differ From Those Projected in Forward Looking Statements. Readers of this discussion are advised that the discussion should be read in conjunction with the consolidated financial statements of FREIT (including related notes thereto) appearing elsewhere in this Form 10-K. Certain statements in this discussion may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect FREIT's current expectations and are based on estimates, projections, beliefs, data, methods and assumptions of management of FREIT at the time of such statements regarding future results of operations, economic performance, financial condition and achievements of FREIT, and do not relate strictly to historical or current facts. These forward-looking statements are identified through the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Although FREIT believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which may cause the actual results to differ materially from those projected. Such factors include, but are not limited to the following: general economic and business conditions, including the purchase of retail products over the Internet, which will, among other things, affect demand for rental space, the availability of prospective tenants, lease rents, the financial condition of tenants and the default rate on leases, operating and administrative expenses and the availability of financing; adverse changes in FREIT's real estate markets, including, among other things, competition with other real estate owners, competition confronted by tenants at FREIT's commercial properties, governmental actions and initiatives; environmental/safety requirements; and risks of real estate development and acquisitions. The risks with respect to the development of real estate include: increased construction costs, inability to obtain construction financing, or unfavorable terms of financing that may be available, unforeseen construction delays and the failure to complete construction within budget.

OVERVIEW

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

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

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

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

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

On October 31, 2023, FREIT exercised its right, pursuant to the loan agreement, to extend the term of its loan secured by the Westwood Plaza shopping center located in Westwood, New Jersey for one additional year from an initial maturity date of February 1, 2024 to a new maturity date of February 1, 2025. The outstanding balance of this loan as of February 1, 2024 was approximately $16,458,000, payable based on monthly installments of principal and interest of approximately $166,727, and

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

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

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

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

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

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

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

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

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

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

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

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

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

Results of Operations:

Fiscal Years Ended October 31, 2025 and 2024

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

		Years Ended October 31,
		2025				2024				Change
		(in thousands, except per share amounts)
Real estate revenues:
Commercial properties		$	7,541			$	7,777			$	(236	)
Residential properties			21,776				20,901				875
Total real estate revenues			29,317				28,678				639
Operating expenses:
Real estate operating expenses			14,250				13,745				505
General and administrative expenses			2,892				4,419				(1,527	)
Depreciation			2,965				2,981				(16	)
Total operating expenses			20,107				21,145				(1,038	)
Investment income			1,351				1,560				(209	)
Net loss on sale of Maryland properties			-				(356	)			356
Litigation settlement, net of fees			-				15,673				(15,673	)
Loss on investment in tenancy-in-common			(135	)			(170	)			35
Financing costs			(7,280	)			(7,307	)			27
Net income			3,146				16,933				(13,787	)
Net loss (income) attributable to noncontrolling interests in subsidiaries			363				(1,081	)			1,444
Net income attributable to common equity		$	3,509			$	15,852			$	(12,343	)
Earnings per share:
Basic and diluted		$	0.47			$	2.13			$	(1.66	)
Weighted average shares outstanding:
Basic			7,469				7,455
Diluted			7,469				7,459

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

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

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

NON-GAAP NET INCOME COMPONENTS
		Years Ended October 31,
		2025				2024				Change
		(In Thousands)
Income from real estate operations:
Commercial properties		$	2,446			$	2,951			$	(505	)
Residential properties			12,621				11,982				639
Total income from real estate operations			15,067				14,933				134
Financing costs:
Fixed rate mortgages			(6,821	)			(6,783	)			(38	)
Mortgage cost amortization			(459	)			(524	)			65
Total financing costs			(7,280	)			(7,307	)			27
Investment income			1,351				1,560				(209	)
General & administrative expenses:
Accounting fees			(411	)			(495	)			84
Legal and professional fees			(387	)			(1,070	)			683
Directors fees			(1,326	)			(1,328	)			2
Stock compensation expense			-				(1	)			1
Corporate expenses			(768	)			(1,525	)			757
Total general & administrative expenses			(2,892	)			(4,419	)			1,527
Depreciation			(2,965	)			(2,981	)			16
Loss on investment in tenancy-in-common			(135	)			(170	)			35
Adjusted net income			3,146				1,616				1,530
Net loss on sale of Maryland properties			-				(356	)			356
Litigation settlement, net of fees			-				15,673				(15,673	)
Net income			3,146				16,933				(13,787	)
Net loss (income) attributable to noncontrolling interests in subsidiaries			363				(1,081	)			1,444
Net income attributable to common equity		$	3,509			$	15,852			$	(12,343	)

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

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

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

SEGMENT INFORMATION

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

		Commercial																Residential																Combined
		Years Ended																Years Ended																Years Ended
		October 31,								Increase (Decrease)								October 31,								Increase (Decrease)								October 31,
		2025				2024				$				%				2025				2024				$				%				2025				2024
		(In Thousands)																(In Thousands)																(In Thousands)
Rental income		$	5,599			$	5,731			$	(132	)			-2.3%			$	21,412			$	20,578			$	834				4.1%			$	27,011			$	26,309
Reimbursements			1,878				1,903				(25	)			-1.3%				(1	)			(16	)			15				93.8%				1,877				1,887
Other			164				261				(97	)			-37.2%				365				339				26				7.7%				529				600
Total revenue			7,641				7,895				(254	)			-3.2%				21,776				20,901				875				4.2%				29,417				28,796
Operating expenses			5,095				4,826				269				5.6%				9,155				8,919				236				2.6%				14,250				13,745
Net operating income		$	2,546			$	3,069			$	(523	)			-17.0%			$	12,621			$	11,982			$	639				5.3%				15,167				15,051
Average Occupancy %			48.3%				50.9%								-2.6%				96.6%				96.1%								0.5%

	Reconciliation to consolidated net income-common equity:
	Deferred rents - straight lining			(100	)			(118	)
	Investment income			1,351				1,560
	Loss on investment in tenancy-in-common			(135	)			(170	)
	General and administrative expenses			(2,892	)			(4,419	)
	Depreciation			(2,965	)			(2,981	)
	Net loss on sale of Maryland properties			-				(356	)
	Litigation settlement, net of fees			-				15,673
	Financing costs			(7,280	)			(7,307	)
	Net income			3,146				16,933
	Net loss (income) attributable to noncontrolling interests in subsidiaries			363				(1,081	)
	Net income attributable to common equity		$	3,509			$	15,852

NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), depreciation, financing costs and other items. FREIT assesses and measures segment operating results based on NOI.

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

NOI and Same Property NOI are non-GAAP financial measures and are not measures of operating results or cash flow as measured by GAAP, and are not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

COMMERCIAL SEGMENT

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

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

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

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

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

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

RETAIL:		Number of Leases				Lease Area (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)			12				119,396			$	18.77			$	18.24				2.9%			$	-			$	0.15
Non-comparable leases			2				4,873			$	20.44				N/A				N/A			$	-			$	1.02
Total leasing activity			14				124,269

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

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

RESIDENTIAL SEGMENT

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

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

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

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

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

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

INTEREST EXPENSE INCLUDING AMORTIZATION OF DEFERRED FINANCING COSTS ("NET FINANCING COSTS")

		Years Ended October 31,
		2025				2024
		(In Thousands of Dollars)
Fixed rate mortgages (a):
1st Mortgages
Existing		$	6,821			$	6,783
New			-				-
Total gross financing costs			6,821				6,783
Amortization of mortgage costs			459				524
Total net financing costs		$	7,280			$	7,307

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

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

INVESTMENT INCOME

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

GENERAL AND ADMINISTRATIVE EXPENSES ("G&A")

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

DEPRECIATION

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

Results of Operations:

Fiscal Years Ended October 31, 2024 and 2023

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

		Years Ended October 31,
		2024				2023				Change
		(in thousands, except per share amounts)
Real estate revenues:
Commercial properties		$	7,777			$	8,689			$	(912	)
Residential properties			20,901				19,655				1,246
Total real estate revenues			28,678				28,344				334
Operating expenses:
Real estate operating expenses			13,745				13,754				(9	)
General and administrative expenses			4,419				4,243				176
Depreciation			2,981				2,944				37
Total operating expenses			21,145				20,941				204
Investment income			1,560				1,013				547
Net loss on sale of Maryland properties			(356	)			(1,003	)			647
Litigation settlement, net of fees			15,673				-				15,673
Loss on investment in tenancy-in-common			(170	)			(271	)			101
Financing costs			(7,307	)			(7,717	)			410
Net income (loss)			16,933				(575	)			17,508
Net (income) loss attributable to noncontrolling interests in subsidiaries			(1,081	)			1,335				(2,416	)
Net income attributable to common equity		$	15,852			$	760			$	15,092
Earnings per share:
Basic and diluted		$	2.13			$	0.10			$	2.03
Weighted average shares outstanding:
Basic			7,455				7,441
Diluted			7,459				7,447

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

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

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

NON-GAAP NET INCOME COMPONENTS
		Years Ended October 31,
		2024				2023				Change
		(In Thousands)
Income from real estate operations:
Commercial properties		$	2,951			$	3,609			$	(658	)
Residential properties			11,982				10,981				1,001
Total income from real estate operations			14,933				14,590				343
Financing costs:
Fixed rate mortgages			(6,783	)			(5,529	)			(1,254	)
Floating rate mortgages			-				(1,653	)			1,653
Other - Corporate interest			-				(26	)			26
Mortgage cost amortization			(524	)			(509	)			(15	)
Total financing costs			(7,307	)			(7,717	)			410
Investment income			1,560				1,013				547
General & administrative expenses:
Accounting fees			(495	)			(519	)			24
Legal and professional fees			(1,070	)			(1,133	)			63
Directors fees			(1,328	)			(1,277	)			(51	)
Stock compensation expense			(1	)			(11	)			10
Corporate expenses			(1,525	)			(1,303	)			(222	)
Total general & administrative expenses			(4,419	)			(4,243	)			(176	)
Depreciation			(2,981	)			(2,944	)			(37	)
Loss on investment in tenancy-in-common			(170	)			(271	)			101
Adjusted net income			1,616				428				1,188
Net loss on sale of Maryland properties			(356	)			(1,003	)			647
Litigation settlement, net of fees			15,673				-				15,673
Net income (loss)			16,933				(575	)			17,508
Net (income) loss attributable to noncontrolling interests in subsidiaries			(1,081	)			1,335				(2,416	)
Net income attributable to common equity		$	15,852			$	760			$	15,092

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

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

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

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

SEGMENT INFORMATION

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

		Commercial																Residential																Combined
		Years Ended																Years Ended																Years Ended
		October 31,								Increase (Decrease)								October 31,								Increase (Decrease)								October 31,
		2024				2023				$				%				2024				2023				$				%				2024				2023
		(In Thousands)																(In Thousands)																(In Thousands)
Rental income		$	5,731			$	6,319			$	(588	)			-9.3%			$	20,578			$	19,303			$	1,275				6.6%			$	26,309			$	25,622
Reimbursements			1,903				2,356				(453	)			-19.2%				(16	)			1				(17	)			-1700.0%				1,887				2,357
Other			261				114				147				128.9%				339				351				(12	)			-3.4%				600				465
Total revenue			7,895				8,789				(894	)			-10.2%				20,901				19,655				1,246				6.3%				28,796				28,444
Operating expenses			4,826				5,080				(254	)			-5.0%				8,919				8,674				245				2.8%				13,745				13,754
Net operating income		$	3,069			$	3,709			$	(640	)			-17.3%			$	11,982			$	10,981			$	1,001				9.1%				15,051				14,690
Average Occupancy %			50.9%				64.4%								-13.5%				96.1%				96.8%								-0.7%

	Reconciliation to consolidated net income-common equity:
	Deferred rents - straight lining			(118	)			(100	)
	Investment income			1,560				1,013
	Loss on investment in tenancy-in-common			(170	)			(271	)
	General and administrative expenses			(4,419	)			(4,243	)
	Depreciation			(2,981	)			(2,944	)
	Net loss on sale of Maryland properties			(356	)			(1,003	)
	Litigation settlement, net of fees			15,673				-
	Financing costs			(7,307	)			(7,717	)
	Net income (loss)			16,933				(575	)
	Net (income) loss attributable to noncontrolling interests in subsidiaries			(1,081	)			1,335
	Net income attributable to common equity		$	15,852			$	760

NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes deferred rents (straight lining), depreciation, financing costs and other items. FREIT assesses and measures segment operating results based on NOI.

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

NOI and Same Property NOI are non-GAAP financial measures and are not measures of operating results or cash flow as measured by GAAP, and are not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

COMMERCIAL SEGMENT

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

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

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

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

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

Leasing: The following table reflects leasing activity at FREIT's commercial properties for comparable leases (leases executed for spaces in which there was a tenant at some point during the previous twelve-month period) and non-comparable leases for Fiscal 2024.

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				17,164				$	28.17			$	28.43			-0.9%				$	-			$	0.68
Non-comparable leases			-				-			$	-				N/A				N/A			$	-			$	-
Total leasing activity			8				17,164

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

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

RESIDENTIAL SEGMENT

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

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

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

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

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

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

INTEREST EXPENSE INCLUDING AMORTIZATION OF DEFERRED FINANCING COSTS ("NET FINANCING COSTS")

		Years Ended October 31,
		2024				2023
		(In Thousands of Dollars)
Fixed rate mortgages (a):
1st Mortgages
Existing		$	6,783			$	5,148
New			-				381
Variable rate mortgages:
1st Mortgages
Existing			-				1,653
New			-				-
Other - Corporate interest			-				26
Total gross financing costs			6,783				7,208
Amortization of mortgage costs			524				509
Total net financing costs		$	7,307			$	7,717

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

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

INVESTMENT INCOME

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

GENERAL AND ADMINISTRATIVE EXPENSES ("G&A")

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

DEPRECIATION

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

Fiscal Year		2026	2027	2028	2029
($ in millions)
Mortgage "Balloon" Payments		$59.1 (A)	$8.6	$23.8	$26.0

Includes the following:

(A)

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

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

($ in Millions)		October 31, 2025		October 31, 2024
Fair Value		$118.4		$124.7
Carrying Value, Net		$120.8		$128.1

Fair values are estimated based on market interest rates at the end of each fiscal year and on a discounted cash flow analysis. Changes in assumptions or estimation methods may significantly affect these fair value estimates. The fair value is based on observable inputs (level 2 in the fair value hierarchy as provided by authoritative guidance).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CONTRACTUAL OBLIGATIONS-PRINCIPAL
(in thousands of dollars)
						Within				2 - 3				4 - 5
		Total				One Year				Years				Years
Long-Term Debt
Annual Amortization		$	3,779			$	1,493			$	1,771			$	515
Balloon Payments			117,521				59,125	(A)			32,405				25,991
Total Long-Term Debt		$	121,300			$	60,618			$	34,176			$	26,506

(A)

Includes the following:

(1)

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

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

INTEREST OBLIGATIONS
(in thousands of dollars)
						Within				2 - 3				4 - 5
		Total				One Year				Years				Years
Interest on Fixed Rate Debt		$	9,428			$	4,651			$	3,912			$	865

ADJUSTED FUNDS FROM OPERATIONS

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

		Years Ended October 31,
		2025				2024				2023
		(In Thousands, Except Per Share)
Funds From Operations ("FFO") (a)
Net income (loss)		$	3,146			$	16,933			$	(575	)
Depreciation of consolidated properties			2,965				2,981				2,944
Amortization of deferred leasing costs			90				123				103
Distributions to non-controlling interests			(630	)(b)			(1,620	)(c)			(240	)(d)
Net loss on sale of Maryland properties			-				356				1,003
Litigation settlement, net of fees			-				(15,673	)			-
Adjustment to loss in investment in tenancy-in-common for depreciation			1,476				1,453				1,438
FFO		$	7,047			$	4,553			$	4,673
Per Share - Basic and Diluted		$	0.94			$	0.61			$	0.63
(a) As prescribed by NAREIT. (b) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $0.2 million related to the sale of the Rotunda and Damascus properties located in Maryland in a prior year. See Note 2 to FREIT's consolidated financial statements for further details. (c) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $0.6 million related to the sale of the Rotunda property located in Maryland in a prior year. See Note 2 to FREIT's consolidated financial statements for further details. (d) FFO excludes the additional distribution of proceeds to non-controlling interests in the amount of approximately $3.3 million related to the sale of the Damascus and Rotunda properties located in Maryland in a prior year. See Note 2 to FREIT's consolidated financial statements for further details.
Adjusted Funds From Operations ("AFFO")
FFO		$	7,047			$	4,553			$	4,673
Deferred rents (Straight lining)			100				118				100
Capital Improvements - Apartments			(502	)			(1,154	)			(532	)
AFFO		$	6,645			$	3,517			$	4,241
Per Share - Basic and Diluted		$	0.89			$	0.47			$	0.57
Weighted Average Shares Outstanding:
Basic			7,469				7,455				7,441
Diluted			7,469				7,459				7,447

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

DISTRIBUTIONS TO STOCKHOLDERS

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

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

		Fiscal Years Ended October 31,
		2025				2024				2023
First Quarter		$	0.08			$	0.05			$	0.05
Second Quarter		$	0.08			$	0.05			$	0.05
Third Quarter		$	0.10			$	0.05			$	0.30
Fourth Quarter		$	0.10			$	0.70			$	0.05
Total For Year		$	0.36			$	0.85			$	0.45

						(in thousands of dollars)																Dividends
Fiscal		Per				Total				Ordinary				Capital Gain				Taxable				as a % of
Year		Share				Dividends				Income-Tax Basis				Income-Tax Basis				Income				Taxable Income
2025		$	0.36			$	2,690			$	2,690	*		$	-	*		$	2,690	*		100.0%
2024		$	0.85			$	6,343			$	6,045			$	298			$	6,343			100.0%
2023		$	0.45			$	3,520			$	-			$	928			$	928			379.3%
*Estimated

INFLATION

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