FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, INC. (FREVS) stock intrinsic value fair value estimate & owner earnings analysis

FREIT (First Real Estate Investment Trust of New Jersey) owns apartment communities and a handful of shopping centers, mostly in northern and central New Jersey plus one apartment community in Middletown, New York. About 74% of rental revenue comes from apartments (FY2025: $21.8M residential vs $7.6M commercial), managed by the related company Hekemian & Co. The shares trade over the counter and only sporadically. WHAT CHANGED SINCE OUR LAST ANALYSIS. Our previous estimate ($3.85 / $7.50 / $11.30) was built with a much higher discount rate and did not reflect the company's decision to wind itself up. The Board approved a plan of voluntary liquidation on May 12, 2026, with a stockholder vote scheduled for September 29, 2026 (the outcome was not known when we finished). Franklin Crossing shopping center was sold on July 8, 2026 to an affiliate of Regency Centers for $27.0M (a $19.8M accounting gain), and Westwood Plaza shopping center is under contract to the same buyer for $28.8M, expected to close in early 2027 with no financing condition. The company has published its own estimate of $24.44 to $30.03 per share from a full liquidation. We did not adopt it: the proxy does not disclose the property-by-property prices behind it, and only these two sales are actually contracted. We value only what is evidenced. If the remaining apartments sell above their income value, shareholders would do better than our base case. HOW WE MEASURED EARNINGS. We use the cash the business generates, less working-capital swings, less stock compensation (director stock awards are treated as pay), less the capital spending needed to maintain the buildings (capital improvements and leasing costs). Fiscal 2024 is excluded from the anchor because it includes roughly $16.9M net from the June 2024 legal settlement over a terminated 2020 sale agreement; without it, that year's cash generation was about $0.31 per share after maintenance spending. Treasury-bill accretion ($0.8M in FY2025) is left out of earnings because we count the Treasuries as cash. Before paying lenders, the business generated $1.31 (FY2023), $1.22 (FY2024 excluding the settlement) and $1.67 (FY2025) per share. We take the median, $1.31, and deduct about $0.11 for the share of cash paid to outside partners in partly owned properties (about $0.8M a year). Growth check: the latest year rose 37% from the normalized prior year, but the base case assumes 0% growth from year 1 and does not extrapolate that rise; we can point to no specific dated reason it should repeat. Recent nine-month cash from operations was $3.4M against $3.9M a year earlier, so the level is not stronger than the anchor. Selling Franklin Crossing and Westwood Plaza removes income the anchor includes. The filing does not give income by property, so we estimate about $2.0M a year for the two together (Franklin Crossing: 96.8% leased at roughly $23 per sq ft on 87,659 sq ft; Westwood Plaza: 29.1% leased after Kmart left in 2023). This estimate could not be reconciled to a reported figure. Franklin's $27.0M price is roughly a 6% yield on that income, so it added no premium to income value. Westwood's $28.8M is far above what its income would support, and that is the one sale premium we credit. BASE CASE ($9.82). The remaining portfolio yields about $0.93 per share a year before lenders, flat for the long run. We credit no growth: the apartments have raised rents in each of the last two years (residential revenue +6% in FY2024, +4% in FY2025), but two years is not the many-year record we require. At 6%, the remaining portfolio is worth $15.57 per share; Westwood Plaza adds $3.55 after about 5.5% costs (Franklin's gain implies costs and other charges near that level); liquidation friction subtracts $1.38 ($0.76 for higher administrative costs, which rose $752K in the quarter ended July 2026 against the year-earlier quarter and are assumed for eight quarters, plus 4% selling costs). The business is worth about $17.75 per share, it owes $7.93 net, leaving $9.82. NET DEBT. Mortgages were $114.2M at July 31, 2026 ($121.3M at October 2025, weighted rate 5.34%, average life about 1.6 years). We subtract cash above $3M of operating needs ($13.0M) and $41.9M of Treasuries, giving net debt of $59.3M, or $7.93 per share. The blended rate is close to 6%, so we make no cost-of-debt adjustment. Maturities that matter: the $25M Preakness loan matured August 1, 2025 and has been on short extensions with ConnectOne Bank; the River Edge loan matures May 2027; the Red Bank loan December 2027; the 3.54% Berdan Court loan September 2029. BEAR CASE ($3.18). Named risks: the Westwood contract does not close (customary conditions remain) and the property stays 29.1% leased; Preakness (44.7% leased, revenue down about $350K in FY2025) loses another $350K a year for three more years; earnings sit at the weaker FY2024 level ($1.22 before lenders); and the liquidation costs above are incurred. Business value is about $11.11 per share, it owes $7.93, leaving $3.18. Cash flow before lenders is about $5.5M a year against roughly $4.4M of interest after netting the income on the Treasury holdings, so the case can carry its debt. BULL CASE ($22.93). The latest year's level ($1.67 before lenders) holds, apartment rents keep growing at 3% a year for ten years (below the last two years' pace), the Westwood sale closes, and there are no liquidation costs. Business value is about $30.86 per share, it owes $7.93, leaving $22.93. We left out any sale premium on unsold properties, and any recovery in commercial occupancy, because nothing contracted supports them. WHAT WOULD MAKE US WRONG. On the upside, buyers of the remaining apartments paying materially more than a roughly 6% yield. On the downside, tenant losses at Preakness or difficulty refinancing the near-term mortgages. The shares are thinly traded and the manager is a related party.