Management agreement, fees and transactions with related party

9 Months Ended

Jul. 31, 2011

Management agreement, fees and transactions with related party [Abstract]

Management agreement, fees and transactions with related party

Note 6 - Management agreement, fees and transactions with related party:

Hekemian & Co., Inc. (“Hekemian”) currently manages all the properties owned by FREIT, except for The Rotunda, a mixed-use office and retail facility located in Baltimore, Maryland, which is managed by an independent third party management company. The management agreement with Hekemian, effective November 1, 2001, requires the payment of management fees equal to a percentage of rents collected. Such fees were approximately $1,344,000 and $1,336,000 for the nine-months ended July 31, 2011 and 2010, respectively. For the three-month period ended July 31, 2011 and 2010, such fees were approximately $449,000 and $438,000, respectively. In addition, the management agreement provides for the payment to Hekemian of leasing commissions, as well as the reimbursement of operating expenses incurred on behalf of FREIT. Such fees amounted to approximately $239,000 and $268,000 for the nine-months ended July 31, 2011 and 2010, respectively, and $83,000 and $88,000 for the three-months ended July 31, 2011 and 2010, respectively. The management agreement expires on October 31, 2011, and is automatically renewed for periods of two years unless either party gives notice of non-renewal.

FREIT also uses the resources of the Hekemian insurance department to secure various insurance coverages for its properties and subsidiaries. Hekemian is paid a commission for these services. Such commissions amounted to approximately $85,000 and $101,000 for the nine-months ended July 31, 2011 and 2010, respectively, and $19,000 and $37,000 for the three-months ended July 31, 2011 and 2010, respectively.

From time to time, FREIT engages Hekemian to provide certain additional services, such as consulting services related to development and financing activities of FREIT. Separate fee arrangements are negotiated between Hekemian and FREIT with respect to such additional services. No such fees were incurred to Hekemian for the nine-months ended July 31, 2011 and 2010.

Mr. Robert S. Hekemian, Chairman of the Board, Chief Executive Officer and a Trustee of FREIT, is the Chairman of the Board and Chief Executive Officer of Hekemian. Mr. Robert S. Hekemian, Jr, a Trustee of FREIT, is the President of Hekemian. Trustee fee expense (including interest) incurred by FREIT for the nine-months ended July 31, 2011 and July 31, 2010 was approximately $368,000 and $338,000, respectively, for Mr. Robert S. Hekemian, and $28,000 and $26,000, respectively, for Mr. Robert S. Hekemian, Jr.