UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
On July 28, 2023, the Board of Directors of First Real Estate Investment Trust of New Jersey, Inc. (the “Company”) adopted a stockholder rights plan, as set forth in the Stockholder Rights Agreement, dated July 31, 2023, between the Company and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agreement”). The following description of the terms of the Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement which is included as an exhibit and is incorporated herein by reference.
Pursuant to the terms of the Rights Agreement, the Board of Directors declared a dividend distribution of one Preferred Stock Purchase Right (a “Right”) for each outstanding share of common stock, par value $0.01 per share, of the Company (the “Common Stock”) to stockholders of record as of the close of business on August 11, 2023 (the “Record Date”). In addition, one Right will automatically attach to each share of Common Stock issued between the Record Date and the Distribution Date (as hereinafter defined). Each Right entitles the registered holder thereof to purchase from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) at a cash exercise price of $95.00 per Unit (the “Exercise Price”), subject to adjustment, under certain conditions specified in the Rights Agreement and summarized below.
Initially, the Rights are not exercisable and are attached to and trade with all shares of Common Stock outstanding as of, and issued subsequent to, the Record Date. The Rights will separate from the Common Stock and will become exercisable upon the earlier of (i) the close of business on the tenth calendar day following the first public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial ownership of 10% or more of the outstanding shares of Common Stock, other than as a result of repurchases of stock by the Company or certain inadvertent actions by a stockholder (the date of said announcement being referred to as the “Stock Acquisition Date”), or (ii) the close of business on the tenth business day (or such later day as the Board of Directors may determine) following the commencement of a tender offer or exchange offer that could result upon its consummation in a person or group becoming an Acquiring Person (the earlier of such dates being herein referred to as the “Distribution Date”).
For purposes of the Rights Agreement, beneficial ownership is defined to include ownership of securities that are subject to a derivative transaction and acquired derivative securities. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Rights Agreement are excepted from such imputed beneficial ownership.
In the event that a Stock Acquisition Date occurs, proper provision will be made so that each holder of a Right (other than an Acquiring Person or its associates or affiliates, whose Rights shall become null and void) will thereafter have the right to receive upon exercise, in lieu of a number of Units of Preferred Stock, that number of shares of Common Stock of the Company (or, in certain circumstances, including if there are insufficient shares of Common Stock to permit the exercise in full of the Rights, Units of Preferred Stock, other securities, cash or property, or any combination of the foregoing) having a market value of two times the Exercise Price of the Right (such right being referred to as the “Subscription Right”). In the event that, at any time following the Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other person, and the Company is not the continuing or surviving corporation, (ii) any person consolidates with the Company, or merges with and into the Company and the Company is the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of Common Stock are changed into or exchanged for stock or other securities of any other person or cash or any other property, or (iii) 50% or more of the Company’s assets or earning power is sold, mortgaged or otherwise transferred, each holder of a Right (other than an Acquiring Person or its associates or affiliates, whose Rights shall become null and void) will thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the Exercise Price of the Right (such right being referred to as the “Merger Right”). The holder of a Right will continue to have the Merger Right whether or not such holder has exercised the Subscription Right. Rights that are or were beneficially owned by an Acquiring Person may (under certain circumstances specified in the Rights Agreement) become null and void.
The Rights may be redeemed in whole, but not in part, at a price of $0.01 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors) by the Board of Directors only until the earlier of (i) the time at which any person becomes an Acquiring Person or (ii) the expiration date of the Rights Agreement. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and thereafter the only right of the holders of Rights will be to receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its sole discretion at any time prior to the time at which any person becomes an Acquiring Person. After such time the Board of Directors may, subject to certain limitations set forth in the Rights Agreement, amend the Rights Agreement only to cure any ambiguity, defect or inconsistency, to shorten or lengthen any time period, or to make changes that do not adversely affect the interests of Rights holders (excluding the interests of an Acquiring Person or its associates or affiliates).
In the event that stockholder action is taken to elect directors of the Company such that Continuing Directors (as defined below) do not constitute a majority of the Board of Directors, Rights may not be redeemed until 180 days following the effectiveness of the election. “Continuing Director” means any director of the Company other than an Acquiring Person or affiliate or associate of an Acquiring Person who was either (a) a member of the Board of Directors of the Company on July 31, 2023, (b) nominated for his or her initial term of office by a majority of the Continuing Directors then in office, or (c) nominated for his or her initial term by a majority of the members of the Nominating Committee of the Board of Directors who were then Continuing Directors.
Until a Right is exercised, the holder will have no rights as a stockholder of the Company (beyond those as an existing stockholder), including the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Units, other securities of the Company, other consideration or for common stock of an acquiring company.
The Rights are not exercisable until the Distribution Date and will expire at the close of business on July 31, 2026, unless previously redeemed or exchanged by the Company.
Item 3.03. Material Modification to Rights of Security Holders.
The information in response to Item 1.01 is incorporated by reference in response to this Item 3.03.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In connection with the adoption of the Rights Agreement described in Item 1.01 above, the Board of Directors of the Company approved Articles Supplementary of Series A Junior Participating Cumulative Preferred Stock (the “Articles Supplementary”). The Articles Supplementary was filed with the Department of Assessments and Taxation of the State of Maryland on August 3, 2023. The Articles Supplementary is included as Exhibit 3.1 and is incorporated herein by reference. The description of the Preferred Stock in Item 1.01 is incorporated herein by reference.
Item 8.01. Other Events.
On July 31, 2023, the Company issued a press release announcing the adoption of the Rights Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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 hereunto duly authorized.
| First Real Estate Investment Trust of New Jersey, Inc. | ||||
| Date: August 3, 2023 | By: | /s/ Robert S. Hekemian, Jr. | ||
| Name: | Robert S. Hekemian, Jr. | |||
| Title: | President and Chief Executive Officer | |||
Exhibit 99.1
First Real Estate Investment Trust of New Jersey, Inc. Adopts Stockholder Rights Plan
FREIT Board Committed to Protecting Value for All Stockholders
Highlights Kushner’s Transaction Record with FREIT and Ongoing Litigation with Kushner
HACKENSACK, NJ — July 31, 2023 — First Real Estate Investment Trust of New Jersey, Inc. (“FREIT” or the “Company”) (OTCM: FREVS) today announced that its Board of Directors has unanimously adopted a stockholder rights plan (the “Rights Plan”) following evaluation and consultation with the Company’s legal and financial advisors.
The Rights Plan is similar to plans adopted by other publicly traded companies incorporated in Maryland and is intended to protect the long-term interests of FREIT stockholders and to enable them to realize the full potential value of their investment. The Rights Plan has a three-year duration and the rights will be exercisable only if any person (or any persons acting as a group) acquires 10% or more of FREIT common stock. This ownership limitation better aligns FREIT with the ownership limitation of other REITs.
The Rights Plan does not preclude the Board from considering an offer that recognizes the full value of the Company. Rather, the Rights Plan will reduce the likelihood that any entity, person or group gains control of FREIT without paying an appropriate control premium. Importantly, the Rights Plan provides the Board with adequate time to fully assess its options following its receipt of an unsolicited, non-binding expression of interest from K Corp Acquisitions LLC, a Kushner company, to acquire FREIT.
While the Board will always evaluate credible proposals to maximize stockholder value, it is mindful that Charles Kushner has proven not to be a bona fide counterparty in a prior potential transaction with FREIT. As such, the Board believes any definitive agreement with Charles Kushner would carry significant, atypical closing and additional litigation risk.
The Rights Plan will benefit FREIT stockholders by providing the Company with enough time to pursue a final outcome in the previously announced ongoing litigation with Sinatra LLC, a Kushner company, related to Kushner’s abandonment of a January 2020 definitive agreement to acquire certain of FREIT’s assets. Following the outcome of the litigation, the Board will have greater flexibility to consider a value-maximizing transaction.
Additional Details of the Rights Plan
In connection with the adoption of the Rights Plan, the Board of Directors declared a dividend distribution of one preferred stock purchase right for each outstanding share of FREIT common stock to stockholders of record as of the close of business on August 11, 2023. Initially, these rights will not be exercisable and will trade with the shares of FREIT common stock.
The Rights Plan provides several recognized stockholder protections, such as the following:
| · | Under the Rights Plan, the rights generally will become exercisable if a person or group becomes an “acquiring person” by acquiring 10% or more of the common stock of FREIT (which includes stock subject to a derivative transaction or an acquired derivative security) or if a person commences a tender offer that could result in that person becoming an “acquiring person”. |
| · | If a person becomes an “acquiring person,” each holder of a right (other than the acquiring person) would be entitled to purchase, at the then-current exercise price, such number of shares of common stock (or, subject to the terms of the Rights Plan, shares of preferred stock that are equivalent to shares of FREIT common stock) at a 50% discount. If FREIT is acquired in a merger or other business combination transaction after any such event, each holder of a right would then be entitled to purchase, at the then-current exercise price, shares of the acquiring company’s common stock at a 50% discount. The Board, at its option, may exchange on a cashless basis, each right (other than rights owned by the acquiring person that have become null and void) in whole or in part, at an exchange ratio of one share of FREIT common stock per outstanding right, subject to adjustment. |
Exhibit 99.1
| · | The Rights will expire in three years on July 31, 2026, unless the rights have been previously redeemed or exchanged by the Board of Directors in accordance with the terms of the Rights Plan. |
Under the Rights Plan, any person, entity or group that currently owns more than the triggering percentage may continue to own its shares of FREIT common stock but may not acquire any additional shares of common stock, or form a group with another owner of FREIT common stock, without triggering the Rights Plan.
Additional details about the Rights Plan will be contained in a Current Report on Form 8-K to be filed by FREIT with the Securities and Exchange Commission.
Advisors
Goldman Sachs & Co. LLC is acting as financial advisor to FREIT and Goodwin Procter LLP and Miles & Stockbridge P.C. are acting as legal counsel.
About FREIT
First Real Estate Investment Trust of New Jersey, Inc. is a publicly traded (over-the-counter – symbol FREVS) REIT organized in 1961. Its portfolio of residential and commercial properties are located in New Jersey and New York, with the largest concentration in northern New Jersey. For more information, visit: www.freitnj.com.
Forward-Looking Statements
This Company release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” “will,” “estimate,” “project,” “intend,” “believe,” “guidance,” “approximately,” “anticipate,” “may,” “should,” “seek” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. These forward-looking statements are subject to known and unknown risks and uncertainties that you should not rely on as predictions of future events. Forward-looking statements depend on assumptions, data and/or methods which may be incorrect or imprecise and we may not be able to realize them. The following risks and uncertainties, among others, could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to: industry and economic conditions; the Company’s ability to satisfy the conditions to closing and complete the proposed transaction; the Company’s dependence upon its external manager to conduct its business and achieve its investment objectives; unknown liabilities acquired in connection with acquired properties or interests in real estate-related entities; general risks affecting the real estate industry and local real estate markets (including, without limitation, the market value of the Company’s properties, potential illiquidity of the Company’s remaining real estate investments, condemnations, and potential damage from natural disasters); the financial performance of the Company’s tenants; the impact of any financial, accounting, legal or regulatory issues or litigation that may affect the Trust and its major tenants; volatility and uncertainty in the financial markets, including potential fluctuations in the consumer price index; risks associated with the Company’s failure to maintain status as a REIT under the Internal Revenue Code of 1986, as amended; and other additional risks discussed in the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2022. The Company expressly disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Media & Investor Contact
Scott Bisang / Nick Lamplough / Jack Kelleher
Collected Strategies
FREIT-IR@collectedstrategies.com
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