Termination of Purchase and Sale Agreement

9 Months Ended

Jul. 31, 2024

Termination of Purchase And Sale Agreement [Abstract]

Termination of Purchase and Sale Agreement

Note 6 – Termination of Purchase and Sale Agreement:

As FREIT previously reported, on June 26, 2024, a settlement was reached between FREIT and certain of its affiliates and Sinatra and Kushner Companies, LLC, (the “Kushner Parties”) regarding previously reported ongoing litigation. The litigation involved a dispute between the parties related to a purchase and sale agreement entered into on January 14, 2020. All settlement payments have been received by FREIT and its affiliates.

Legal costs attributed to the legal proceeding between FREIT and certain of its affiliates and Sinatra have been incurred in the amount of approximately $881,000 and $369,000 for the nine and three months ended July 31, 2024, respectively, and $798,000 and $407,000 for the nine and three months ended July 31, 2023, respectively, and are included in operating expenses on the condensed consolidated statements of operations.

The litigation settlement, offset by certain adjustments and additional expenses, was included as income in “Litigation settlement, net of fees” on the accompanying condensed consolidated statements of operations for the nine and three months ended July 31, 2024. The settlement triggered the following items:

● A transaction break-up fee due to the originating third party broker of approximately $605,000 and a four-year litigation management fee of $750,000 due to Hekemian & Co., Inc.

● Reimbursement of costs related to this transaction of $166,000 due to FREIT from the Pierre TIC.

● Approximately $2.6 million, comprising $4.5 million of the gross settlement income, less litigation and certain transaction expenses totaling approximately $1.9 million, was allocated to Westwood Hills, LLC. This allocation was based on the pro-rata share of the contracted sales prices between the companies. Of the net amount, approximately $1 million is FREIT’s share based on its 40% ownership of Westwood Hills, LLC.