Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-K (Annual Report)
Period Ended: July 31, 2007
Business Overview: The Company operates a portfolio of commercial real estate properties in New York and Ohio. It discontinued its department store business in 1989 and focuses on leasing real estate. The Company employs approximately 29 people, with a union contract covering 24% of employees expiring November 30, 2007.
Key Financial Metrics
Note: Specific revenue, net income, and cash flow figures for the fiscal year are incorporated by reference from the Annual Report to Shareholders and are not explicitly detailed in the provided text. The following metrics are derived from the filing text:
- Real Estate Assets: Total gross carrying cost of real estate and improvements was $76,568,695 as of July 31, 2007.
- Accumulated Depreciation: $31,790,146 as of July 31, 2007.
- Debt Structure:
- Fixed-rate debt: $7,149,227
- Variable-rate debt: $6,269,441
- Total Debt: $13,418,668
- Market Capitalization: Approximately $9,055,268 (aggregate market value of voting stock held by non-affiliates as of January 31, 2007).
- Shares Outstanding: 2,015,780 as of September 14, 2007.
- Dividends: No dividends were declared in fiscal years 2007 or 2006.
Material Changes and Property Status
- Occupancy Trends:
- Brooklyn (Bond Street): Occupancy rate increased to 61.50% in 2007 from 56.68% in 2006. Approximately 110,000 sq. ft. remains available.
- Brooklyn (Jowein Building): Occupancy rate increased to 50.75% in 2007 from 49.20% in 2006. Approximately 150,000 sq. ft. remains available.
- Jamaica, NY: Occupancy rate decreased to 66.03% in 2007 from 71.98% in 2006.
- Fishkill, NY: Occupancy dropped to 0% (indicated by dash) in 2007 from 4.09% in 2006. Approximately 203,000 sq. ft. is available.
- Circleville, OH: Occupancy dropped significantly to 38.79% in 2007 from 55.77% in 2006. Approximately 118,000 sq. ft. is available.
- Capital Improvements: The Company added $603,222 in improvements to real estate during the fiscal year. Plans include adding two elevators to the Bond Street lobby (completion expected in fiscal 2008) and renovating vacant space for office use across multiple properties.
- Lease Expirations: Significant lease expirations include the Jowein Building leases (April 30, 2010) and the Massapequa sub-leases (April/May 2009).
Outlook, Risks, and Contingencies
Management Commentary and Outlook
Management intends to renew the union contract on a timely basis. The Company is actively seeking to lease vacant space, particularly in Fishkill and Circleville, though no assurances are given regarding timing. The Company does not use derivative financial instruments to hedge market risk.
Risk Factors
- Ownership Structure: A controlling shareholder group exists, which may create conflicts of interest, though the Board is majority independent.
- Real Estate Operations: Risks include rising costs to "fit up" properties, environmental liabilities from older buildings, and the loss of major tenants. The Company mitigates tenant concentration by leasing to multiple tenants where possible.
- Interest Rate Risk: A 100 basis point increase in interest rates on variable-rate debt would decrease net income by approximately $62,694.
- Legal Proceedings: The Company is involved in a lawsuit regarding a termination notice for a portion of the Jowein building. A preliminary injunction was granted on May 16, 2007, preventing eviction during the pendency of the action. Management cannot predict the outcome or potential costs.
Investor Verification Checklist
- Financial Statements: Verify specific Revenue, Net Income, and Cash Flow figures in the "Annual Report to Shareholders" (incorporated by reference), as these are not explicitly stated in the 10-K text provided.
- Occupancy Rates: Confirm the impact of the significant vacancy in the Fishkill and Circleville properties on future rental income.
- Legal Contingency: Monitor the status of the lawsuit regarding the Jowein building lease termination and potential financial exposure.
- Debt Maturity: Review the terms of the $13.4 million in debt, specifically the variable-rate portion, to assess sensitivity to interest rate hikes.
- Union Contract: Verify the renewal status of the union contract expiring November 30, 2007.