J.W. Mays, Inc. Form 10-K Summary
Business Context and Reporting Period
J.W. Mays, Inc. operates commercial real estate properties in New York and Ohio. The filing covers the fiscal year ended July 31, 2020, and was filed October 8, 2020. The company had 29 employees and approximately 2,015,780 shares outstanding as of September 7, 2020.
The company operates or leases approximately 1.4 million square feet across eight principal properties, including retail, office, warehouse, distribution, restaurant, and municipal-garage facilities. The company is a smaller reporting company and incorporates its 2020 Annual Report to Shareholders for detailed financial statements and management’s discussion.
Financial Metrics, Liquidity, and Capital Structure
- The filing text provided does not include clear consolidated values for revenue, operating income, net income, earnings per share, operating cash flow, total assets, liabilities, debt, cash, or liquidity.
- The company owns or has ownership interests in several properties subject to mortgages, but the filing text does not provide a clear mortgage balance, maturity schedule, interest rate, or available borrowing capacity.
- Federal tax-basis net carrying values disclosed for selected properties include approximately $9.5 million for Fulton Street, $2.9 million for the Jowein building, $4.7 million for Jamaica, $5.0 million for Fishkill, and $0.7 million for Circleville.
- Annual real estate taxes disclosed for the properties range from approximately $38,000 at Circleville to $2.3 million at Fulton Street.
- Independent auditor fees totaled $241,810 in fiscal 2020, compared with $234,205 in fiscal 2019.
Material Changes Versus the Prior Comparable Period
- COVID-19 caused increased late payments from March through July 2020, higher allowances for credit losses, and limited rent abatements and deferrals. The company also experienced volatility in equity-investment valuations.
- Fulton Street occupancy decreased to 70.07% from 75.65% in fiscal 2019 after a retail tenant surrendered approximately 85,000 square feet. The expected annual rental-income reduction is approximately $2.35 million.
- Jowein building occupancy decreased to 73.22% from 85.14% after tenants occupying approximately 23,603 square feet and 5,500 square feet vacated. The disclosed annual rent losses are approximately $814,000 and $165,000, respectively.
- Fishkill occupancy declined to 21.48% from 45.42% after a 90,000-square-foot retail tenant vacated in January 2020. Approximately 156,000 square feet remained available for lease at July 31, 2020.
- Circleville occupancy increased to 99.30% from 99.10%, while Massapequa occupancy remained 85.01% and Levittown occupancy remained 100%.
- A 47,000-square-foot Fishkill lease began occupancy in June 2020, with rent commencing in September 2020. A 20,000-square-foot Massapequa lease also began rent payments in September 2020.
- The company extended several property leases, including leases at Fulton Street, Jamaica, Jowein, and Circleville.
Guidance, Outlook, Risks, and Unusual Items
- Management did not provide quantitative earnings, revenue, occupancy, or cash-flow guidance in the filing text.
- Management stated that the full impact of COVID-19 remained unknown and highly unpredictable. Prolonged economic disruption could reduce rental revenue, increase tenant credit deterioration, depress property demand, and reduce investment values.
- Many expenses are relatively fixed and may not decline proportionally with revenue. Historical collections and third- and fourth-quarter past-due activity may not predict future results.
- Key real estate risks include vacancies, tenant defaults, online retail competition, rising property renovation and fit-out costs, environmental liabilities, insurance availability, financing availability, interest-rate volatility, cybersecurity, climate change, and regulatory requirements.
- A controlling shareholder group may exercise voting influence that does not align with unaffiliated shareholders. The largest shareholder also conducts business with the company, and certain management personnel serve both entities.
- There are various lawsuits and claims pending, but management believes their resolution will not materially adversely affect the consolidated financial statements. A potential obligation to create a condominium unit for a loading dock at 25 Elm Place could arise if the property is sold, transferred, disposed of, or demolished; the cost cannot currently be determined.
- The company reported effective disclosure controls and internal control over financial reporting, with no identified significant deficiencies or material weaknesses. The independent auditor was not required to provide an internal-control attestation because of the company’s smaller reporting company status.
- Four executive employment agreements were renewed effective August 1, 2020 through July 31, 2023.
Important Facts for Investors to Verify
- Review the incorporated 2020 Annual Report to Shareholders for consolidated revenue, net income, margins, operating cash flow, cash, debt, mortgage terms, and liquidity.
- Assess the financial impact of the Fulton Street, Jowein, and Fishkill vacancies and the company’s ability to re-lease available space.
- Verify COVID-19-related rent collections, receivables, allowances for credit losses, abatements, deferrals, and subsequent collections.
- Review tenant concentration, particularly tenants representing more than 10% of rentable space or rental income, and upcoming lease expirations.
- Examine related-party leases and transactions involving the controlling shareholder and affiliated landlords.
- Review property carrying values, mortgage obligations, environmental matters, pending claims, and the potential 25 Elm Place condominium obligation.
- Confirm post-year-end occupancy, rent commencement, leasing activity, and any changes in property valuations or investment results.