J.W. Mays, Inc. Form 10-K Summary
Business context and reporting period
J.W. Mays, Inc. is a New York-based commercial real estate company that discontinued its department store operations in 1989 and now primarily leases and operates commercial properties. The fiscal year ended July 31, 2013. The Company had 29 employees, no foreign operations, and approximately 1,350 shareholders of record as of September 6, 2013.
The portfolio includes properties in Brooklyn, Jamaica, Fishkill, Levittown, and Massapequa, New York, and Circleville, Ohio. Properties total approximately 1.45 million square feet based on the locations and square-footage figures disclosed in the filing. Several properties are subject to long-term leases, some extending to 2073.
Financial metrics, liquidity, and capital structure
- The filing incorporates the consolidated financial statements and management’s discussion from the 2013 Annual Report to Shareholders, but the provided filing text does not include clear values for total revenue, net income, operating income, earnings per share, cash flow, current assets, or current liabilities.
- Fixed-rate debt was $6.6 million at July 31, 2013. The Company stated that this debt does not expose it to market risk from changing interest rates, and it does not use derivative financial instruments.
- Real estate and improvements had a gross carrying amount of $78.5 million and accumulated depreciation of $33.1 million at July 31, 2013. The Company reported $1.6 million of depreciation expense for fiscal 2013.
- Fiscal 2013 investment in real estate increased by $3.2 million for improvements, partly offset by $435,891 of retirements.
- The Company financed disclosed construction and brokerage expenditures through operating funds. The filing text does not provide a clear year-end cash balance or liquidity ratio.
- No dividends were declared and no common shares were repurchased during fiscal 2013 or fiscal 2012.
Material changes versus the prior comparable period
- Fiscal 2013 property improvements of $3.2 million were substantially higher than the $1.1 million reported for fiscal 2012.
- At the Jowein Building, a 56,547-square-foot tenant and a 22,000-square-foot tenant vacated in January 2013. The Company signed replacement leases for 41,385 square feet and 22,000 square feet; management stated that the replacement rents would more than offset the prior rents on a per-square-foot basis. Related construction and brokerage costs totaled approximately $1.9 million.
- At the Nine Bond Street property, the Company entered into a lease for 10,000 square feet of office space. Construction costs were expected to be approximately $1.2 million, with brokerage commissions of $247,830 and relocation costs of $556,868. Occupancy was expected in late 2013, with rent beginning in early 2014.
- A 7,401-square-foot retail tenant at Nine Bond Street notified the Company that it would vacate. The estimated annual rental-income loss is approximately $430,000, and the Company is litigating to evict the tenant.
- At the Jamaica property, two retail tenants with leases expiring in August and September 2013 were not expected to renew, resulting in disclosed annual rental-income losses of approximately $240,000 and $300,000.
- Occupancy at the Brooklyn Bond Street property was 74.73% at July 31, 2013, compared with 72.28% at July 31, 2012. Occupancy at the Jowein Building declined to 61.45% from 76.38%, while Jamaica occupancy declined modestly to 80.30% from 81.14%.
- The Company exercised 30-year renewal options for certain Brooklyn leases, extending expiration dates to 2043.
Guidance, outlook, commentary, risks, and unusual items
- The Company plans to continue negotiating lease renewals, renovating vacant space when supported by future leasing activity, and using brokers to re-lease vacated premises. No formal financial guidance was provided.
- Fishkill had approximately 203,000 square feet available for lease, and Circleville had approximately 55,000 square feet available. Management provided no assurance regarding the timing or occurrence of future leases or renovations.
- Unbilled receivables of $240,258 at Nine Bond Street and $84,278 at Jamaica were expensed during fiscal 2013 in connection with tenant matters.
- Major risks include tenant defaults or vacancies, economic downturns, rising property fit-out costs, limited financing availability, environmental remediation obligations, insurance availability and cost, regulation, climate change, cybersecurity, and interest-rate volatility affecting investments.
- The controlling shareholder group may have voting interests that differ from those of other shareholders. The largest shareholder also does business with the Company, and the Company and that shareholder share certain management personnel, including the Chief Executive Officer.
- Various lawsuits and claims were pending; management believed they would 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, but the cost could not be determined.
- Management concluded that disclosure controls and internal control over financial reporting were effective as of July 31, 2013, with no reported significant deficiencies or material weaknesses. The independent auditor did not provide an internal-control attestation because the Company qualified as a smaller reporting company.
Key facts investors should verify
- Obtain the incorporated 2013 Annual Report financial statements to verify revenue, net income, margins, cash flow, cash balances, debt maturities, and liquidity.
- Assess the effect of the Nine Bond Street vacancy and the two Jamaica nonrenewals on future rental income and occupancy.
- Verify the timing, costs, and expected rent commencement for the Nine Bond Street office project and the completed Jowein Building replacement leases.
- Review tenant concentration, lease expirations, renewal options, and exposure to major tenants.
- Review related-party transactions and governance safeguards involving the controlling shareholder and shared management.
- Evaluate potential environmental liabilities, pending litigation, the 25 Elm Place condominium contingency, and the availability of financing for future property improvements.