J.W. Mays, Inc. — Fiscal 2021 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 is an annual report for the fiscal year ended July 31, 2021, rather than a standalone fourth-quarter report. The company had 29 employees and approximately 2.0 million square feet of commercial property and leasehold interests across eight principal locations.
The company’s consolidated financial statements and management’s discussion are incorporated by reference from its 2021 Annual Report to Shareholders. The supplied filing text does not provide the underlying income statement, balance sheet, or cash flow amounts.
Financial Metrics and Operating Results
- Revenue and profit: The filing text does not provide clear fiscal 2021 or fiscal 2020 amounts for rental revenue, operating income, net income, or earnings per share.
- Cash flow and liquidity: Cash provided by operating activities, cash balances, working capital, and liquidity measures are not provided in the supplied text.
- Margins: Operating, net, and property-level margins are not provided.
- Debt and mortgages: The filing states that the Brooklyn Fulton Street property and the Fishkill property are subject to mortgages, but the supplied text does not provide principal balances, interest rates, maturities, or covenant information.
- Occupancy: Reported July 31, 2021 occupancy was 62.31% at Fulton Street, 72.54% at the Jowein building, 80.41% in Jamaica, 20.42% in Fishkill, 100% in Levittown, 93.75% in Massapequa, and 99.30% in Circleville.
- Property rental base: Listed annual rent for specified leases totaled approximately $8.0 million at Fulton Street, $3.8 million at Jowein, $5.5 million in Jamaica, $0.9 million at Fishkill, $0.4 million at Levittown, $0.8 million at Massapequa, and $0.7 million at Circleville. These figures are property lease schedules and are not presented as consolidated revenue.
- Equity: The company had 2,015,780 common shares outstanding as of September 6, 2021. No shares were repurchased during the fourth quarter of fiscal 2021.
Material Changes Versus the Prior Comparable Period
- COVID-19 contributed to increased late payments from tenants from March 2020 through July 2021. The company increased its allowance for credit losses and granted rent abatements or deferrals in limited circumstances.
- Occupancy declined or remained low at several properties, most notably Fishkill at 20.42% and Fulton Street at 62.31%. Fishkill had approximately 156,000 square feet available for lease.
- Massapequa occupancy increased to 93.75%, supported in part by a 20,000-square-foot fast-food lease that began generating rent in September 2020.
- The company entered into or commenced several leases, including 23,000 square feet of office space at Jowein, 5,500 square feet of retail space at Jowein, and additional retail and office leases at Fulton Street.
- The company expects approximately $500,000 of renovations and $979,000 of brokerage commissions for the 23,000-square-foot Jowein office lease; occupancy and rental payments were anticipated in late 2021.
- Accounting fees declined to $226,000 in fiscal 2021 from $241,810 in fiscal 2020, primarily because tax fees decreased to $45,000 from $66,310.
Outlook, Risks, Contingencies, and Unusual Items
- Outlook: The filing provides no quantified earnings, revenue, occupancy, or capital-spending guidance. Management states that the continuing effects of COVID-19 are unknown and highly unpredictable.
- Real estate risks: Risks include weak commercial real estate demand, online retail competition, remote work, tenant defaults, lease expirations, property renovation costs, financing availability, insurance costs, environmental liabilities, and economic downturns.
- Concentration: Certain tenants occupy more than 10% of rentable space at Fulton Street and Jamaica, creating tenant-concentration exposure.
- Related-party matters: The Jamaica property is leased from an affiliated company principally owned by a company director. The company and its largest shareholder share certain management personnel and the same chief executive officer, creating potential conflicts of interest.
- Investments: Excess cash may be invested in equity and other investments, exposing results to interest-rate, market, legal, financial, and regulatory volatility.
- Legal contingencies: Various lawsuits and claims are pending, but management believes they will not materially affect the consolidated financial statements. If the company sells, transfers, disposes of, or demolishes 25 Elm Place, it may be required to create a condominium unit for a loading dock; the cost and obligation cannot currently be determined.
- Controls: Management concluded that disclosure controls and internal control over financial reporting were effective as of July 31, 2021. No material weaknesses or significant deficiencies were reported. The independent auditor did not provide an internal-control attestation because the company qualifies as a smaller reporting company.
Facts an Investor Should Verify
- Verify fiscal 2021 and fiscal 2020 consolidated revenue, net income, operating cash flow, cash, debt, mortgage maturities, and shareholders’ equity in the incorporated Annual Report to Shareholders.
- Review the allowance for credit losses, rent abatements, rent deferrals, and tenant receivables associated with COVID-19.
- Assess leasing and capital requirements for substantially vacant Fishkill space and other underoccupied properties.
- Review upcoming lease expirations, particularly those in 2022 and 2023, and the company’s tenant-concentration exposure.
- Examine the terms and governance controls for the Jamaica related-party lease and other relationships with the controlling shareholder group.
- Confirm the status and potential cost of the 25 Elm Place condominium-unit contingency and other pending claims.