SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



For Quarter Ended July 31, 1998                      Commission File No. 2-27018


                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
             (exact name of registrant as specified in its charter)


         New Jersey                                               22-1697095
-------------------------------                              -------------------
(State or other Jurisdiction of                              (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


          505 Main Street, P.O. Box 667, Hackensack, New Jersey 07602
          -----------------------------------------------------------
              (Address of principal executive offices) (Zip Code)


        Registrant's telephone number, including area code 201-488-6400


--------------------------------------------------------------------------------
Former name,former address and former fiscal year, if changed since last report.


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports);  and (2) has been  subject to such filing
requirements for the past 90 days.

                            Yes [ X ]     No [   ]
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                                      INDEX


Part I:  Financial Information

         Item 1:  Financial Statements

                  a.)    Balance Sheets for July 31, 1998 and October 31, 1997;

                  b.)    Statements  of Income and  Undistributed  Earnings  For
                         Nine and Three Months Ended July 31, 1998 and 1997;

                  c.)    Statements of Cash Flows for Nine Months Ended July 31,
                         1998 and 1997;

         Item 2: Management's Discussion and Analysis of Results of Operations 
                 and Financial Condition

Part II:

         Item 4. Submission of Matters to a Vote of Security Holders

         Item 5. Other Information

         Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Disclosure Concerning Forward-Looking Statements

         Certain statements in the "Management's  Discussion and Analysis of the
Results of Operation and Financial  Condition",  and certain of the Notes to the
Registrant's Financial Statements,  in particular Note 6, contain or may contain
information  that is  forward-looking  within the  meaning of Section 27A of the
Securities Act of 1933, as amended (the  "Securities  Act"),  and Section 21E of
the  Securities  Exchange Act of 1934,  as amended  (the  "Exchange  Act").  The
Registrant cautions readers that forward-looking statements,  including, without
limitation,  those relating to the Registant's  liquidity and capital resources,
are  subject to  certain  risks and  uncertainties.  Actual  results  may differ
materially  from those described in the  forward-looking  statements and will be
affected by a variety of risk and factors,  including  without  limitation,  the
Registrant's future financial performance;  the availability of capital; general
market  conditions;   national  and  local  economic  conditions,   particularly
long-term  interest rates;  the terms of federal,  state and local  governmental
regulations that affect the Registrant; and the competitive environment in which
the Registrant operates,  including, the availability of commercial office space
and  residential  units in the  areas  where  the  Registrant's  properties  are
located. In addition, the Registrant's continued  qualification as a real estate
investment  trust  involves  the  application  of highly  technical  and complex
programs of the Internal Revenue Code. The  forward-looking  statements are made
as of the date of this Form 10-Q and the  Registrant  assumes no  obligation  to
update the  forward-looking  statements or to update the reasons  actual results
could differ from those projeced in such forward-looking statements.
<PAGE>
Part 1.

Item 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS 
                  AND FINANCIAL CONDITION

                  The following  discussion  should be read in conjunction  with
the  attached  financial  statements  and notes  thereto,  and the  Registrant's
Audited Financial Statements and notes thereto for Fiscal Year Ended October 31,
1997.

Liquidity and Capital Resources

         Liquidity

         Cash from  operations  has enabled the  Registrant  to meet all current
obligations.  Registrant expects that cash from operations will allow it to meet
all future requirements as they become due.

         Results of Operations

         The  Registrant's  net income for the second  quarter  ended  April 30,
1998,  increased  24.5% to  $973,000  ($.62 per share) from  $776,000  ($.49 per
share) for the comparable prior year quarter.

         Net income for the nine months ended July 31, 1998,  increased 24.5% to
$2,688,000  ($1.72 per  share)  from  $2,159,000  ($1.38 per share) for the nine
months ended July 31, 1997.

         Earnings from operating  properties  (before  interest costs) increased
the  first  nine  months of Fiscal  Year  1997.  While  earnings  at  comparable
properties  in both years  increased  as a result of higher base rents and lower
operating  costs,  the principle reason for increase in earnings is Registrant's
new  commercial  properties  in Patchogue,  New York,  and Franklin  Lakes,  New
Jersey.  An increase of 21% in net income from the  Registrant's  affiliate also
contributed in the increase in net income  realized during the first nine months
of fiscal 1998.

         Funds from  operations,  consisting of net income,  excluding  deferred
rents and  gains and  losses  from  property  sales,  plus real  estate  related
depreciation and  amortization,  ("FFO") was $1,357,000 for the third quarter of
fiscal 1998 as compared to $1,137,000  for the same period in 1997.  FFO for the
nine months 1998 was $3,924,000 as compared to $3,237,000 for the same period in
1997.
<PAGE>
Part II.

Item 4.           Submission of Matters to a Vote of Security Holders.

                  On May 27, 1998 at the Annual Meeting of the Shareholders, the
Shareholders re-elected Donald W. Barney, Ronald A. Artinian and Alan L. Aufzien
as Trustees for  additional  three year terms.  A total of 1,316,848  votes were
cast in favor of each Trustee;  there were  1,559,788  shares of the  Registrant
eligible to vote. There were no negative votes.

Item. 5.          Other Information

                  The Board of Trustees  declared a $0.40 third quarter dividend
payable on September  14,  1998,  to  shareholders  of record as of September 1,
1998.  This will raise  dividends  paid thus far this  fiscal  year to $1.20 per
share compared to $1.05 per share paid during the same period in 1997.

Item 6.           Exhibits and Reports on Form 8-K

                  No Form 8-K was filed during the third  quarter of fiscal year
1998 which ended July 31, 1998.

<PAGE>
                                   SIGNATURES










  Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                                FIRST REAL ESTATE INVESTMENT
                                                TRUST OF NEW JERSEY
                                                      (Registrant)




Date September 15, 1998



                                               /s/ William R. DeLorenzo, Jr.
                                               -----------------------------
                                                          (Signature)*
                                               William R. DeLorenzo, Jr.
                                               Executive Secretary and Treasurer

-------------------
*Print name and title of the signing officer under his signature.
<PAGE>






                SALES OF UNREGISTERED SECURITIES (DEBT OR EQUITY)

                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY















                                     N O N E

<PAGE>
<TABLE>
<CAPTION>
                         FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                                          BALANCE SHEETS
                                JULY 31, 1998 AND OCTOBER 31, 1997



                                                                            July       October
                        ASSETS                                            31, 1998    31, 1997
                                                                          -------     -------
                                                                        (Unaudited) (See Note 1)
                                                                       (In Thousands of Dollars)
<S>                                                                       <C>         <C>    
Real estate, at cost, net of accumulated depreciation ...............     $64,683     $53,737
Equipment, at cost, net of accumulated depreciation of $693,000 and
  $657,000 ..........................................................         188         184
Investment in affiliate .............................................       1,854       1,905
Cash ................................................................         649         228
Tenants' security accounts ..........................................         781         719
Sundry receivables ..................................................       1,021         280
Prepaid expenses and other assets ...................................         904       1,470
Deferred charges, net ...............................................       1,171         710
                                                                          -------     -------

          Totals ....................................................     $71,251     $59,233
                                                                          =======     =======

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Mortgages payable ...............................................     $48,020     $24,429
    Note payable - bank .............................................                  11,429
    Accounts payable and accrued expenses ...........................         441         409
    Construction liabilities ........................................                     496
    Dividends payable ...............................................         624       1,326
    Tenants' security deposits ......................................         991         905
    Deferred revenue ................................................         375         255
                                                                          -------     -------
          Total liabilities .........................................      50,451      39,249
                                                                          -------     -------

Commitments and contingencies

Shareholders' equity:
    Shares of beneficial interest without par value; 1,560,000 shares
        authorized; 1,559,788 shares issued and outstanding .........      19,314      19,314
    Undistributed earnings ..........................................       1,486         670
                                                                          -------     -------
          Total shareholders' equity ................................      20,800      19,984
                                                                          -------     -------

          Totals ....................................................     $71,251     $59,233
                                                                          =======     =======
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                         FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                         STATEMENTS OF INCOME AND UNDISTRIBUTED EARNINGS
                        NINE AND THREE MONTHS ENDED JULY 31, 1998 AND 1997
                                           (Unaudited)

                                                    Nine Months               Three Months
                                                  Ended July 31,              Ended July 31,
              INCOME                            1998          1997          1998          1997
                                              --------      --------      --------      --------
                                                           (In Thousands of Dollars,
                                                           Except Per Share Amounts)
<S>                                           <C>           <C>           <C>           <C>     
Revenue:
    Rental income .......................     $  9,233      $  7,419      $  3,207      $  2,508
    Reimbursements ......................        1,202         1,060           378           375
    Equity in income of affiliate .......          149           123            71            46
    Sundry income .......................          149           110            47            28
                                              --------      --------      --------      --------
        Totals ..........................       10,733         8,712         3,703         2,957
                                              --------      --------      --------      --------

Expenses:
    Operating expenses ..................        2,251         1,979           760           658
    Management fees .....................          428           369           155           121
    Real estate taxes ...................        1,325         1,258           437           419
    Interest ............................        2,813         1,960           948           648
    Depreciation ........................        1,220           978           428           332
                                              --------      --------      --------      --------
        Totals ..........................        8,037         6,544         2,728         2,178
                                              --------      --------      --------      --------

Income before state income taxes ........        2,696         2,168           975           779

Provision for state income taxes ........            8             9             2             3
                                              --------      --------      --------      --------

Net income ..............................     $  2,688      $  2,159      $    973      $    776
                                              ========      ========      ========      ========

Earnings per share ......................     $   1.72      $   1.38      $    .62      $    .49
                                              ========      ========      ========      ========

               UNDISTRIBUTED EARNINGS

Balance, beginning of period ............     $    670      $    670      $  1,137      $    961
Net income ..............................        2,688         2,159           973           776
Less dividends ..........................       (1,872)       (1,637)         (624)         (545)
                                              --------      --------      --------      --------

Balance, end of period ..................     $  1,486      $  1,192      $  1,486      $  1,192
                                              ========      ========      ========      ========

Dividends per share .....................     $   1.20      $   1.05      $    .40      $    .35
                                              ========      ========      ========      ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                               FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                                           STATEMENTS OF CASH FLOWS
                                   NINE MONTHS ENDED JULY 31, 1998 AND 1997
                                                  (Unaudited)
                                                                                         1998          1997                      
                                                                                       --------      -------- 
                                                                                          (In Thousands       
                                                                                            of Dollars)       
<S>                                                                                    <C>           <C>      
Operating activities:                                                                                         
    Net income .........................................................               $  2,688      $  2,159 
    Adjustments to reconcile net income to net cash provided by                                               
        operating activities:                                                                                 
        Depreciation and amortization ..................................                  1,313         1,005 
        Deferred revenue ...............................................                    120          (259)
    Equity in income of affiliate ......................................                   (149)         (123)
    Changes in operating assets and liabilities:                                                          
           Tenants' security accounts ..................................                    (62)            7 
           Sundry receivables, prepaid expenses and other assets .......                   (175)          103 
           Accounts payable and accrued expenses .......................                     32           (61)
           Tenants' security deposits ..................................                     86            22 
                                                                                       --------      -------- 
               Net cash provided by operating activities ...............                  3,853         2,853 
                                                                                       --------      -------- 
Investing activities:                                                                                         
    Capital expenditures ...............................................                 (5,195)       (4,447)
    Distributions from affiliate .......................................                    200           117 
                                                                                       --------      -------- 
               Net cash used in investing activities ...................                 (4,995)       (4,330)
                                                                                       --------      -------- 
Financing activities:                                                                                         
    Dividends paid .....................................................                 (2,574)       (2,120)
    Proceeds (repayments) of note payable - bank .......................                (11,429)        4,721 
    Net proceeds from mortgage refinancing .............................                  5,443         1,314 
    Proceeds from mortgage borrowings ..................................                 11,100               
    Repayment of mortgages .............................................                   (452)         (377)
    Deferred mortgage costs ............................................                   (525)         (224)
                                                                                       --------      -------- 
               Net cash provided by financing activities ...............                  1,563         3,314 
                                                                                       --------      -------- 
                                                                                                              
Net increase in cash ...................................................                    421         1,837 
Cash, beginning of period ..............................................                    228           189 
                                                                                       --------      -------- 
                                                                                                              
Cash, end of period ....................................................               $    649      $  2,026 
                                                                                       ========      ========  
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                               FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                                           STATEMENTS OF CASH FLOWS
                                   NINE MONTHS ENDED JULY 31, 1998 AND 1997
                                                  (Unaudited)
                                                  (continued)
                                                                                         1998          1997                      
                                                                                       --------      -------- 
                                                                                          (In Thousands       
                                                                                            of Dollars)       
<S>                                                                                    <C>           <C>      
Supplemental disclosure of cash flow data:                                                                    
    Interest paid, net of capitalized interest of $67,000 and $51,000 in                                      
        1998 and 1997, respectively ....................................               $  2,814      $  1,961 
                                                                                       ========      ======== 
Supplemental schedule of noncash investing and financing activities:
    Dividends  declared  but not paid  amounted to $624,000 and $545,000 at July
    31, 1998 and 1997, respectively.

    During  the nine  months  ended  July 31,  1998,  the  Trust  completed  its
    acquisition of a 64,000 square foot  commercial  property in Patchogue,  New
    York  for  approximately  $11,000,000,  in  part,  with  the  proceeds  of a
    $7,500,000 mortgage.
</TABLE>
See Notes to Financial Statements.
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS



Note 1 - Organization and significant accounting policies:
                Organization:
                    First  Real  Estate  Investment  Trust  of New  Jersey  (the
                    "Trust")  was  organized  November  1, 1961 as a New  Jersey
                    Business Trust.  The Trust is engaged in owning  residential
                    and commercial income producing properties located primarily
                    in New Jersey, Maryland and New York.

                    The  Trust  has  elected  to  be  taxed  as  a  Real  Estate
                    Investment Trust under the provisions of Sections 856-860 of
                    the Internal  Revenue  Code,  as amended.  Accordingly,  the
                    Trust does not pay  Federal  income  tax on income  whenever
                    income  distributed to shareholders is equal to at least 95%
                    of real estate investment trust taxable income. Further, the
                    Trust   pays  no  Federal   income  tax  on  capital   gains
                    distributed to shareholders.

                    The Trust is subject to Federal income tax on  undistributed
                    taxable  income  and  capital  gains.  The Trust may make an
                    annual  election  under Section 858 of the Internal  Revenue
                    Code to apply  part of the  regular  dividends  paid in each
                    respective   subsequent  year  as  a  distribution  for  the
                    immediately preceding year.

                Basis of presentation:
                    The  financial  information  included  herein as at July 31,
                    1998 and for the nine and three  months  ended July 31, 1998
                    and 1997 is  unaudited  and,  in the  opinion  of the Trust,
                    reflects  all   adjustments   (which   include  only  normal
                    recurring accruals) necessary for a fair presentation of the
                    financial  position  as of  that  date  and the  results  of
                    operations for those periods. The information in the balance
                    sheet as of October 31,  1997 was  derived  from the Trust's
                    audited annual report for 1997.

                Use of estimates:
                    The  preparation of financial  statements in conformity with
                    generally accepted accounting principles requires management
                    to  make  estimates  and  assumptions  that  affect  certain
                    reported  amounts  and  disclosures.   Accordingly,   actual
                    results could differ from those estimates.

                Investment in Affiliate:
                    The  Trust's 40%  investment  in  Westwood  Hills,  LLC (the
                    "Affiliate") is accounted for using the equity method.

                Cash:
                    The Trust maintains its cash in bank deposit accounts which,
                    at times,  may exceed  Federally  insured limits.  The Trust
                    considers all highly liquid debt instruments  purchased with
                    a maturity of three  months or less to be cash  equivalents.
                    At July 31, 1998 and October 31, 1997, the Trust had no cash
                    equivalents.
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS


Note 1 - Organization and significant accounting policies (concluded):
                Depreciation:
                    Real   estate  and   equipment   are   depreciated   on  the
                    straight-line   method  by  annual   charges  to  operations
                    calculated  to absorb  costs of assets over their  estimated
                    useful lives.

                Revenue recognition:
                    Income from leases is  recognized on a  straight-line  basis
                    regardless of when payment is due. Lease agreements  between
                    the Trust  and  commercial  tenants  generally  provide  for
                    additional  rentals  based on such factors as  percentage of
                    tenants' sales in excess of specified volumes,  increases in
                    real estate  taxes,  Consumer  Price Indices and common area
                    maintenance charges.  These additional rentals are generally
                    included in income when  reported to the Trust,  when billed
                    to tenants or ratably over the appropriate period.

                Deferred charges:
                    Deferred  charges  consist  of  mortgage  costs and  leasing
                    commissions.  Deferred  mortgage  costs are amortized on the
                    straight-line  method by annual  charges to operations  over
                    the terms of the  mortgages.  Amortization  of such costs is
                    included in interest  expense and  approximated  $49,000 and
                    $19,000 for the nine and three  months  ended July 31, 1998,
                    respectively.  Deferred leasing commissions are amortized on
                    the  straight-line  method over the terms of the  applicable
                    leases.

                Advertising:
                    The Trust expenses the cost of advertising and promotions as
                    incurred.  Advertising costs charged to operations  amounted
                    to  approximately  $40,000  and  $23,000 for the nine months
                    ended   July  31,   1998   and   1997,   respectively,   and
                    approximately $17,000 and $10,000 for the three months ended
                    July 31, 1998 and 1997, respectively.

                Earnings per share:
                    Earnings  per  share  are  computed  based  on the  weighted
                    average number of shares  outstanding.  The weighted average
                    number of shares  outstanding  was 1,559,788 for each of the
                    nine and three month periods ended July 31, 1998 and 1997.

                Reclassification:
                    Certain  amounts in the 1997 financial  statements have been
                    reclassified to conform with the current presentation.
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS


Note 2 - Investment in affiliate:
                The Trust is a 40% member of the Affiliate,  a limited liability
                company that is managed by Hekemian & Co., Inc. ("Hekemian"),  a
                company which manages all of the Trust's properties and in which
                one of the  trustees of the Trust is the  chairman of the board.
                Certain other  members of the  Affiliate are either  trustees of
                the  Trust  or their  families  or  officers  of  Hekemian.  The
                Affiliate  owns  a  residential  apartment  complex  located  in
                Westwood, New Jersey.

                Summarized financial information of the Affiliate as of July 31,
                1998 and  October  31,  1997 and for the nine and  three  months
                ended July 31, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
                                                             July         October
                                                           31, 1998      31, 1997
                                                           --------      --------
                                                         (In Thousands of Dollars)
<S>                                                          <C>         <C>    
Balance sheet data:
      Assets:
          Real estate and equipment, net ...............     $14,489     $14,696
          Other ........................................         544         551
                                                             -------     -------

                 Total assets ..........................     $15,033     $15,247
                                                             =======     =======

      Liabilities and members' equity:
          Liabilities:
             Mortgage payable ..........................     $10,068     $10,192
             Other .....................................         333         295
                                                             -------     -------
                 Totals ................................      10,401      10,487
                                                             -------     -------
          Members' equity:
             Trust .....................................       1,854       1,905
             Others ....................................       2,778       2,855
                                                             -------     -------
                 Totals ................................       4,632       4,760
                                                             -------     -------

                 Total liabilities and members' equity .     $15,033     $15,247
                                                             =======     =======
</TABLE>
<PAGE>

                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                           Nine Months            Three Months
                                              Ended                  Ended
                                             July 31,               July 31,
                                      ------------------      ------------------
                                        1998        1997        1998        1997
                                      ------      ------      ------      ------
                                              (In Thousands of Dollars)
<S>                                   <C>         <C>         <C>         <C>   
Income statement data:
   Rental revenue ..............      $1,953      $1,878      $  660      $  632
   Rental expenses .............       1,581       1,570         483         515
                                      ------      ------      ------      ------

   Net income ..................      $  372      $  308      $  177      $  117
                                      ======      ======      ======      ======
</TABLE>




Note 3 - Real estate:
                Real estate consists of the following:




<TABLE>
<CAPTION>
                                                      Range
                                                  of Estimated            July           October
                                                  Useful Lives          31, 1998        31, 1997
                                                  ------------          --------        --------
                                                                              (In Thousands
                                                                              of Dollars)
<S>                                               <C>                    <C>             <C>    
         Land                                                            $22,768         $20,244
         Unimproved land                                                   2,308           2,310
         Apartment buildings                        7-40 years            10,929          10,711
         Commercial buildings and shopping
            centers                               15-50 years             39,866          30,328
         Construction in progress                                          1,981           2,126
                                                                       ---------       ---------
                                                                          77,852          65,719
         Less accumulated depreciation                                    13,169          11,982
                                                                        --------        --------

            Totals                                                       $64,683         $53,737
                                                                         =======         =======
</TABLE>
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS

Note 4 - Mortgages payable:
                Mortgages payable consist of the following:
<TABLE>
<CAPTION>
                                                           July          October
                                                         31, 1998        31, 1997
                                                        -----------   -----------
                                                                 (In Thousands
                                                                 of Dollars)
<S>                                                     <C>           <C>        
         Northern Life Insurance Cos. (A)               $    18,940   $    19,123
         Travelers Insurance (B)                                            5,181
         National Realty Funding L.C. (B)                    10,551
         Summit Bank (C)                                         54           125
         Summit Bank (D)                                      7,437
         Federal Home Loan Mortgage Corporation (E)          11,038
                                                        -----------   -----------

            Totals                                      $    48,020   $    24,429
                                                        ===========   ===========
</TABLE>
                     (A)   The  mortgage is payable in monthly  installments  of
                           $152,153  including  interest at 8.31%  through  June
                           2007 at which  time the  outstanding  balance is due.
                           The  mortgage  is  secured  by a  shopping  center in
                           Frederick,  Maryland  having  a  net  book  value  of
                           approximately $24,665,000.

                     (B)   On  January 9, 1998,  the Trust  repaid the  existing
                           mortgage on the Westwood,  New Jersey shopping center
                           utilizing  proceeds from a new mortgage in the amount
                           of $10,600,000  with National Realty Funding L.C. The
                           new  mortgage is payable in monthly  installments  of
                           $73,248 including  interest at 7.38% through February
                           2013 at which  time the  outstanding  balance is due.
                           The  mortgage  is  secured  by a  shopping  center in
                           Westwood,  New  Jersey  having  a net  book  value of
                           approximately $11,568,000.

                    (C)    Payable in monthly  installments of $8,555  including
                           interest at 7.625%  through March 1999.  The mortgage
                           is secured by an  apartment  building in Spring Lake,
                           New Jersey  having a net book value of  approximately
                           $566,000.  One of the  directors  of  the  bank  is a
                           trustee of the Trust.

                    (D)    Payable in monthly  installments of $54,816 including
                           interest at 7.375% through January 2005 at which time
                           the  outstanding  balance  is due.  The  mortgage  is
                           secured by a commercial  building in  Patchogue,  New
                           York  having  a  net  book  value  of   approximately
                           $10,752,000.
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS

Note 4 - Mortgages payable: (concluded)

                    (E)    Payable in monthly  installments of $76,023 including
                           interest at 7.29% through July 2010 at which time the
                           outstanding  balance is due.  The mortgage is secured
                           by an apartment  building in Wayne, New Jersey having
                           a net book value of approximately $1,608,000.

                Principal  amounts (in thousands of dollars) due under the above
                obligations  in each of the five  years  subsequent  to July 31,
                1998 are as follows:

                      Year Ending
                       July 31,                 Amount
                       --------                 ------

                         1999                    $648 
                         2000                     633  
                         2001                     684  
                         2002                     739  
                         2003                     799  
                                                       
                Based on borrowing rates currently  available to the Trust,  the
                carrying amount of mortgages payable  approximates fair value at
                July 31, 1998.


Note 5 - Note payable - bank:
                At October 31, 1997, note payable - bank consisted of borrowings
                under a  revolving  line of credit  agreement  with  Summit Bank
                which expired on April 30, 1998, at which time the agreement was
                renegotiated  and extended to May 31, 1999.  Maximum  borrowings
                under the agreement were $12,310,000 and $20,000,000 at July 31,
                1998 and  October  31,  1997,  respectively.  The line of credit
                bears interest at the bank's floating base rate plus .25% or the
                LIBOR rate plus 175 basis  points.  Outstanding  borrowings  are
                secured  by all  of the  Trust's  properties  except  commercial
                property located in Frederick,  Maryland,  Westwood,  New Jersey
                and  Patchogue,  New York,  apartment  buildings  in Wayne,  New
                Jersey,  River Edge, New Jersey and Maywood,  New Jersey and any
                vacant  land  owned  by the  Trust.  There  were no  outstanding
                borrowings under the agreement at July 31, 1998.


Note 6 - Commitments and contingencies:
                Leases:
                    Commercial tenants:
                         The Trust  leases  commercial  space  having a net book
                         value of approximately  $56,957,000 at July 31, 1998 to
                         tenants for periods of up to twenty years.  Most of the
                         leases contain clauses for reimbursement of real estate
                         taxes,   maintenance,   insurance   and  certain  other
                         operating  expenses of the  properties.  Minimum rental
                         income (in  thousands  of dollars) to be received  from
                         noncancelable  operating  leases in years subsequent to
                         July 31, 1998 are as follows:
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS

                         Year Ending
                           July 31,               Amount
                           --------               ------

                             1999               $  6,050
                             2000                  5,616
                             2001                  5,406
                             2002                  5,048
                             2003                  4,793
                             Thereafter           50,433
                                                 -------
                                 Total          $ 77,346
                                                ========

                         The above  amounts  assume that all leases which expire
                         are  not  renewed  and,  accordingly,  neither  minimal
                         rentals  nor  rentals  from  replacement   tenants  are
                         included.

                         Minimum  future  rentals  do  not  include   contingent
                         rentals which may be received  under certain  leases on
                         the basis of  percentage  of  reported  tenants'  sales
                         volume  or   increases  in  Consumer   Price   Indices.
                         Contingent  rentals  included in income for each of the
                         nine and three months ended July 31, 1998 and 1997 were
                         not material.

                Residential tenants:
                         Lease  terms for  residential  tenants  are usually one
                         year or less.

                Standby letters  of credit:
                         At  July  31,  1998,  the  Trust  was  obligated  under
                         irrevocable  standby letters of credit of approximately
                         $100,000  in  connection  with  certain  required  land
                         improvements at the Franklin Lakes shopping center.

                Environmental concerns:
                         In accordance  with applicable  regulations,  the Trust
                         reported to the New Jersey  Department of Environmental
                         Protection  that a discharge of hazardous  material was
                         recently  discovered  at the newly  renovated  Franklin
                         Crossing Shopping Center (the "Center").

                         At  present,  the  discharge  material  appears  to  be
                         isolated  and  management  believes  there  will  be no
                         significant effect on the operations of the Center.

                         In  connection  therewith,  the  Trust is  required  to
                         investigate  and monitor  such  discharge,  the cost of
                         which will not be material.
<PAGE>
                FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

                          NOTES TO FINANCIAL STATEMENTS


Note 7 - Management agreement and related party transactions:
                The  properties  owned by the Trust  are  currently  managed  by
                Hekemian.  The  management  agreement  requires  fees equal to a
                percentage  of rents  collected.  Such fees  were  approximately
                $428,000  and  $369,000  for the nine months ended July 31, 1998
                and 1997, respectively,  and approximately $155,000 and $121,000
                for the three months ended July 31, 1998 and 1997, respectively.


Note 8 - Earnings per share:
                Earnings  per share,  based on the  weighted  average  number of
                shares outstanding during each period, are comprised of ordinary
                income.




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