10-Q: J.W. Mays Q2 Loss Widens Amid Revenue Decline

J.W. Mays, Inc. reported a significantly wider net loss for the second fiscal quarter and six months ended January 31, 2026, driven by decreased rental income and increased operating expenses.

Summary

• Net loss for the three months ended January 31, 2026, was $(508,960), or $(0.25) per share, compared to $(157,681), or $(0.08) per share, for the same period in 2025.
• Net loss for the six months ended January 31, 2026, was $(842,987), or $(0.42) per share, compared to $(131,024), or $(0.07) per share, for the same period in 2025.
• Total revenues decreased to $5,211,482 for the three months and $10,462,896 for the six months ended January 31, 2026, from $5,643,444 and $11,182,573 respectively in the prior year.
• Revenue decline was primarily due to loss of tenants and rent concessions totaling $213,942 for the three months and $333,942 for the six months.
• Real estate operating expenses increased for the six-month period to $8,204,797 from $7,878,554, mainly due to higher real estate taxes, insurance, utilities, maintenance, and a loss on fixed asset disposal.
• Administrative and general expenses increased for the three-month period to $1,325,921 from $1,251,875, driven by professional fees and executive payroll.
• Cash provided by operating activities decreased to $1,192,140 for the six months ended January 31, 2026, from $1,419,209 in the prior year.
• Cash used in investing activities significantly increased to $(1,394,849) from $(662,849) due to higher property and equipment acquisitions and tenant improvements.
• The company anticipates incurring an additional $12 million in capital expenditures over the next twelve months ending January 31, 2027.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging quarter for J.W. Mays, marked by widening losses and declining revenues, indicating a struggle to maintain profitability in the current commercial real estate environment.

Positives

• Interest expense, net of capitalized interest, improved for both the three-month and six-month periods, decreasing to $(6,778) from $(25,025) and to $(6,778) from $(49,502) respectively.
• Administrative and general expenses decreased for the six-month period to $2,515,739 from $2,544,628, primarily due to lower professional fees and pension expenses.
• The company successfully secured several new leases and lease extensions, including a 5,500 sq ft retail space at Jowein, a 9,500 sq ft storage space at Fishkill, and extensions at 9 Bond Street and Jamaica, New York properties.
• Sublease income exceeded operating lease costs by $1,152,754 for the three months and $2,321,225 for the six months ended January 31, 2026.
• The company maintains a positive relationship with its bank and is in full compliance with loan provisions for its $3.15 million mortgage.

Negatives

• Net loss significantly widened for both the three-month (to $(508,960) from $(157,681)) and six-month (to $(842,987) from $(131,024)) periods compared to the prior year.
• Loss per common share increased to $(0.25) for three months and $(0.42) for six months, from $(0.08) and $(0.07) respectively.
• Total revenues decreased by 7.6% for the three months and 6.4% for the six months, primarily due to tenant losses and rent concessions.
• Real estate operating expenses increased by 4.1% for the six-month period, driven by higher taxes, insurance, utilities, maintenance, and a loss on fixed asset disposal.
• Cash and cash equivalents decreased to $434,420 as of January 31, 2026, from $748,597 as of July 31, 2025.
• Total cash, cash equivalents, and restricted cash decreased by $284,177 for the six months ended January 31, 2026.
• The company granted significant rent concessions: $213,942 for the three months and $333,942 for the six months ended January 31, 2026.
• The mortgage on the Fishkill building includes a balloon payment demand provision, allowing the lender to demand full repayment at any time through April 1, 2040, which impacts short-term liquidity perception.

Risks

• Changes in the rate of economic growth in the commercial real estate leasing market, and interest rates both nationally and locally.
• Existing indebtedness, including the potential for accelerated maturities due to the Fishkill mortgage balloon payment demand provision.
• The ability to obtain additional financing to fund necessary capital expenditure projects on reasonable terms or at all.
• Changes in the financial condition of customers.
• Changes in the regulatory environment, particularly increasing local, state, and federal requirements and taxes.
• Increasing trend of lease cancellations and loss of key tenants at properties.
• Changes in estimates of costs.
• Loss of key personnel.
• War and/or terrorist attacks, global, national, and local political unrest and protests could significantly impact buildings leased to tenants.
• The continued availability of insurance for various policies at reasonable rates.
• Outcomes of pending and future litigation.
• Increasing competition by other landlords and building management companies, including the use of artificial intelligence and other advanced technologies among competitors.
• Compliance with loan covenants.
• Impact of climate change on properties and geographic regions.
• Recoverability of claims against customers and others by the company and claims by third parties against the company.
• Changes in estimates used in critical accounting policies.
• Cybersecurity and data privacy breach threats or incidents.
• Pandemics and the related trends of office versus remote work practices.
• Potential liability to create a condominium unit for the loading dock if 25 Elm Place, Brooklyn, New York is sold, transferred, disposed of, or demolished, with an undetermined cost.

Future Outlook

The company anticipates incurring an additional $12 million in capital expenditures over the next twelve months ending January 31, 2027. Management believes its current sources of liquidity, including cash from operations and pending borrowings, will be sufficient to meet obligations for the next 12 months. However, there is no assurance that additional financing will be secured when needed, and a failure to do so may necessitate selling properties, potentially at unfavorable times or terms. New York State's capital-based tax will be phased out starting with the company's tax year ending July 31, 2027.

Management Comments

• "The increased loss in the 2026 three months was primarily due to an increase in administration expenses, combined with loss of tenants and rent concessions granted; partially offset by several new leases."
• "The increase in loss for the 2026 six months was primarily due to increase in real estate operating expenses combined with loss of tenants and rent concessions granted; partially offset by several new leases."
• "We believe our sources of liquidity described above will be sufficient to meet our obligations over the next 12 months."
• "The Company maintains a positive relationship with the bank and remains in full compliance with terms of the loan provisions."
• "It is the opinion of management that the resolution of these matters [legal proceedings] will not have a material adverse effect on the Company’s Consolidated Financial Statements."

Industry Context

StockSavvy.ai notes that the commercial real estate sector continues to face headwinds from evolving macroeconomic conditions, fluctuating interest rates, and the ongoing shift in work practices (office versus remote). J.W. Mays' challenges with tenant losses and rent concessions, alongside increased operating expenses, reflect broader industry pressures, particularly in urban markets. The company's reliance on new leases and extensions to partially offset declines highlights the competitive landscape for landlords.

Corporate Governance

Legal Proceedings

• The company is subject to various legal proceedings, claims, and litigation arising in the ordinary course of business operations, including contractual disputes and third-party personal injury claims.
• Management believes the resolution of these matters will not have a material adverse effect on the Consolidated Financial Statements.
• A contingent liability exists if 25 Elm Place, Brooklyn, New York is sold, transferred, disposed of, or demolished, potentially requiring the creation of a condominium unit for the loading dock, with an undetermined cost.

Related Party Transactions

• The company has three operating leases with Weinstein Enterprises, Inc., an affiliated company principally owned by the Chairman of the Board of Directors (who also principally owns J.W. Mays, Inc.).
• These leases are for properties at Jamaica Avenue at 169th Street, 504-506 Fulton Street, and 508 Fulton Street (acquired by Weinstein Enterprises in December 2024).
• Rent payments to the related party for these three leases totaled $261,072 for the three months and $522,144 for the six months ended January 31, 2026.
• Rent expense for these leases totaled $356,845 for the three months and $713,690 for the six months ended January 31, 2026.
• The Jamaica Avenue lease was extended through May 31, 2040, with an increase in operating right-of-use asset and liability of $1,575,690 and a decrease in monthly rent expense of $(14,766) due to remeasurement.
• Upon termination of the Jamaica, New York lease (currently 2040), all premises included in operating lease right-of-use assets plus leasehold improvements will be turned over to the Landlord (Weinstein Enterprises, Inc.).

Stakeholder Impact

• Shareholders face negative impact due to widening net losses, declining revenues, and increased capital expenditures. Potential dilution if future capital raises involve equity.
• Employees continue to receive contributions to both noncontributory Money Purchase Plan and union-sponsored multi-employer pension plan, with labor relations considered good.
• Customers (Tenants) benefited from significant rent concessions, which negatively impacted the company's revenue. New leases indicate continued demand for some properties.
• Creditors face uncertainty due to the balloon payment demand provision on the Fishkill mortgage, although the company states it is in compliance and has a positive relationship with the bank. The need for additional financing could increase leverage.

Next Steps

• Incur an additional $12 million in capital expenditures over the next twelve months ending January 31, 2027.
• Finalize securing two loan commitments to fund capital expenditures.
• Continue negotiations for the union-sponsored multi-employer pension fund rehabilitation plan.
• Evaluate the effect of new accounting pronouncements (ASU 2024-03 and ASU 2023-09) on consolidated financial statements and disclosures.

Key Dates

Recommendation

The company reported a substantial increase in net loss and a decline in revenue, indicating deteriorating financial performance. While some new leases were secured, significant rent concessions and rising operating expenses are concerning. The need for substantial capital expenditures ($12 million) in the near term, coupled with the uncertainty of securing additional financing and the balloon payment risk on existing debt, points to significant liquidity challenges and potential asset sales under unfavorable terms. These factors suggest a negative outlook for the stock.

Keywords

Commercial Real Estate, Property Leasing, Net Loss, Rental Income, Operating Expenses, Capital Expenditures, Mortgage Debt, New York Real Estate, SEC 10-Q, Financial Results