Executive Summary / Key Takeaways

• J.W. Mays, Inc. operates a focused portfolio of commercial real estate properties in specific regional markets, primarily in New York and Ohio, differentiating itself through localized presence and property management.
• Recent financial results for the nine months ended April 30, 2025, show revenue growth driven by new and existing leases and a significant reduction in net loss compared to the prior year, indicating operational improvements.
• A key financial risk is the $3.30 million outstanding mortgage on the Fishkill building, which includes a provision allowing the lender to demand full repayment at any time from April 30, 2025, though management reports a positive relationship with the bank and no current intent of acceleration.
• Competitively, MAYS is a small player in a market dominated by large REITs like Simon Property Group (SPG) and Kimco Realty (KIM), lacking their scale and technological sophistication, but potentially benefiting from niche market focus and lower overhead.
• The outlook involves planned capital expenditures and is subject to macroeconomic factors, interest rate fluctuations, and evolving trends in commercial real estate demand, particularly concerning office and retail space utilization.

Setting the Scene: A Regional Real Estate Story

J.W. Mays, Inc., a company with roots tracing back to 1924, currently operates as an owner, operator, and lessor of commercial real estate properties. Its portfolio is concentrated in specific geographic areas, including Brooklyn, Jamaica, Fishkill, Levittown, and Massapequa in New York, and Circleville in Ohio. This regional focus defines MAYS's business model, centering on managing and leasing space within its established properties.

The commercial real estate sector is broad and competitive, featuring large, diversified players alongside smaller, regional operators like MAYS. Major publicly traded competitors include large retail and mixed-use focused REITs such as Simon Property Group, Kimco Realty, Realty Income (O), and Federal Realty Investment Trust (FRT). These larger entities benefit from significant scale, diversified portfolios, and greater access to capital. MAYS, with a market capitalization significantly smaller than these giants, operates in a different league, competing more directly with other local and regional property owners and facing indirect competition from evolving real estate service models, including tech-driven platforms offering flexible or virtual space solutions.

MAYS's strategy appears centered on maximizing value from its existing asset base through active leasing and property management. The company's historical presence in its core markets provides a degree of local knowledge and established relationships, which can be a competitive advantage in securing and retaining tenants within its specific niches. However, this regional concentration also exposes MAYS more directly to local economic fluctuations and market-specific challenges compared to more geographically diversified competitors.

Technology in Real Estate: A Comparative View

In the modern real estate landscape, technology plays an increasingly vital role, from property management software and energy efficiency systems to digital leasing platforms and data analytics. While information for MAYS does not detail any unique, differentiated physical technology inherent to its properties or operations, the competitive landscape highlights the importance of technology adoption in the sector.

Larger competitors like SPG and KIM are noted for leveraging digital tools for operational efficiency, tenant management, and even sustainability initiatives (e.g., energy-efficient buildings). These technologies can lead to quantifiable benefits such as lower operating costs per square foot, faster leasing cycles, and improved tenant satisfaction and retention. In contrast, MAYS's infrastructure is described as older, and the company appears to rely on more traditional operational methods. This potential technological gap represents a competitive vulnerability, potentially resulting in higher operational expenses and slower adaptation to evolving tenant expectations compared to more tech-savvy rivals. The rise of tech-driven real estate services as indirect competitors further underscores the need for technological consideration in the sector, potentially offering cheaper or more flexible alternatives that could pressure traditional leasing models.

MAYS's strategic response to this technological environment seems focused on managing its existing physical assets effectively rather than pioneering technological innovation. While this approach leverages the company's core strength in property ownership and management, it suggests that MAYS may not currently possess the technological moats enjoyed by some larger, more technologically integrated competitors. Any future investments in modernizing infrastructure or adopting digital tools could be critical for enhancing efficiency and competitiveness.

Financial Performance and Operational Insights

Recent financial results provide insight into MAYS's operational trajectory. For the three months ended April 30, 2025, the company reported net income of $86,784, a notable improvement compared to a net loss of $84,880 in the same period of 2024. This shift was primarily attributed to increased rental income and reduced administrative expenses.

Looking at the nine months ended April 30, 2025, MAYS significantly reduced its net loss to $44,240 from $375,483 in the comparable prior year period. Total revenues increased to $16.81 million from $16.10 million year-over-year for the nine-month period, driven by higher rent from existing tenants and the addition of several new leases, although partially offset by tenant departures. Real estate operating expenses saw a slight increase to $11.70 million from $11.35 million, mainly due to higher real estate taxes and insurance costs, partially mitigated by lower payroll maintenance expenses. Administrative and general expenses decreased to $3.78 million from $4.01 million, benefiting from reduced executive payroll costs. Depreciation expense rose to $1.35 million from $1.29 million, reflecting investments in tenant build-outs.

While the TTM financial ratios show negative operating and net profit margins (-0.45% and -0.34% respectively), the recent quarterly net income suggests a positive trend in profitability. The TTM Gross Profit Margin stands at 30.48%, indicating the core rental operations are profitable before considering broader operating expenses and financing costs. The improvement in net results for both the recent quarter and the nine-month period underscores the positive impact of successful leasing activities and cost management efforts.

Operational highlights from the period include several specific leasing transactions. These range from tenant lease extensions and expansions, such as the significant 84,000 square foot expansion at the Circleville, Ohio property, to new leases like a 10-year office lease at the Jamaica premises and a 10-year office lease at the 9 Bond Street building. The company also experienced tenant turnover, including a lease termination at 9 Bond Street resulting in an estimated $120,000 annual rent loss and non-renewal notices for space at the Jowein building and 9 Bond Street totaling approximately $1.03 million in potential annual rent loss. These activities illustrate the dynamic nature of managing a commercial real estate portfolio and the ongoing effort required to maintain occupancy and revenue streams.

Liquidity and Capital Resources

As of April 30, 2025, MAYS held $2.28 million in cash and cash equivalents. The company's primary sources of liquidity are cash flow from operations and borrowings. Net cash provided by operating activities was $3.35 million for the nine months ended April 30, 2025, an increase from $2.85 million in the prior year period, demonstrating improved operational cash generation.

Investing activities during the nine-month period included capital expenditures for tenant improvements totaling approximately $1.48 million across various properties, along with scaffolding costs and other improvements. The company anticipates incurring an additional $1.20 million in capital expenditures over the next twelve months ending April 30, 2026, indicating planned investments in its properties.

A critical aspect of MAYS's capital structure and liquidity profile is its outstanding mortgage debt. As of April 30, 2025, the company had approximately $3.30 million outstanding on a mortgage secured by the Fishkill building. While this loan has a stated maturity in 2040, the mortgage agreement includes a provision granting the lender an unconditional right to demand full repayment at any time effective from April 30, 2025, through the final payment date.

Key Risk: The Fishkill Mortgage Balloon Payment

The potential for the lender to demand full repayment of the $3.30 million Fishkill mortgage represents a significant risk factor for MAYS. This balloon payment demand provision has a material impact on the perception of the company's short-term liquidity, despite the long stated maturity date.

Management acknowledges this risk and states that as of the filing date (June 12, 2025), the bank has not communicated any intent to accelerate repayment. The company reports maintaining a positive relationship with the bank and being in full compliance with the loan terms. However, the bank is under no obligation to refinance the mortgage if or when a demand for repayment is made after April 1, 2025.

The company's stated intention, should the bank demand repayment, is to first attempt to refinance the mortgage with the current bank at the available interest rate while also seeking alternative lenders at competitive rates. The success of this strategy would depend on prevailing interest rates and the availability of financing in the commercial real estate market at that time. Failure to secure refinancing could have a material adverse effect on the company's financial condition and operations.

Competitive Positioning and Outlook

MAYS operates in a competitive environment where its smaller scale (Market Cap ~$75.87M) is a notable contrast to the multi-billion dollar market capitalizations of major REITs like SPG, KIM, O, and FRT. While these larger players benefit from economies of scale, broader market reach, and greater access to capital for acquisitions and development, MAYS leverages its long history and concentrated regional presence to focus on specific local market opportunities.

MAYS's competitive advantages appear rooted in its established regional network and potentially lower overhead costs compared to larger, more complex organizations. However, it faces disadvantages in terms of scale, access to capital for significant portfolio expansion, and a lag in technological adoption compared to industry leaders. The competitive analysis suggests MAYS may trail larger rivals in key financial performance indicators such as revenue growth rates, operating margins, and returns on capital. Indirect competitors offering flexible or tech-enabled space solutions also pose a challenge to traditional leasing models.

The outlook for MAYS is tied to its ability to effectively manage its existing portfolio, secure new leases, and retain tenants in the face of evolving market dynamics. The anticipated $1.20 million in capital expenditures suggests ongoing investment in property maintenance and tenant improvements, which is crucial for maintaining the attractiveness and competitiveness of its assets. However, the absence of specific quantitative guidance from management means the future financial trajectory is subject to various external factors. These include changes in the rate of economic growth, fluctuations in interest rates, the ongoing impact of remote work trends on demand for office and retail space, and potential increases in real estate taxes and regulatory burdens. The successful management of the Fishkill mortgage risk is also paramount to the company's stability and future prospects.

Conclusion

J.W. Mays, Inc. presents an investment profile centered on a focused portfolio of regional commercial real estate assets. The recent financial results, particularly the improved profitability in the most recent quarter and the reduced loss year-to-date, indicate positive momentum driven by effective leasing and cost control efforts. The company's long history and established presence in its core markets provide a foundation, but it operates within a highly competitive industry dominated by much larger, more technologically advanced players.

The critical factor for investors to monitor is the potential demand for repayment of the Fishkill mortgage, which poses a significant liquidity risk despite management's current positive relationship with the lender. Beyond this immediate financial consideration, the company's ability to sustain revenue growth through continued leasing success and manage its operating expenses in the face of rising costs and evolving market trends will be key determinants of its long-term performance. While MAYS may lack the scale and technological sophistication of larger REITs, its performance will hinge on its execution within its specific regional niches and its capacity to navigate the broader economic and industry-specific headwinds impacting commercial real estate.