Executive Summary / Key Takeaways

• J.W. Mays, Inc. ($MAYS) operates a focused portfolio of commercial real estate properties, primarily in New York and Ohio, leveraging a century of operational history and strong local tenant relationships to maintain stability in a dynamic market.
• The company faces significant industry headwinds, including increased competition from online retail and reduced demand for commercial office space due to remote work trends, which have impacted recent financial performance, resulting in a net loss of $136,240 for fiscal year 2025.
• MAYS's strategic response centers on long-term tenant retention, aggressive marketing to diversified sectors (governmental, medical, educational), and robust cybersecurity measures, which serve as its key operational differentiators to mitigate risks and ensure business continuity.
• Despite recent losses and a high interest rate environment, MAYS maintains a cautious outlook, prioritizing the retention of future earnings for business use and actively managing its property portfolio through strategic lease renewals and renovations.
• Investors should consider MAYS's niche market positioning, its resilience through active property management and risk mitigation strategies, and the potential for long-term value creation from its established real estate assets, balanced against the ongoing challenges in the broader commercial real estate sector.

A Legacy in Bricks and Mortar: J.W. Mays' Enduring Real Estate Strategy

J.W. Mays, Inc. (NASDAQ:MAYS) stands as a testament to endurance in the commercial real estate sector, with a history stretching back to its founding in 1924 and incorporation in 1927. The company's core business revolves around owning, operating, and leasing a portfolio of commercial properties concentrated in key locations across Brooklyn, Jamaica, Fishkill, Levittown, and Massapequa, New York, as well as Circleville, Ohio. This focused geographic footprint and long-standing presence have shaped MAYS's strategic approach, emphasizing deep local market knowledge and established tenant relationships.

The commercial real estate landscape, however, is undergoing profound shifts. The relentless expansion of online retail continues to reduce the demand for physical retail properties, creating a challenging environment for landlords. Concurrently, the widespread adoption of remote work practices since the pandemic has led to a careful evaluation and reduction of office space needs by tenants, resulting in a decline in demand for commercial office rentals. These broad industry trends exert considerable pressure on traditional commercial real estate operators like MAYS, intensifying competition and impacting occupancy rates and rental income.

In this evolving environment, MAYS strategically positions itself as a stable, locally-focused operator. The company's overarching strategy centers on tenant retention over long periods and aggressively marketing available space to a diverse array of tenants, including governmental agencies, medical facilities, industrial users, and educational institutions. This diversification aims to mitigate the sector-specific risks inherent in a market increasingly influenced by e-commerce and hybrid work models.

Operational Resilience: MAYS's Technological Edge in Cybersecurity

While MAYS does not boast a "core differentiated technology" in the sense of a proprietary product or service, its technological differentiation lies in its robust approach to operational resilience, particularly in cybersecurity. In an era where digital infrastructure is paramount for business continuity, MAYS has implemented and maintains various information security processes designed to identify, assess, and manage material risks from cybersecurity threats.

The company relies on third-party service providers with experienced information technology professionals to manage its information systems, including network security. This strategic outsourcing provides MAYS with access to specialized expertise and advanced security protocols that might be cost-prohibitive to develop in-house for a company of its scale. The tangible benefits of this approach include business continuity through cloud-based disaster recovery, real-time protection against multi-vector security threats across email, browsers, files, and infrastructure resources, and consistent system integrity via patch management for Windows and third-party applications. Furthermore, 24x7 infrastructure monitoring, alerting, and maintenance of office and cloud systems ensure proactive threat detection and response.

The "so what" for investors is clear: MAYS's investment in cybersecurity is a critical component of its competitive moat, safeguarding its operational stability and protecting sensitive tenant and financial data. This focus on digital resilience contributes to the company's ability to maintain consistent operations, which in turn supports reliable cash flow generation and preserves its market positioning against competitors who might face more significant disruptions from cyber incidents. The oversight by the Audit Committee and the leadership of the Chief Financial Officer, Ward Lyke, in managing these processes, underscores the strategic importance MAYS places on this operational differentiator.

Financial Performance and Operational Dynamics

For the fiscal year ended July 31, 2025, J.W. Mays reported annual revenue of $22.47 million, a modest increase from $21.59 million in the prior year. However, the company recorded a net loss of $136,240, following a loss of $406,568 in fiscal year 2024. This trend reflects the challenging operating environment, where increased costs and tenant concessions have impacted profitability.

Cash flow generation remains a critical aspect of MAYS's financial health. The company reported annual operating cash flow of $2.52 million for fiscal year 2025, demonstrating its ability to generate cash from its core business activities despite the net loss. Free cash flow for the year was $128,349, indicating a tight but positive cash position after capital expenditures.

The gross profit margin for the trailing twelve months (TTM) stood at 22.32%, while the operating profit margin was -0.69%, and the net profit margin was -0.61%. These figures highlight the pressures on the company's core real estate operations. The company's total debt stood at $27.27 million, with a debt-to-equity ratio of 0.52, suggesting a manageable leverage profile. MAYS has not declared cash dividends for fiscal year 2025 and plans to retain future earnings for business use, signaling a focus on reinvestment and strengthening its financial position.

Operational details from the fiscal year 2025 10-K filing illustrate the dynamic nature of MAYS's property management. The Brooklyn, Fulton Street property, with an occupancy rate of 52.69% and annual rent of approximately $7.46 million, saw a tenant expansion in November 2024 but also faced rent concessions and a lease termination, resulting in an approximate loss of $120,000 per annum. Similarly, the Jowein building in Brooklyn, with an 83.52% occupancy rate and $4.50 million in annual rent, experienced tenant expansions alongside significant non-renewals, leading to an approximate loss of $885,000 per annum from combined leases. These fluctuations underscore the challenges in maintaining stable occupancy and rental income in competitive urban markets.

In contrast, the Circleville, Ohio property, primarily a warehouse and distribution facility, demonstrated stability with a 96.72% occupancy rate and annual rent of approximately $1.36 million. A tenant extended its lease and expanded its premises by 84,000 square feet in August 2024, increasing annual base rent to $877,440. This highlights the varying performance across MAYS's diverse portfolio and the resilience of its industrial assets. The Fishkill, New York property, with a lower occupancy rate of 24.69%, has approximately 156,000 square feet available for lease, with plans for renovation upon execution of future leases, indicating potential for future revenue growth.

Competitive Landscape and Strategic Positioning

J.W. Mays operates in a competitive commercial real estate market, contending with both larger, diversified REITs and the broader shifts in tenant demand. Direct competitors include industry giants like Simon Property Group (SPG), Kimco Realty Corporation (KIM), Regency Centers Corporation (REG), and Boston Properties, Inc. (BXP).

Compared to these larger players, MAYS holds a niche position, characterized by its focused geographic footprint. While SPG and KIM benefit from expansive portfolios and greater diversification, offering them an edge in negotiating leases and maintaining occupancy, MAYS leverages its localized expertise and long-standing presence. This allows MAYS to offer a more community-oriented value proposition, potentially fostering stronger local tenant loyalty and enabling agility in responding to specific market needs. However, MAYS's smaller scale means it may lag in overall market share capture and the ability to attract large national tenants, which could translate to less robust growth rates and profitability compared to its larger counterparts. For instance, MAYS's TTM gross profit margin of 22.32% and negative operating and net profit margins suggest a more challenging profitability profile than what might be seen from larger, more diversified REITs.

The company's strategy of emphasizing long-term tenant retention and diversifying its tenant base across governmental, medical, industrial, and educational institutions is a direct response to the competitive pressures from online retail and remote work. This approach helps to mitigate the risks associated with sector-specific downturns, a vulnerability that larger, more specialized REITs might also face. For example, while Boston Properties (BXP) focuses on premium urban office spaces, exposing it to office market shifts, MAYS's mixed portfolio offers a degree of insulation.

Indirect competition also stems from alternative real estate solutions like co-working spaces and the emerging demand for specialized real estate, such as AI-driven data centers. While these trends could potentially repurpose commercial properties, MAYS's current portfolio and strategic focus are primarily on traditional commercial leasing. The company's ability to adapt its properties for such emerging uses, or to attract tenants in these new sectors, will be crucial for its long-term competitive standing.

Outlook and Risk Considerations

The outlook for J.W. Mays is characterized by a cautious yet proactive approach to managing its real estate assets amidst ongoing market challenges. The company's stated intention to negotiate renewals of expiring leases, contingent on tenants maintaining adequate finances, reflects a pragmatic stance in a high interest rate environment where tenant financial stability is a concern. Plans to renovate vacant space at properties like Fishkill upon the execution of future leases indicate a commitment to enhancing asset value and attracting new tenants, though management acknowledges that there are no assurances as to when such leases will be entered into.

Several risks could impact MAYS's future performance. The influence of a controlling shareholder group, which may vote in favor of its own interests, presents a potential conflict, although the Board of Directors, composed of a majority of independent directors, acts as a counter-balance. Changes in economic growth rates and interest rates, both nationally and locally, pose a continuous risk, affecting tenant demand and the cost of financing. The current high interest rate environment, in particular, could continue to challenge the financial health of MAYS's tenants.

Furthermore, environmental liabilities associated with older properties, which may require remediation during fit-outs for new tenants, represent an ongoing operational and financial risk. The competitive pressures from online retail and remote work are expected to persist, potentially leading to continued evaluations and reductions in office space needs by tenants. While MAYS has implemented robust cybersecurity measures, the inherent risk of a cybersecurity incident remains, which could materially affect the company's operations and financial condition.

Conclusion

J.W. Mays, Inc. embodies a century of resilience in the commercial real estate sector, navigating dynamic market forces with a focused portfolio and a strategic emphasis on long-term tenant relationships and operational stability. Despite recent financial headwinds, including net losses and the pervasive challenges from online retail and remote work, the company's commitment to active property management, tenant diversification, and robust cybersecurity measures underpins its investment thesis.

MAYS's competitive positioning, while not defined by vast scale, is strengthened by its localized expertise and ability to foster enduring tenant loyalty in its specific markets. The company's cautious yet proactive outlook, coupled with its strategy to retain earnings for reinvestment, suggests a measured approach to growth and value creation. For discerning investors, MAYS represents an opportunity to invest in a deeply rooted commercial real estate operator that, despite facing significant industry shifts, is strategically adapting to preserve and enhance the value of its established asset base. The ongoing effectiveness of its tenant retention strategies and its ability to capitalize on renovation opportunities will be key indicators of its future success in a continuously evolving market.