Urstadt Biddle Properties Inc. (NYSE:UBA and UBP), a real estate
investment trust, today reported its operating results for the
three and nine month periods ended July 31, 2018.
Net income applicable to Class A Common and Common stockholders
for the third quarter of fiscal 2018 was $5,579,000 or $0.15 per
diluted Class A Common share and $0.13 per diluted Common share,
compared to $6,061,000 or $0.16 per diluted Class A Common share
and $0.14 per diluted Common share in last year’s third quarter.
Net income attributable to Class A Common and Common stockholders
for the first nine months of fiscal 2018 was $20,098,000 or $0.53
per diluted Class A Common share and $0.47 per diluted Common
share, compared to $33,574,000 or $0.90 per diluted Class A Common
share and $0.79 per diluted Common share in the first nine months
of fiscal 2017. Net income for the three and nine month periods
ended July 31, 2017 includes a loss on sale of properties of
$688,000 and net income for the nine month period ended July 31,
2017 includes a net gain on sale of properties in the amount of
$18.8 million.
Funds from operations (“FFO”) for the third quarter of fiscal
2018 was $13,410,000 or $0.35 per diluted Class A Common share and
$0.32 per diluted Common share, compared with $13,815,000 or $0.37
per diluted Class A Common share and $0.33 per diluted Common share
in last year’s third quarter. For the first nine months of fiscal
2018, FFO amounted to $42,610,000 or $1.13 per diluted Class A
Common share and $1.01 per diluted Common share, compared to
$35,384,000 or $0.94 per diluted Class A Common share and $0.84 per
diluted Common share in the corresponding period of fiscal
2017.
Both FFO and net income for the nine month period ended July 31,
2018 include $3.7 million in lease termination income the company
received from the grocery store tenant in the company’s Newark, NJ
property when that tenant vacated the property prior to the end of
its lease. Both FFO and net income for the three and nine month
periods ended July 31, 2017 include lease termination income of
$2.1 million relating to the termination of the only lease at the
company’s Stratfield Road property located in Fairfield, CT, which
was sold in the third quarter of fiscal 2017.
At July 31, 2018, the company’s consolidated properties were
91.9% leased (versus 92.7% at the end of fiscal 2017) and 90.2%
occupied (versus 91.0% at the end of fiscal 2017).
Both the percentage of property leased and the percentage of
property occupied referenced in the preceding paragraph exclude the
company’s unconsolidated joint ventures. At July 31, 2018, the
company had equity interests in seven unconsolidated joint ventures
(751,000 square feet), which were 96.8% leased (versus 97.7% at the
end of fiscal 2017).
Commenting on the quarter’s operating results, Willing L.
Biddle, President and CEO of Urstadt Biddle Properties Inc., said
“We had another strong operating quarter with FFO of $13.4 million
or $0.35 per Class A Common share which provides strong coverage of
our current dividend level, reflecting a 77% FFO payout ratio on a
per Class A Common share basis. We are very pleased our FFO payout
ratio continues to improve as we know our investors greatly value
the safety and consistent growth of our dividend through all types
of economic cycles. The strong operating results are a result of a
number of positive transactions completed in fiscal 2017 as well as
positive events thus far in fiscal 2018. We completed the sale of
our vacant Westchester Pavilion property in March of fiscal 2017
for $57 million and re-invested those proceeds in several new
properties and other investments, and we are continuing to see
earnings improvement in our operating results as that capital is
now fully deployed. In addition, we were able to complete two
accretive financing transactions in fiscal 2017, which increased
our operating results this quarter and will continue to have a
positive impact going forward. In July 2017, the company refinanced
its largest mortgage, reducing the interest rate from 5.52% to
3.398%, which is now saving the company over $1 million in interest
expense per annum. Also, in October 2017, we redeemed all $129
million of our 7.125% Series F Cumulative Preferred Stock using
proceeds from the sale of the Pavilion and the issuance of $115
million of 6.25% Series H Cumulative Preferred Stock. This
reduction in preferred stock outstanding, along with the lower
coupon, is now saving the company over $2 million per annum in
preferred stock dividends.”
Mr. Biddle continued………“In June 2018, we purchased a 75.3%
equity interest in a newly formed DownREIT joint venture, UB New
City I, LLC, in which the company is the managing member. Our
initial investment was $2.4 million. New City owns a single tenant
retail real estate property leased to Putnam County Savings Bank.
In addition, New City rents certain parking spaces on the property
to the owner of the adjacent grocery anchored shopping center. The
property is located in New City, NY. The property was contributed
to the new entity by the former owners who received units of
ownership in New City equal to the value of this contributed
property. This investment provides a strong yield on our invested
capital and we believe it improves our chances of acquiring the
adjacent grocery anchored shopping center in the future. Our
portfolio’s leased rate for properties we consolidate has fallen
0.8% since the end of fiscal 2017 to 91.9%, primary due to the
vacancy in this third quarter of our 31,000 square foot grocery
store tenant in our Passaic, NJ property. This vacancy represents
0.7% of our consolidated portfolio square footage, and we are
currently working with several prospective new tenants for this
space. As reported last quarter, we signed a new 40,000 square foot
lease with Whole Foods Market to anchor our Wayne, NJ property.
Although we have a signed lease, at quarter end we still have not
accounted for this space as leased due to some approval
contingencies, which include obtaining municipal site plan
approval. We expect to receive this approval in the next month.
Once we receive site plan approval, we will include this lease in
our leasing metrics and the percentage of our consolidated
properties leased will increase 0.9%. In addition, the Seabra
Supermarket Group is currently making good progress renovating the
62,000 square foot anchor supermarket space they leased in our
Ferry Plaza property in the Ironbound section of Newark, and hopes
to open in early 2019. We also have five other spaces over 10,000
square feet that are vacant in our consolidated portfolio, which
represent 36% of our current vacant square footage, however we do
have several prospects for some of this vacant space and hope to
have new leasing to announce on these spaces in the months to
come.”
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
84 properties containing approximately 5.1 million square feet of
space. Listed on the New York Stock Exchange since 1970, it
provides investors with a means of participating in ownership of
income-producing properties. It has paid 194 consecutive quarters
of uninterrupted dividends to its shareholders since its inception
and has raised total dividends to its shareholders for the last 24
consecutive years.
Certain statements contained herein may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the company to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other
things, risks associated with the timing of and costs associated
with property improvements, financing commitments and general
competitive factors.
(Table Follows)
URSTADT BIDDLE PROPERTIES INC. (NYSE:
UBA AND UBP)
NINE MONTHS AND THREE MONTHS ENDED JULY
31, 2018 AND 2017 RESULTS (UNAUDITED)
(in thousands, except per share data)
Nine Months Ended Three Months
Ended July 31, July 31,
2018 2017
2018 2017
Revenues Base rents
$72,162 $64,863
$24,668 $22,074 Recoveries from tenants
23,390 20,979
7,074 6,753 Lease termination income
3,790 2,431
36 2,148 Other income
3,467
2,558 1,031 899 Total
Revenues
102,809 90,831
32,809 31,874 Operating
Expenses Property operating
16,850 14,635
4,804
3,989 Property taxes
15,604 14,474
5,300 4,891
Depreciation and amortization
21,287 19,442
7,370
6,678 General and administrative
7,024 6,893
2,322
2,226 Provision for tenant credit losses
674 429
302
69 Directors' fees and expenses
267
240 79 74 Total
Operating Expenses
61,706 56,113
20,177 17,927 Operating
Income 41,103 34,718
12,632 13,947
Non-Operating Income (Expense): Interest expense
(10,178) (9,800)
(3,439) (3,284) Equity in net income
from unconsolidated joint ventures
1,710 1,478
483
439 Interest, dividends and other investment income
246 568 104
199 Income Before Gain (Loss) on Sale of
Properties 32,881 26,964
9,780 11,301 Gain (loss)
on sale of properties
- 18,772
- (688) Net Income
32,881 45,736
9,780 10,613
Noncontrolling
interests: Net income attributable to noncontrolling interests
(3,595) (1,451)
(1,138) (982) Net income
attributable to Urstadt Biddle Properties Inc.
29,286 44,285
8,642 9,631 Preferred stock dividends
(9,188) (10,711)
(3,063) (3,570) Net
Income Applicable to Common and Class A Common Stockholders
$20,098 $33,574
$5,579 $6,061 Diluted
Earnings Per Share: Per Common Share:
$0.47
$0.79 $0.13 $0.14 Per
Class A Common Share:
$0.53 $0.90
$0.15 $0.16 Weighted
Average Number of Shares Outstanding (Diluted): Common and
Common Equivalent
9,147 8,998
9,233 9,061 Class A Common and Class A
Common Equivalent
29,538 29,485
29,590 29,509
Results of Operations
The following information summarizes the company's results of
operations for the nine month and three month periods ended July
31, 2018 and 2017 (amounts in thousands):
Nine Months EndedJuly 31,
Change Attributable to: Revenues
2018 2017
Increase(decrease)
%
Change
PropertyAcquisitions/Sales
Properties HeldIn Both Periods(Note
1)
Base rents
$72,162 $64,863 $7,299 11.3% $5,313 $1,986
Recoveries from tenants
23,390 20,979 2,411 11.5% 1,241
1,170 Lease termination income
3,790 2,431 1,359 55.9%
(2,148) 3,507 Mortgage interest and other income
3,467 2,558
909 35.5% (178) 1,087
Operating Expenses Property
operating expenses
16,850 14,635 2,215 15.1% 800 1,415
Property taxes
15,604 14,474 1,130 7.8% 670 460 Depreciation
and amortization
21,287 19,442 1,845 9.5% 1,879 (34) General
and administrative expenses
7,024 6,893 131 1.9% n/a n/a
Other Income/Expenses Interest expense
10,178
9,800 378 3.9% 617 (239) Interest, dividends and other investment
income
246 568 (322) -56.7% n/a n/a
Three Months Ended
July 31,
Change Attributable
to: Revenues 2018
2017
Increase(decrease)
%Change
PropertyAcquisitions/Sales
Properties HeldIn Both Periods(Note
1)
Base rents
$24,668 $22,074 $2,594 11.8% $1,644 $950
Recoveries from tenants
7,074 6,753 321 4.8% 216 105 Lease
termination income
36 2,148 (2,112) -98.3% (2,148) 36
Mortgage interest and other income
1,031 899 132 14.7% (101)
233
Operating Expenses Property operating expenses
4,804 3,989 815 20.4% 165 650 Property taxes
5,300
4,891 409 8.4% 186 223 Depreciation and amortization
7,370
6,678 692 10.4% 586 106 General and administrative expenses
2,322 2,226 96 4.3% n/a n/a
Other
Income/Expenses Interest expense
3,439 3,284 155 4.7%
158 (3) Interest, dividends and other investment income
104
199 (95) -47.7% n/a n/a
Note 1 – Properties held in both periods
include only properties owned for the entire periods of 2017 and
2018. All other properties are included in the property
acquisition/sales column. There are no properties excluded from the
analysis.
Revenues
Base rents increased by 11.3% to $72.2 million for the nine
month period ended July 31, 2018 as compared with $64.9 million in
the comparable period of 2017. Base rents increased by 11.8% to
$24.7 million for the three month period ended July 31, 2018 as
compared with $22.1 million in the comparable period of 2017. The
change in base rent and the changes in other income statement line
items analyzed in the tables above were attributable to:
Property Acquisitions and Properties
Sold:
In fiscal 2017, the company purchased four properties totaling
114,700 square feet of GLA, invested in two joint ventures that own
four properties totaling 173,600 square feet, whose operations the
company consolidates, and sold two properties totaling 203,800
square feet. In the first nine months of fiscal 2018, the company
purchased three properties totaling 53,700 square feet. These
properties accounted for all of the revenue and expense changes
attributable to property acquisitions and sales in the nine months
ended July 31, 2018 when compared with fiscal 2017.
Properties Held in Both
Periods:
Revenues
Base Rent
The increase in base rents for both the nine month and three
month periods ended July 31, 2018, when compared to the
corresponding prior periods, was predominantly caused by new
leasing activity at several properties held in both periods that
created a positive variance in base rent. This increase was
accentuated by the company writing off $633,000 in accrued but
unpaid straight-line rent in the third quarter of fiscal 2017
relating to a tenant who occupied the 36,000 square foot grocery
store space at the company’s Valley Ridge property. This tenant
failed to perform under its lease and the lease was terminated in
the third quarter of fiscal 2017.
In fiscal 2018, the company leased or renewed approximately
417,000 square feet (or approximately 9.5% of total consolidated
property leasable area). At July 31, 2018, the company’s
consolidated properties were 91.9% leased (92.7% leased at October
31, 2017).
Tenant Recoveries
In the nine month and three month periods ended July 31, 2018,
recoveries from tenants (which represent reimbursements from
tenants for operating expenses and property taxes) increased by
$1.2 million and $105,000, respectively, when compared with the
corresponding prior periods. These increases were the result of an
increase in both property operating expenses and property tax
expense in the consolidated portfolio for properties owned in both
the three months and nine months of fiscal 2018 when compared with
the corresponding prior periods. The increases in property
operating expenses were related to an increase in snow removal
costs, roof repairs and parking lot repairs at the company’s
properties and the increase in property tax expenses were related
to an increase in property tax assessments.
Lease Termination Income
In April 2018, the company reached agreement with the grocery
tenant at the company’s Newark, NJ property to terminate its 63,000
square foot lease in exchange for a one-time $3.7 million lease
termination payment, which the company received and recorded as
revenue in the nine months ended July 31, 2018. Also, in March
2018, the company leased that same space to a new grocery store
operator who took possession in May 2018. While the rental rate on
the new lease is 30% less than the rental rate on the terminated
lease, the company hopes that part of this decreased rental rate
will be recaptured with the receipt of percentage rent in
subsequent years as the store matures and its sales increase. The
new lease required no tenant improvements or tenant allowances.
Expenses
Operating Expenses
In the nine month and three month periods ended July 31, 2018,
property operating expenses increased by $1.4 million and $650,000,
respectively, when compared with the corresponding prior periods,
predominantly as a result of an increase in snow removal costs,
roof repairs and parking lot repairs at the company’s
properties.
Real Estate Tax
In the nine month and three month periods ended July 31, 2018,
property taxes increased by $460,000 and $223,000, respectively,
when compared with the corresponding prior periods, as a result of
an increase in property tax assessments for a number of the
company’s properties owned in both periods.
Interest
In the nine month period ended July 31, 2018, interest expense
decreased by $239,000, when compared with the corresponding prior
period as a result of the refinancing of the company’s largest
mortgage (secured by the company’s Ridgeway property) after the
second quarter of fiscal 2017 and the reduction of mortgage
principal from normal amortization. The Ridgeway mortgage interest
rate was reduced from 5.52% to 3.398% on a principal balance of
approximately $44 million. This decrease was partially offset by an
increase in the mortgage principal on the Ridgeway mortgage from
$44 million to $50 million as a result of the refinancing. Interest
expense was relatively unchanged for the three month period ended
July 31, 2018, when compared to the corresponding prior period.
Depreciation and Amortization
Depreciation and amortization was relatively unchanged in both
the nine month and three month periods ended July 31, 2018, when
compared with the corresponding prior periods.
General and Administrative
Expenses
General and administrative expense was relatively unchanged in
the nine month and three month periods ended July 31, 2018 when
compared to the corresponding prior periods. The company had a
small reduction in state and local taxes paid, which reduction was
offset by normal salary increases for employees of the company.
Non-GAAP Financial Measure
Funds from Operations (“FFO”)
The company considers FFO to be an additional measure of the
company’s operating performance. The company reports FFO in
addition to net income applicable to common stockholders and net
cash provided by operating activities. Management has adopted the
definition suggested by The National Association of Real Estate
Investment Trusts (“NAREIT”) and defines FFO to mean net income
(computed in accordance with GAAP) excluding gains or losses from
sales of property, plus real estate-related depreciation and
amortization and after adjustments for unconsolidated joint
ventures.
Management considers FFO a meaningful, additional measure of
operating performance because it primarily excludes the assumption
that the value of the company’s real estate assets diminishes
predictably over time and industry analysts have accepted it as a
performance measure. FFO is presented to assist investors in
analyzing the performance of the company. It is helpful as it
excludes various items included in net income that are not
indicative of the company’s operating performance, such as gains
(or losses) from sales of property and depreciation and
amortization. However, FFO:
- does not represent cash flows from
operating activities in accordance with GAAP (which, unlike FFO,
generally reflects all cash effects of transactions and other
events in the determination of net income); and
- should not be considered an alternative
to net income as an indication of the company’s performance.
FFO as defined by the company may not be comparable to similarly
titled items reported by other real estate investment trusts due to
possible differences in the application of the NAREIT definition
used by such REITs. The table below provides a reconciliation of
net income applicable to Common and Class A Common Stockholders in
accordance with GAAP to FFO for the nine and three month periods
ended July 31, 2018 and 2017:
URSTADT BIDDLE PROPERTIES INC. (NYSE:
UBA AND UBP)
NINE MONTHS AND THREE MONTHS ENDED JULY
31, 2018 AND 2017
(in thousands, except per share data)
Reconciliation of Net
IncomeAvailable to Common and Class ACommon
Stockholders To FundsFrom Operations:
Nine Months EndedJuly 31,
Three Months EndedJuly
31,
2018 2017
2018 2017 Net
Income Applicable to Common and Class A Common Stockholders
$20,098 $33,574
$5,579 $6,061 Real property
depreciation
16,558 15,105
5,562 5,238 Amortization
of tenant improvements and allowances
3,046 3,240
967
996 Amortization of deferred leasing costs
1,618 1,028
820 423 Depreciation and amortization on unconsolidated
joint ventures
1,290 1,209
482 409 (Gain)/Loss on
sale of asset
- (18,772)
- 688 Funds from Operations
Applicable to Common and Class A Common Stockholders
$42,610
$35,384
$13,410 $13,815
Funds from Operations
(Diluted) Per Share: Common
$1.01
$0.84 $0.32
$0.33 Class A Common
$1.13
$0.94 $0.35
$0.37 Urstadt Biddle Properties Inc.
(NYSE: UBA AND UBP) Balance Sheet Highlights (in
thousands) July
31, October 31,
2018 2017
(Unaudited)
Assets Cash and Cash Equivalents
$10,744 $8,674 Real
Estate investments before accumulated depreciation
$1,116,445 $1,090,402
Investments in and advances to unconsolidated joint ventures
$37,642 $38,049 Total
Assets $1,016,475 $996,713
Liabilities Revolving credit line
$25,595 $4,000 Mortgage
notes payable and other loans $295,351
$297,071 Total Liabilities
$351,034 $328,122
Redeemable Noncontrolling Interests
$81,882 $81,361
Preferred Stock $190,000
$190,000 Total Stockholders’ Equity
$583,559 $587,230
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version on businesswire.com: https://www.businesswire.com/news/home/20180907005048/en/
Urstadt Biddle Properties Inc.Willing L. Biddle, CEOorJohn T.
Hayes, CFO203-863-8200
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