Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported its operating results for
the first quarter ended January 31, 2020.
Net income applicable to Class A Common and Common stockholders
for its first quarter of fiscal 2020 was $5,071,000 or $0.13 per
diluted Class A Common share and $0.12 per diluted Common share
compared to $5,854,000 or $0.16 per diluted Class A Common share
and $0.14 per diluted Common share in last year’s first
quarter.
Funds from operations (“FFO”) for the first quarter of fiscal
2020 was $12,897,000 or $0.34 per diluted Class A Common share and
$0.30 per diluted Common share compared with $13,537,000 or $0.36
per diluted Class A Common share and $0.32 per diluted Common share
in last year’s first quarter.
At January 31, 2020, the company’s consolidated properties were
92.8% leased (versus 92.9% at the end of fiscal 2019) and 91.2%
occupied (versus 91.4% at the end of fiscal 2019). The company
currently has 329,200 square feet of vacancy in its consolidated
portfolio, 41,000 square feet of which is in the lease negotiation
stage. In addition, the company is negotiating letters of intent
with potential tenants on another 116,000 square feet of vacant
space. Also, as previously discussed, at January 31, 2020, the
leased percentage treats as leased, and the January 31, 2020
occupancy percentage treats as unoccupied, 65,700 square feet of
retail space (1.4% of our consolidated square footage) formerly
ground leased by Toys R’ Us and Babies R’ Us at the company’s
Danbury Square shopping center in Danbury, CT. Toys R’ Us and
Babies R’ Us went bankrupt in fiscal 2017, and this ground lease
was purchased from Toys R’ Us and Babies R’ Us and assumed by a
real estate investor in August 2018. The lease rate for the 65,700
square foot space was and remains at $0 for the duration of the
lease, and the company did not have any other leases with Toys R’
Us or Babies R’ Us, so the company’s cash flow was not impacted by
the bankruptcy of Toys R’ Us and Babies R’ Us. As of the date of
this press release, the company has not been informed if the new
owner of the lease has a tenant for the space.
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 January 31, 2020, the
company had equity interests in six unconsolidated joint ventures
(723,000 square feet), which were 93.7% leased (96.1% at October
31, 2019).
Commenting on the quarter’s operating results, Willing L.
Biddle, President and CEO of the company, said “We had another
strong operating quarter and our properties continue to perform
well with same property operating results growing by approximately
1.9% in this quarter when compared with last year’s first quarter.
Although our FFO was lower on a dollar value and per share basis
versus last year’s first quarter, this was caused primarily by
several positive financing and investing transactions that will
benefit the company over the long-term but had a negative effect on
the comparison of FFO in our fiscal 2020 first quarter when
compared with last year’s first quarter. In our fourth quarter of
fiscal 2019, we issued $110 million of a new series of preferred
stock at a 5.875% coupon rate, one of the lowest coupon rates ever
for a non-rated company. The primary reason for this new series
issue was to redeem our $75 million of higher yielding 6.75% series
G preferred stock. While the lower coupon will result in long-term
cost savings to the company, excess capital of $35 million was
raised, of which $15 million is being used for the development of
our retail and self-storage project under construction adjacent to
our Stratford, CT property. This new development will not be
completed until late 2020 or early 2021 and will cause dilution to
our FFO until stabilization, as we will pay dividends on the excess
portion of the preferred stock prior to the production of cash flow
by the new development. The reduction in FFO this quarter versus
last year was further accentuated by increased employee
compensation as compared with last year, rewarding our employees
and management for the strong operating results of the company in
fiscal 2019 and their continued excellent performance. In the first
quarter, we continued to strengthen our overall portfolio by
pruning two smaller properties that did not meet our investment
strategy. We sold Bernards Square, a small office building in
Bernardsville, NJ that we purchased in 2012 as part of a
three-property portfolio, including our New Providence, NJ
grocery-anchored shopping center. The sale successfully executes on
our original plan of improving Bernards Square, increasing its
occupancy, then divesting it from the portfolio. This quarter, we
also sold a vacant single tenant retail property located in Carmel,
NY to a restaurant user. These two sales leave us with a
best-in-class 81-property portfolio encompassing 5.3 million square
feet, 84% of which is anchored by grocery stores, pharmacies or
wholesale clubs, which we believe is the best type of retail
property for investment.”
Mr. Biddle continued… “Leasing the vacant space in our portfolio
is management’s primary focus at this time. This quarter, we signed
leases for 14,300 square feet of vacant space in our portfolio and
renewed leases for 131,600 square feet. The rents on the new leases
were 5.17% higher than the previous rents for the same spaces, and
the rents on renewals were 6.72% higher than the expiring rents for
the same spaces. Of the remaining 329,200 square feet of vacancy in
our consolidated portfolio, we have approximately 41,000 square
feet in the lease negotiation stage, and we are negotiating letters
of intent with potential tenants for over 116,000 square feet. In
addition, on January 31 we delivered a 40,000 square foot
supermarket space to Whole Foods Markets, which Whole Foods is
currently building out, and revenue recognition will begin in the
second quarter of fiscal 2020. We are also close to delivering two
spaces totaling 20,800 square feet to Family Dollar and Dollar Tree
at our Passaic, NJ property, and revenue recognition will begin
upon delivery. We were not affected by any retailer bankruptcies
this quarter. We are in the grocery-anchored retail business and
not the power center business, but we are keeping a careful watch
on some of our tenants. Modell’s Sporting Goods is attempting to
avoid bankruptcy and has informed us they will be closing their
only store in our portfolio (at our Ridgeway Shopping Center), and
we already have interest in this space from another tenant. AC
Moore is in a similar situation, and we expect they will close the
only store they have with us (at our Yorktown, NY shopping center)
at some point in the near future, and we are also already in
discussions with other tenants for this space. We expect that some
segments of retailers will continue to be challenged in the current
environment as they adjust to the new economy, but we are fortunate
to have well-located properties in areas with strong demographics
that are desirable for new tenants.”
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
81 properties containing approximately 5.3 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 200 consecutive quarters
of uninterrupted dividends to its shareholders since its inception
and has raised total dividends to its shareholders for the last 26
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)
First quarter 2020 results
(Unaudited)
(in thousands, except per share
data)
Three Months Ended
January
31,
2020
2019
Revenues
Rental revenue
$32,945
$33,261
Lease termination
209
17
Other income
1,194
989
Total Revenues
34,348
34,267
Operating Expenses
Property operating
5,929
5,930
Property taxes
5,810
5,913
Depreciation and amortization
7,135
6,940
General and administrative
2,777
2,654
Directors' fees and expenses
105
108
Total Operating Expenses
21,756
21,545
Operating Income
12,592
12,722
Non-Operating Income (Expense):
Interest expense
(3,339)
(3,578)
Equity in net income from unconsolidated
joint ventures
513
342
Gain on sale of marketable securities
-
403
Gain/(loss) on sale of properties
(339)
-
Interest, dividends and other investment
income
94
129
Net Income
9,521
10,018
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(1,038)
(1,101)
Net income attributable to Urstadt Biddle
Properties Inc.
8,483
8,917
Preferred stock dividends
(3,412)
(3,063)
Net Income Applicable to Common and
Class A Common Stockholders
$5,071
$5,854
Diluted Earnings Per Share:
Per Class A Common Share:
$0.13
$0.16
Per Common Share:
$0.12
$0.14
Weighted Average Number of Shares
Outstanding (Diluted):
Class A Common and Class A Common
Equivalent
29,648
29,547
Common and Common Equivalent
9,447
9,199
Results of Operations
The following information summarizes our results of operations
for the three months ended January 31, 2020 and 2019 (amounts in
thousands):
Three Months Ended
January
31,
Change
Attributable to
Revenues
2020
2019
Increase
(Decrease)
%
Change
Property
Acquisitions/Sales
Properties
Held In Both Periods (Note 1)
Base rents
$24,950
$24,809
$141
0.6%
$57
$84
Recoveries from tenants
7,995
8,452
(457)
(5.4)%
39
(496)
Other income
1,194
989
205
20.7%
1
204
Operating Expenses
Property operating
5,929
5,930
(1)
-
37
(38)
Property taxes
5,810
5,913
(103)
(1.7)%
34
(137)
Depreciation and amortization
7,135
6,940
195
2.8%
5
190
General and administrative
2,777
2,654
123
4.6%
n/a
n/a
Non-Operating Income/Expense
Interest expense
3,339
3,578
(239)
(6.7)%
120
(359)
Interest, dividends, and other investment
income
94
129
(35)
(27.1)%
n/a
n/a
Note 1 – Properties held in both periods includes only
properties owned for the entire periods of 2020 and 2019 and for
interest expense the amount also includes parent company interest
expense. All other properties are included in the property
acquisition/sales column. There are no properties excluded from the
analysis.
Base rents increased by 0.6% to $25.0 million for the three
month period ended January 31, 2020 as compared with $24.8 million
in the comparable period of 2019. The change in base rent and the
changes in other income statement line items analyzed in the table
above were attributable to:
Property Acquisitions and Properties
Sold:
In the first three months of fiscal 2019, we purchased one
property totaling 177,000 square feet, and in fiscal 2019 we sold
one property totaling 10,100 square feet. In the first three months
of fiscal 2020, we sold two properties totaling 18,100 square feet.
These properties accounted for all of the revenue and expense
changes attributable to property acquisitions and sales in the
three months ended January 31, 2020 when compared with fiscal
2019.
Properties Held in Both
Periods:
Revenues
Base Rent
The small net increase in base rents for the three month period
ended January 31, 2020, when compared to the corresponding prior
period, was predominantly caused by an increase in base rents at
most properties related to normal base rent increases provided for
in our leases and new leasing at some properties offset by a
decrease in base rent at six properties related to tenant
vacancies. The most significant of these vacancies were the
vacating of TJ Maxx at our New Milford, CT property and a tenant at
our Stamford, CT property after the first quarter of fiscal
2019.
In the first three months of fiscal 2019, we leased or renewed
approximately 145,800 square feet (or approximately 3.2% of total
consolidated property leasable area). At January 31, 2020, the
Company’s consolidated properties were 92.8% leased (92.9% leased
at October 31, 2019).
Tenant Recoveries
In the three month period ended January 31, 2020, recoveries
from tenants (which represent reimbursements from tenants for
operating expenses and property taxes) decreased by a net $496,000,
when compared with the corresponding prior period. This decrease
was predominantly the result of a large real estate tax reduction
at one of our properties caused by a reduced assessment as part of
a successful tax reduction proceeding, which reduces the amount to
be billed back to tenants at that property. In addition, this
decrease was caused by a negative variance of $400,000 relating to
reconciliation of the accruals for real estate tax recoveries
billed to tenants in the first quarter of fiscal 2019 and 2020.
This net decrease was offset by an increase in property tax expense
caused by an increase in property tax assessments at some of our
properties.
Expenses
Property Operating
In the three month period ended January 31, 2020, property
operating expenses were relatively unchanged when compared with the
corresponding prior period.
Property Taxes
In the three month period ended January 31, 2020, property taxes
decreased by $137,000 when compared with the corresponding prior
period predominantly as a result of a large real estate tax
reduction at one of our properties caused by a reduced assessment
as part of a successful tax reduction proceeding offset by an
increase in property tax assessments for a number of our properties
owned in both periods.
Interest
In the three month period ended January 31, 2020, interest
expense decreased by $359,000 when compared with the corresponding
prior periods as a result of a reduction in interest expense
related to our revolving credit facility. In October 2019, we used
a portion of the proceeds from a new series of preferred stock to
repay all amounts outstanding on our revolving credit facility.
Depreciation and Amortization
In the three month period ended January 31, 2020, depreciation
and amortization increased by $190,000 when compared with the prior
period primarily as a result of a write off of tenant improvements
related to a tenant that vacated our Danbury, CT property in the
first quarter of fiscal 2020.
General and Administrative
Expenses
General and administrative expense had a net increase in the
three month period ended January 31, 2020 when compared with the
corresponding prior periods as a result of an increase of $454,000
in compensation and benefits expense predominantly related to an
increase in cash bonuses paid in the first quarter of fiscal 2020
when compared with the corresponding prior period and an increase
in medical insurance costs in the first quarter of fiscal 2020 when
compared with the corresponding prior period.
Non-GAAP Financial Measure
Funds from Operations (“FFO”)
The company considers Funds from Operations (“FFO”) to be an
additional measure of our operating performance. We report 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 our 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 our performance.
FFO as defined by us 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 three month periods ended
January 31, 2020 and 2019 (amounts in thousands):
(Table Follows)
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
First quarter Ended 2020
Results
(in thousands, except per share
data)
Reconciliation of Net Income Available
to Common and Class A Common Stockholders To Funds From
Operations:
Three Months Ended
January 31,
2020
2019
Net Income Applicable to Common and Class
A Common Stockholders
$5,071
$ 5,854
Real property depreciation
5,671
5,664
Amortization of tenant improvements and
allowances
1,036
883
Amortization of deferred leasing costs
407
393
Depreciation and amortization on
unconsolidated joint ventures
373
380
Loss on sale of property
339
-
Loss on sale of property in unconsolidated
joint venture
-
363
Funds from Operations Applicable to Common
and Class A Common Stockholders
$12,897
$ 13,537
Funds from Operations (Diluted) Per
Share:
Common
$0.30
$0.32
Class A Common
$0.34
$0.36
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,447
9,199
Class A Common and Class A Common
Equivalent
29,648
29,547
Non-GAAP Financial Measure
Same Property Net Operating Income (“NOI”)
We present Same Property Net Operating Income ("Same Property
NOI"), which is a non-GAAP financial measure. Same Property NOI
excludes from Net Operating Income (“NOI”) properties that have not
been owned for the full periods presented. The most directly
comparable GAAP financial measure to NOI is operating income. To
calculate NOI, operating income is adjusted to add back
depreciation and amortization, general and administrative expense,
interest expense, amortization of above and below-market lease
intangibles and to exclude straight-line rent adjustments,
interest, dividends and other investment income, equity in net
income of unconsolidated joint ventures, gain/loss on sale of
operating properties.
We use Same Property NOI internally as a performance measure and
believe Same Property NOI provides useful information to investors
regarding our financial condition and results of operations because
it reflects only those income and expense items that are incurred
at the property level. Our management also uses Same Property NOI
to evaluate property level performance and to make decisions about
resource allocations. Further, we believe Same Property NOI is
useful to investors as a performance measure because, when compared
across periods, Same Property NOI reflects the impact on operations
from trends in occupancy rates, rental rates and operating costs on
an unleveraged basis, providing perspective not immediately
apparent from income from continuing operations. Same Property NOI
excludes certain components from net income attributable to Urstadt
Biddle Properties Inc. in order to provide results that are more
closely related to a property’s results of operations. For example,
interest expense is not necessarily linked to the operating
performance of a real estate asset and is often incurred at the
corporate level as opposed to the property level. In addition,
depreciation and amortization, because of historical cost
accounting and useful life estimates, may distort operating
performance at the property level. Same Property NOI presented by
us may not be comparable to Same Property NOI reported by other
REITs that define Same Property NOI differently.
Table Follows:
Urstadt Biddle Properties Inc.
Same Property Net Operating
Income
(In thousands, except for number of
properties and percentages)
Three Months Ended
January 31,
2020
2019
% Change
(Unaudited)
(Unaudited)
Same Property Operating
Results:
Number of Properties (Note 3)
74
Revenue (Note 2)
Base Rent
$24,291
$23,838
1.9%
Recoveries from tenants
7,718
8,213
-6.0%
Other property income
119
163
-27.3%
$32,128
$32,214
-0.3%
Expenses
Property operating
3,119
3,377
-7.6%
Property taxes
5,597
5,812
-3.7%
Other non-recoverable operating
expenses
410
448
-8.4%
9,126
9,637
-5.3%
Same Property Net Operating Income
$23,002
$22,577
1.9%
Reconciliation of Same Property NOI to
Most Directly Comparable GAAP Measure:
Other reconciling
items:
Other non-same property net operating
income
444
415
Other Interest income
141
77
Other Dividend Income
-
97
Consolidated lease termination income
209
17
Consolidated amortization of above and
below market leases
177
135
Consolidated straight line rent income
62
436
Equity in net income of unconsolidated
joint ventures
513
342
Taxable REIT subsidiary income/(loss)
131
172
Solar income/(loss)
(112)
(117)
Storage income/(loss)
236
219
Gain on sale of marketable securities
-
403
Interest expense
(3,339)
(3,578)
General and administrative expenses
(2,777)
(2,654)
Provision for tenant credit losses
(343)
(254)
Directors fees and expenses
(105)
(108)
Depreciation and amortization
(7,135)
(6,940)
Adjustment for intercompany expenses and
other
(1,244)
(1,221)
Total other -net
(13,142)
(12,559)
Income from continuing operations
9,860
10,018
Gain (loss) on sale of real estate
(339)
-
Net income
9,521
10,018
Net income attributable to noncontrolling
interests
(1,038)
(1,101)
Net income attributable to Urstadt Biddle
Properties Inc.
$8,483
$8,917
Same Property Operating Expense Ratio
(Note 1)
88.6%
89.4%
Note 1 - Represents the percentage of property operating expense
and real estate tax Note 2 - Excludes straight line rent,
above/below market lease rent, lease termination income, and bad
debt expense. Note 3 - Includes only properties owned for the
entire period of both periods presented
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
Balance Sheet
Highlights
(in thousands)
January 31,
October 31,
2020
2019
(Unaudited)
Assets
Cash and Cash Equivalents
$14,278
$94,079
Real Estate investments before
accumulated depreciation
$1,143,018
$1,141,770
Investments in and advances to
unconsolidated joint ventures
$29,046
$29,374
Total Assets
$993,852
$1,072,304
Liabilities
Revolving credit line
$-
$-
Mortgage notes payable and other
loans
$304,947
$306,606
Total Liabilities
$343.188
$414,704
Redeemable Noncontrolling
Interests
$76.720
$77,876
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$573,944
$579,724
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version on businesswire.com: https://www.businesswire.com/news/home/20200309005785/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
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