Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported financial and operating
results for the three and nine months ended July 31, 2020, and
provided information regarding financial and operational activities
in light of the ongoing COVID-19 pandemic.
The following are statistics about our portfolio that are useful
in assessing the impact of COVID-19 on our business:
COVID-19 UPDATE (as of
July 31, 2020)
- Of our 81 properties, 74 are shopping centers and
free-standing, net-leased retail bank or restaurant properties. The
remaining properties are small two-story suburban office buildings
in Greenwich, CT and Bronxville, NY and a childcare center in
Chester, NJ.
- All 74 of our shopping centers and/or free-standing, net-leased
retail bank or restaurant properties are open and operating, with
95.8% of our total tenants open and operating based on Annualized
Base Rent (“ABR”).
- All of our shopping centers include necessity-based tenants,
with approximately 70.2% of our tenants, based on ABR, either
designated “essential businesses” during the early stay-at-home
period of the pandemic in the tri-state area or otherwise permitted
to operate through curbside pick-up and other modified operating
procedures in accordance with state guidelines. Those “essential
businesses” are 96.3% open.
We have received 406 rent relief requests from our tenants, out
of approximately 900 tenants in our consolidated portfolio, with
most requests received during the early days of the pandemic when
stay-at-home orders were in place and many businesses made to
close, but we continue to receive a smaller number of new requests
even after businesses have re-opened, and in some cases, follow-on
requests from tenants to which we had already provided temporary
rent relief. Subsequently, approximately 110 of the 406 tenants
withdrew their request for rent relief or paid their rent in full.
We have been evaluating each request on a case-by-case basis to
determine the best course of action, recognizing that in many cases
some type of concession may be appropriate and beneficial to our
long-term interests. Although each negotiation has been specific to
that tenant, most of these concessions have been in the form of
deferred rent for some portion of rents due in April through
August, to be paid back over the later part of the lease,
preferably within a period of one year or less. A much smaller
portion of these concessions have been in the form of rent
abatement. At July 31, 2020, the 406 tenants that had originally
requested rent relief (of which approximately 110 subsequently
withdrew their request for rent relief or paid), represent 45.3% of
our consolidated ABR and occupy 38.5% of our consolidated Gross
Leasable Area (“GLA”). As of July 31, 2020, we had completed lease
amendments with approximately 194 tenants that have requested rent
relief, representing deferments of approximately $2.6 million in
total lease income ($1.9 million of our third quarter lease income)
or approximately 2.7% of our ABR and representing abatements of
approximately $492,000 or approximately 0.5% of our ABR. The
weighted average payback period for the $2.6 million of deferred
rents is 8.1 months.
RENTAL COLLECTIONS
UPDATE (as of September 4, 2020)
- 81% of total April 2020 base rent, common area maintenance
charges (“CAM”) and real estate taxes have been paid. The ratio is
based on collections to pre-pandemic contractual lease amounts
billed, without the application of any security deposits).
- 81% of total third quarter 2020 base rent, CAM and real estate
taxes have been paid. The ratio is based on collections to
pre-pandemic contractual lease amounts billed, without the
application of any security deposits).
- 79% of total August 2020 base rent, CAM and real estate taxes
have been paid. The ratio is based on collections to pre-pandemic
contractual lease amounts billed, without the application of any
security deposits).
The following are statistics about our company and balance sheet
as of July 31, 2020 that are useful in assessing the impact of
COVID-19 on our business:
- We increased our provision for uncollectable tenant accounts
receivable by $1.6 million in the quarter ended July 31, 2020
($0.04 per Class A Common share), primarily as a result of
uncertainty regarding the ongoing COVID-19 pandemic. This figure
represents a financial reporting charge to earnings and Funds From
Operations (“FFO”) (1), but the company intends to collect all
unpaid rents from its tenants to the extent possible.
- In accordance with generally accepted accounting principles
(“GAAP”), if the company determines that the collection of a
tenant’s future lease payments is not probable, the company must
change the revenue recognition for that tenant to cash-basis from
accrual basis. In light of the financial pressure that COVID-19 has
been placing on many of our local tenants, we re-evaluated all of
those tenants in the third quarter, and as a result of that
assessment, have switched 58 tenants, or 6.4% of the approximately
900 tenants in our consolidated portfolio, to cash-basis
accounting. This assessment required the company to write off an
additional $1.8 million in billed but uncollected rents and
$910,000 in straight-line rents (combined representing $0.07 per
Class A Common share). This figure represents a financial reporting
charge to earnings and FFO, but the company intends to collect all
unpaid rents from its tenants to the extent possible.
- We have $42.3 million of cash & cash equivalents currently
on our balance sheet.
- We have $64 million available on our unsecured revolving credit
facility.
- We have no material mortgage debt maturing for approximately
the next 17 months.
- We have temporarily redirected our Acquisitions Department’s
efforts to focus on tenant lease modification negotiations.
- We have taken proactive measures to manage costs, including
reducing, where possible, our common area maintenance spending. We
have one ongoing construction project with approximately $5.5
million remaining to complete the project. Otherwise, only minimal
construction is underway.
- The health and safety of the company’s employees and their
families is a top priority. In mid-March, we seamlessly
transitioned 100% of our workforce to working on a remote basis. In
accordance with Connecticut state regulations, our office opened at
less than 50% capacity on May 20, 2020, with employees encouraged
to continue working from home when feasible consistent with
business needs.
THIRD QUARTER
2020
- $1.6 million of net income attributable to common stockholders
($0.04 per diluted Class A Common share).
- $9.2 million of FFO ($0.24 per diluted Class A Common
share).
- FFO was reduced by $4.3 million ($0.11 per Class A share) due
to the above-noted increases in the COVID-19 related tenant
accounts receivable reserves and write-offs.
- 91.6% of our consolidated portfolio was leased at July 31,
2020.
- 11.8% average increase in base rental rates on new leases over
the last four quarters.
- 3.6% average increase in base rental rates on lease renewals
over the last four quarters.
- On July 17, 2020, we paid a $0.07 per share quarterly cash
dividend on our Class A Common Stock and a $0.0625 per share
quarterly cash dividend on our Common Stock.
(1) A reconciliation of GAAP net income to FFO is provided at
the end of this press release.
Dividend
Declarations:
- The company’s Board of Directors declared the regular
contractual quarterly dividend with respect to each of the
company’s Series H and Series K cumulative redeemable preferred
stock. All dividends on the preferred stock will be paid on October
30, 2020 to shareholders of record on October 16, 2020.
- As a result of COVID-19 and the continuing economic uncertainty
resulting from the COVID-19 pandemic, the company’s Board of
Directors approved a dividend on its Common and Class A Common
stock that is reduced when compared to pre-pandemic amounts, but
double last quarter’s dividend. The declared dividend will be $0.14
per Class A Common share and $0.125 per Common share, respectively.
This reduced dividend will preserve $5.5 million of cash in the
fourth quarter when compared with pre-pandemic common stock
dividend levels. Dividends on the Common shares and Class A Common
shares will be paid on October 16, 2020 to holders of record on
October 2, 2020. The company’s Board of Directors will continue to
monitor the company’s financial performance and economic outlook
and intends to adjust the Class A Common and Common stock dividends
during fiscal 2021 to at least the amount required to maintain
compliance with its REIT taxable income distribution
requirements.
“Our thoughts and prayers continue to go out to all of those
impacted by the COVID-19 pandemic, along with great appreciation
and respect for those operating every day on the front lines,” said
Willing L. Biddle, President and Chief Executive Officer. Mr.
Biddle continued…. “[t]he New York City suburban area, where our
properties are primarily located, was one of the hardest hit areas
of the country at the onset of the pandemic, but has rebounded to
be a model on how to coexist with this virus until a vaccine is
available. This was accomplished with the hard work and dedication
of our public servants, medical teams and community residents. All
of our shopping centers are open and functioning, and our property
managers have been reporting that the centers are bustling with
customers who are generally acting in a socially-responsible manner
by wearing masks and socially distancing where practicable. We have
been focused on protecting the health and well-being of our
employees, supporting our tenants and working with the communities
to which we and our properties belong. Thankfully, due to our
long-term strategy, 84% of our properties, measured by square feet,
are anchored by grocery stores, wholesale clubs or pharmacies, and
these businesses have remained open and thriving during this
crisis, proving how critical they are to the communities that they
serve. Commercial landlords like us are facing difficult times with
many stores having been forced to temporarily close, but we are
pleased to report that 96% of our tenant businesses are now open
and operating and doing their best to get back to a new normal. We
are not naïve as to the difficulties and financial stress our
tenants have faced and will continue to face from this pandemic,
and our top priority is to work with all of those tenants to make
sure their businesses survive and thrive coming out the other side
of this pandemic. What this means is that because we are a strong
company with a fortress-like balance sheet and strong resources, we
have the ability to partner with select tenants to defer, or in
select cases, abate their rents until their businesses rebound. Our
collections of contractual rents (before any deferrals or
abatements or application of security deposits) was in the 81%
range for April and averaged about 81% in our third quarter and 79%
in August, and we are hopeful that percentage will continue to rise
in September and in the months to come. At those levels of
collections, we can safely cover our fixed costs and preferred
dividends with cash flow left over to pay some level of common
stock dividends. We understand that, unfortunately, this is not the
dividend level that our investors are used to seeing from our
company. Like nearly all of our retail REIT peers, our earnings
have been negatively impacted as a result of tenant collections
being significantly less than pre-pandemic levels, but this
pandemic is a historical event that we must all bear through with
hope and great expectations for the other side. It’s possible that
our lives and our overall business may not completely return to
“normal” until a vaccine becomes available to the general
population. In the meantime, we will do our best to advance our
business, adjusting to the new normal and with great anticipation
for when we can restore our common stock dividend to a more
customary level. Our leasing team has already started to see green
shoots of leasing activity within our portfolio. Residential
brokers within the suburban markets around New York City, where our
properties are located, are reporting an acceleration of city
dwellers looking to move to the suburbs, and we expect this long
anticipated migration will help our suburban tenant businesses.
This quarter, accounting rules required us to take almost $0.11 per
share in COVID-19 related collectability charges, which is the main
reason for our lower earnings. Our company entered this pandemic in
a very strong position both from an operating and balance sheet
perspective, and we fully expect to emerge in good shape on the
other side, given our superior real estate, low leverage, high
percentage of grocery and pharmacy anchored properties, financial
liquidity, flexibility and dedicated employees.”
Net income applicable to Class A Common and Common stockholders
for the third quarter of fiscal 2020 was $1,576,000 or $0.04 per
diluted Class A Common share and $0.04 per diluted Common share,
compared to $7,270,000 or $0.19 per diluted Class A Common share
and $0.17 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 2020 was $9,446,000 or $0.25
per diluted Class A Common share and $0.22 per diluted Common
share, compared to $18,922,000 or $0.50 per diluted Class A Common
share and $0.44 per diluted Common share in the first nine months
of fiscal 2019.
FFO for the third quarter of fiscal 2020 was $9,230,000 or $0.24
per diluted Class A Common share and $0.22 per diluted Common
share, compared with $14,219,000 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 2020, FFO
amounted to $32,414,000 or $0.85 per diluted Class A Common share
and $0.76 per diluted Common share, compared to $40,958,000 or
$1.08 per diluted Class A Common share and $0.96 per diluted Common
share in the corresponding period of fiscal 2019.
Both net income applicable to Class A Common and Common
stockholders and FFO for the nine and three months ended July 31,
2020 were reduced by $5.8 million (approximately $0.15 per Class A
Common share) and $4.3 million (approximately $0.11 per Class A
Common share) respectively, primarily related to COVID-19 related
collectability adjustments to accounts receivable and straight-line
rent receivable.
At July 31, 2020, the company’s consolidated properties were
91.6% leased (versus 92.9% at the end of fiscal 2019) and 89.6%
occupied (versus 91.2% at the end of fiscal 2019). The company
currently has 382,400 square feet of vacancy in its consolidated
portfolio, 32,000 square feet of which is in the lease negotiation
stage. In addition, the company is negotiating letters of intent
with potential tenants on another 150,000 square feet of vacant
space. Also, as previously discussed, at July 31, 2020, the leased
percentage treats as leased, and the July 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 for $0 at the company’s Danbury Square
shopping center in Danbury, CT. The new owner of this ground lease,
which acquired the lease out of the Toys R’ Us bankruptcy process,
has not informed the company if it has secured a new tenant for the
space. This vacancy has no cash flow impact on the company.
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, 2020, the
company had equity interests in six unconsolidated joint ventures
(719,000 square feet), which were 91.1% leased (96.1% at October
31, 2019).
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 202 consecutive quarters
of uninterrupted dividends to its shareholders since its
inception.
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, 2020 and 2019 Results (Unaudited)
(in thousands, except per share
data)
Nine Months Ended July
31,
Three Months Ended July
31,
2020
2019
2020
2019
Revenues
Lease income
$90,003
$99,067
$26,855
$32,457
Lease termination
460
194
112
177
Other
3,964
3,504
1,832
1,758
Total Revenues
94,427
102,765
28,799
34,392
Expenses
Property operating
15,085
16,855
4,355
5,020
Property taxes
17,615
17,603
5,897
5,885
Depreciation and amortization
21,587
20,928
7,304
7,002
General and administrative
8,495
7,149
2,111
2,230
Directors' fees and expenses
287
265
94
73
Total Operating Expenses
63,069
62,800
19,761
20,210
Operating Income
31,358
39,965
9,038
14,182
Non-Operating Income (Expense):
Interest expense
(10,123)
(10,607)
(3,475)
(3,497)
Equity in net income from unconsolidated
joint ventures
1,160
1,007
184
289
Unrealized holding gains arising during
the periods
-
-
(109)
-
Gain on sale of marketable securities
258
403
258
-
Gain (loss) on sale of property
(328)
409
-
409
Interest, dividends and other investment
income
359
228
27
44
Net Income
22,684
31,405
5,923
11,427
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(3,001)
(3,295)
(935)
(1,094)
Net income attributable to Urstadt Biddle
Properties Inc.
19,683
28,110
4,988
10,333
Preferred stock dividends
(10,237)
(9,188)
(3,412)
(3,063)
Net Income Applicable to Common and
Class A Common Stockholders
$9,446
$18,922
$1,576
$7,270
Basic Earnings Per Share:
Per Common Share:
$0.22
$0.45
$0.04
$0.17
Per Class A Common Share:
$0.25
$0.51
$0.04
$0.19
Diluted Earnings Per Share:
Per Common Share:
$0.22
$0.44
$0.04
$0.17
Per Class A Common Share:
$0.25
$0.50
$0.04
$0.19
Dividends Per Share:
Common
$0.5625
$0.735
$0.0625
$0.245
Class A Common
$0.63
$0.825
$0.07
$0.275
Results of Operations
The following information summarizes our results of operations
for the nine months and three months ended July 31, 2020 and 2019
(amounts in thousands):
Nine months ended
Change Attributable to
July 31,
Increase
Property
Properties Held In
Revenues
2020
2019
(Decrease)
% Change
Acquisitions/Sales
Both Periods (Note 1)
Base rents
$75,013
$75,122
$(109)
(0.1)%
$(256)
$147
Recoveries from tenants
21,166
24,664
(3,498)
(14.2)%
47
(3,545)
Uncollectible amounts in lease income
(3,490)
(719)
(2,771)
385.4%
-
(2,771)
ASC Topic 842 cash basis lease income
reversal
(2,686)
-
(2,686)
100.0%
(9)
(2,677)
Lease termination
460
194
266
137.1%
-
266
Other income
3,964
3,504
460
13.1%
(25)
485
Operating Expenses
Property operating
15,085
16,855
(1,770)
(10.5)%
(155)
(1,615)
Property taxes
17,615
17,603
12
0.1%
(51)
63
Depreciation and amortization
21,587
20,928
659
3.1%
(87)
746
General and administrative
8,495
7,149
1,346
18.8%
n/a
n/a
Non-Operating Income/Expense
Interest expense
10,123
10,607
(484)
(4.6)%
306
(790)
Interest, dividends, and other investment
income
359
228
131
57.5%
n/a
n/a
Three Months Ended
Change Attributable to
July 31,
Increase
Property
Properties Held In
Revenues
2020
2019
(Decrease)
% Change
Acquisitions/Sales
Both Periods (Note 1)
Base rents
$24,130
$24,841
$(711)
(2.9)%
$(119)
$(592)
Recoveries from tenants
7,056
7,839
(783)
(10.0)%
77
(860)
Uncollectible amounts in lease income
(1,645)
(223)
(1,422)
637.7%
-
(1,422)
ASC Topic 842 cash basis lease income
reversal
(2,686)
-
(2,686)
100.0%
22
(2,708)
Lease termination income
112
177
(65)
(36.7)%
-
(65)
Other income
1,832
1,758
74
4.2%
(20)
94
Operating Expenses
Property operating
4,355
5,020
(665)
(13.2)%
(97)
(568)
Property taxes
5,897
5,885
12
0.2%
(36)
48
Depreciation and amortization
7,304
7,002
302
4.3%
(18)
320
General and administrative
2,111
2,230
(119)
(5.3)%
n/a
n/a
Non-Operating Income/Expense
Interest expense
3,475
3,497
(22)
(0.6)%
74
(96)
Interest, dividends, and other investment
income
27
44
(17)
(38.6)%
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 decreased by 0.1% to $75.0 million for the nine month
period ended July 31, 2020 as compared with $75.1 million in the
comparable period of 2019. Base rents decreased by 2.9% to $24.1
million for the three month period ended July 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 nine months of fiscal 2019, we purchased one
property totaling 177,000 square feet, and sold one property
totaling 10,100 square feet. In the first nine 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 nine months
ended July 31, 2020 when compared with fiscal 2019.
Properties Held in Both
Periods:
Revenues
Base Rent
The net increase in base rents for the nine month period ended
July 31, 2020, when compared to the corresponding prior periods,
was predominantly caused by an increase in base rents at most
properties related to normal base rent increases provided for in
our leases, new leasing at some properties and base rent revenue
related to two new grocery store leases for which rental
recognition began in the first nine months of fiscal 2020. The new
grocery tenants are Whole Foods at our Valley Ridge shopping center
in Wayne, NJ and DeCicco's at our Eastchester, NY property. This
increase was offset by a decrease in base rent revenue at seven
properties related to tenant vacancies. The most significant of
these vacancies were the vacating of TJ Maxx at our New Milford, CT
property, the vacancy of two tenants at our Cos Cob, CT property,
the vacancy of two tenants at our Orange, CT property and the
vacancy caused by the bankruptcy of Modell's at our Ridgeway
shopping center in Stamford, CT. In addition, base rent decreased
as a result of providing a rent reduction for the grocery store
tenant at our Bloomfield, NJ property.
The net decrease in base rents for the three month period ended
July 31, 2020, when compared to the corresponding prior periods,
was predominantly related to the vacancy caused by the bankruptcy
of Modell's at our Ridgeway shopping center in Stamford, CT.
In the first nine months of fiscal 2020, we leased or renewed
approximately 329,600 square feet (or approximately 7.3% of total
consolidated GLA). At July 31, 2020, the Company’s consolidated
properties were 91.6% leased (92.9% leased at October 31,
2019).
Tenant Recoveries
In the nine month and three month periods ended July 31, 2020,
recoveries from tenants (which represent reimbursements from
tenants for operating expenses and property taxes) decreased by a
net $3.5 million and $860,000, respectively, when compared with the
corresponding prior periods.
The decrease for the nine month period was the result of having
lower common area maintenance expenses in the nine month period of
fiscal 2020 when compared with the nine month period of fiscal
2019. This decrease was caused by significantly lower snow removal
costs in the winter of 2020 when compared with the winter of 2019.
In addition, throughout our third quarter of fiscal 2020, in
response to the COVID-19 pandemic, we made a conscious effort to
reduce common area maintenance costs at our shopping centers to
help reduce the overall tenant reimbursement rents charged to our
tenants. In addition, the reduction was caused by a negative
variance relating to reconciliation of the accruals for real estate
tax recoveries billed to tenants in the first half of fiscal 2019
and 2020. The decrease was further accentuated by accruing a lower
percentage of recovery at most of our properties as a result of our
assessment that many of our smaller local tenants will have
difficulty paying the full amounts required under their leases as a
result of the COVID-19 pandemic. This assessment was based on the
fact that many smaller tenants' businesses were deemed
non-essential by the states where they operate and were forced to
close for a portion of our third quarter. These net decreases were
offset by increased tax assessments at our other properties held in
both periods, which increases the amount of tax due and the amount
billed back to tenants for those billings.
The decrease for the three month period was the result of having
lower common area maintenance expenses in the three month period of
fiscal 2020 when compared with the three month period of fiscal
2019. Throughout our third quarter, in response to the COVID-19
pandemic, we made a conscious effort to reduce common area
maintenance costs at our shopping centers to help reduce the
overall tenant reimbursement rents charged to our tenants. The
decrease was further accentuated by accruing a lower percentage of
recovery at most of our properties as a result of our assessment
that many of our smaller local tenants will have difficulty paying
the full amounts required under their leases as a result of the
COVID-19 pandemic. This assessment was based on the fact that many
smaller tenants' businesses were deemed non-essential by the states
where they operate and were forced to close for a portion of our
third quarter. These net decreases were offset by increased tax
assessments at our other properties held in both periods, which
increases the amount of tax due and the amount billed back to
tenants for those billings.
Uncollectable Amounts in Lease
Income
In the nine month and three month periods ended July 31, 2020,
uncollectable amounts in lease income increased by $2.8 million and
$1.4 million, respectively. This increase was predominantly the
result of an increase in our assessment of the collectability of
existing non-credit small shop tenants' receivables given the
on-going COVID-19 pandemic. Many non-credit small shop tenants'
businesses were deemed non-essential by the states where they
operate and were forced to close for a large portion of our third
quarter. Our assessment was based on the premise that as we emerge
from the COVID-19 pandemic, our non-credit small shop tenants will
need to use most of their resources to re-establish their business
footing and any existing accounts receivable attributable to these
tenants would most likely be uncollectable.
ASC Topic 842 Cash Basis Lease Income
Reversals
ASC Topic 842 "Leases" requires amongst other things, that if
the collectability of a specific tenants future lease payments as
contracted are not probable of collection, revenue recognition for
that tenant must be converted to cash-basis accounting and be
limited to the lesser of the amount billed or collected from that
tenant and any straight-line rental receivables would need to be
reversed in the period that the collectability assessment changed
to not probable. As a result of analyzing our entire tenant base as
a result of the COVID-19 pandemic, we determined that 58 tenants’
future lease payments were no longer probable of collection (6.4%
of our approximate 900 tenants) and as a result of this assessment
in the third quarter of fiscal 2020 we reversed previously billed
lease income that was uncollected in the amount of $1.8 million,
which represented 1.8% of our ABR. In addition, as a result of this
assessment, we reversed $910,000 of accrued straight-line rent
receivables related to these 58 tenants, which equated to 0.9% of
our ABR. These reductions are a direct reduction of lease income in
our third quarter of fiscal 2020.
Expenses
Property Operating
In the nine month and three month periods ended July 31, 2020,
property operating expenses decreased by $1.6 million and $568,000,
respectively, as a result of a large decrease in snow removal costs
and parking lot repairs in the first half of fiscal 2020 when
compared with the first half of fiscal 2019 and an overall
reduction of other common area maintenance expenses as a result of
COVID-19 pandemic.
Property Taxes
In the nine month and three month periods ended July 31, 2020,
property tax expense was relatively unchanged when compared with
the corresponding prior periods. In the first half of fiscal 2020,
one of our properties received a large real estate tax expense
reduction as a result of a successful tax reduction proceeding.
This decrease was offset by increased tax assessments at our other
properties held in both periods, which increases the amount of tax
due.
Interest
In the nine month and three month periods ended July 31, 2020,
interest expense decreased by $790,000 and $96,000, respectively,
when compared with the corresponding prior periods, as a result of
a reduction in interest expense related to our 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
Facility.
Depreciation and Amortization
In the nine month and three month periods ended July 31, 2020,
depreciation and amortization increased by $746,000 and $320,000,
respectively, when compared with the prior periods, primarily as a
result of a write off of tenant improvements related to a tenant
that vacated our Danbury, CT and Stamford, CT properties in fiscal
2020 and increased depreciation for tenant improvements for a large
re-tenanting project at our Orange, CT property.
General and Administrative
Expenses
In the nine month period ended July 31, 2020, general and
administrative expenses increased by $1.3 million when compared
with the corresponding prior period, as a result of an increase of
$1.4 million in restricted stock compensation expense in the second
quarter of fiscal 2020 for the accelerated vesting of the grant
value of restricted stock for our former Chairman Emeritus when he
passed away in the second quarter of fiscal 2020. General and
administrative expenses for the three month period ended July 31,
2020 when compared with the corresponding prior period were
relatively unchanged.
Non-GAAP Financial Measure Funds from Operations (“FFO”)
We consider 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 to be 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 nine month and three month
periods ended July 31, 2020 and 2019 (amounts in thousands):
(Table Follows)
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
Nine Months and Three Months
Ended July 31, 2020 and 2019
(in thousands, except per share
data)
Reconciliation of Net Income Available to
Common and Class A Common Stockholders to Funds From
Operations:
Nine months ended
Three Months Ended
July 31,
July 31,
2020
2019
2020
2019
Net Income Applicable to Common and Class
A Common Stockholders
$9,446
$18,922
$1,576
$7,270
Real property depreciation
16,994
16,930
5,658
5,597
Amortization of tenant improvements and
allowances
3,245
2,706
1,170
974
Amortization of deferred leasing costs
1,279
1,223
451
411
Depreciation and amortization on
unconsolidated joint ventures
1,122
1,129
375
376
(Gain)/loss on sale of property
328
(409)
-
(409)
Loss on sale of property in unconsolidated
joint venture
-
457
-
-
Funds from Operations Applicable to Common
and Class A Common Stockholders
$32,414
$40,958
$9,230
$14,219
Funds from Operations (Diluted) Per
Share:
Common
$0.76
$0.96
$0.22
$0.33
Class A Common
$0.85
$1.08
$0.24
$0.37
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,479
9,313
9,281
9,398
Class A Common and Class A Common
Equivalent
29,610
29,637
29,540
29,675
Non-GAAP Financial Measure Same Property Net Operating
Income
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, and 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)
Nine Months Ended July 31,
Three Months Ended July 31,
2020
2019
% Change
2020
2019
% Change
Same Property Operating Results:
Number of Properties (Note 4)
74
74
Revenue (Note 2)
Base Rent (Note 3)
$69,750
$71,598
-2.6%
$21,254
$23,735
-10.5%
Provision for tenant credit losses-same
property
(3,490)
(719)
385.4%
(1,645)
(223)
637.7%
ASC Topic 842 cash-basis lease income
reversal-same property
(1,758)
-
100.0%
(1,758)
-
100.0%
Recoveries from tenants
20,320
23,860
-14.8%
6,699
7,568
-11.5%
Other property income
763
824
-7.4%
570
475
20.0%
85,585
95,563
-10.4%
25,120
31,555
-20.4%
Expenses
Property operating
8,260
9,993
-17.3%
2,298
2,877
-20.1%
Property taxes
16,995
17,039
-0.3%
5,693
5,662
0.5%
Other non-recoverable operating
expenses
1,294
1,353
-4.4%
488
491
-0.6%
26,549
28,385
-6.5%
8,479
9,030
-6.1%
Same Property Net Operating Income
$59,036
$67,178
-12.1%
$16,641
$22,525
-26.1%
Other reconciling
items:
Other non same-property net operating
income
1,394
1,466
524
556
Other Interest income
336
268
88
91
Other Dividend Income
182
97
-
-
Consolidated lease termination income
460
194
112
178
Consolidated amortization of above and
below market leases
523
448
174
157
Consolidated straight line rent income
1,744
672
1,194
71
Equity in net income of unconsolidated
joint ventures
1,160
1,007
184
289
Taxable REIT subsidiary income/(loss)
719
222
393
97
Solar income/(loss)
(91)
(194)
100
(18)
Storage income/(loss)
714
692
240
240
Unrealized holding gains arising during
the periods
-
-
(109)
-
Gain on sale of marketable securities
258
403
258
-
Interest expense
(10,123)
(10,607)
(3,475)
(3,497)
General and administrative expenses
(8,495)
(7,149)
(2,111)
(2,230)
Provision for tenant credit losses
(3,490)
(719)
(1,645)
(223)
Provision for tenant credit losses-same
property
3,490
719
1,645
223
ASC Topic 842 cash-basis lease income
reversal
(1,776)
-
(1,776)
-
ASC Topic 842 cash-basis lease income
reversal-same property
1,758
-
1,758
-
Directors fees and expenses
(287)
(265)
(94)
(73)
Depreciation and amortization
(21,587)
(20,928)
(7,304)
(7,003)
Adjustment for intercompany expenses and
other
(2,913)
(2,508)
(874)
(365)
Total other -net
(36,024)
(36,182)
(10,718)
(11,507)
Income from continuing operations
23,012
30,996
-25.8%
5,923
11,018
-46.2%
Gain (loss) on sale of real estate
(328)
409
-
409
Net income
22,684
31,405
-27.8%
5,923
11,427
-48.2%
Net income attributable to noncontrolling
interests
(3,001)
(3,295)
(935)
(1,094)
Net income attributable to Urstadt Biddle
Properties Inc.
$19,683
$28,110
-30.0%
$4,988
$10,333
-51.7%
Same Property Operating Expense Ratio
(Note 1)
80.5%
88.3%
-7.8%
83.8%
88.6%
-4.8%
Note 1 - Represents the percentage of property operating expense
and real estate tax expense recovered from tenants under operating
leases Note 2 - Excludes straight line rent, above/below market
lease rent and lease termination income Note 3 - Base rents for the
nine and three months ended July 31, 2020 are reduced by
approximately $1.9 million in rents that were deferred and
approximately $492,000 in rents that were abated as a result of
COVID-19 Note 4 - Includes only properties owned for the entire
period of both periods presented
Urstadt Biddle Properties
Inc.
Balance Sheet
Highlights
(in thousands)
July 31,
October 31,
2020
2019
(Unaudited)
Assets
Cash and Cash Equivalents
$42.271
$94,079
Real Estate investments before
accumulated depreciation
$1,151,635
$1,141,770
Investments in and advances to
unconsolidated joint ventures
$28,305
$29,374
Total Assets
$1,021,205
$1,072,304
Liabilities
Revolving credit line
$35,000
$-
Mortgage notes payable and other
loans
$301,597
$306,606
Total Liabilities
$385,483
$414,704
Redeemable Noncontrolling
Interests
$62,942
$77,876
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$572,780
$579,724
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200908005939/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
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