Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported financial and operating
results for the fiscal year ended October 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
October 31, 2020)
- Of our 81 properties, 67 are shopping centers, 3 are
free-standing, net-leased retail bank branches and 4 are restaurant
properties. The remaining properties are 6 small suburban office
buildings in Greenwich, CT and Bronxville, NY and a childcare
center in Chester, NJ.
- All 74 of our shopping centers or free-standing, net-leased
retail bank or restaurant properties are open and operating, with
99.1% of our total tenants open and operating based on Annualized
Base Rent (“ABR”).
- All of our shopping centers include necessity-based tenants,
with approximately 71.4% 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. These businesses
are 99.0% open based on ABR.
Of the approximately 900 tenants in our consolidated portfolio,
we have received rent relief requests from 396 tenants, with most
requests received during the early days of the pandemic when
stay-at-home orders were in place and many business were required
to close. Subsequently, approximately 118 of such 396 tenants
withdrew their requests for rent relief or paid their rent in full.
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 previously provided temporary rent
relief. We have evaluated 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, some of these concessions have been in the form of
deferred rent for some portion of rents due during calendar 2020,
to be paid back over the later part of the lease, preferably within
a period of one year or less. In addition, some of these concession
requests have resulted in rent abatements for some portion of rents
due during calendar 2020. As of October 31, 2020, we had completed
rent relief deals with approximately 234 tenants that requested
rent relief, representing deferments of approximately $3.4 million
in total lease income ($854,000 of our fourth quarter lease
income), or approximately 3.5% of our ABR, and representing
abatements of approximately $1.4 million in total lease income
($934,000 of our fourth quarter lease income), or approximately
1.4% of our ABR. The weighted average payback period for the $3.4
million of deferred rents is 8.5 months.
RENTAL COLLECTIONS
UPDATE (as of December 10, 2020)
- 86.0% of the total base rent, common area maintenance charges
(“CAM”) and real estate taxes payable for the period of April
through October 2020 has been paid. This percentage is based on
collections of pre-pandemic contractual lease amounts billed,
without application of any security deposits.
- 89.8% of the total base rent, CAM and real estate taxes payable
for the fourth quarter of 2020 has been paid. This percentage is
based on collections of pre-pandemic contractual lease amounts
billed, without application of any security deposits.
- 85.1% of the total base rent, CAM and real estate taxes payable
for November 2020 has been paid thus far. This percentage is based
on collections of pre-pandemic contractual lease amounts billed,
without application of any security deposits.
The following are statistics about our company and balance sheet
as of October 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 $426,000 and $3.9 million for the three month and
twelve months ended October 31, 2020 ($0.10 per Class A Common
share for the year end period), 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 feasible.
- 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 have re-evaluated all
of the tenants in our consolidated portfolio, and, as a result of
that assessment, we have switched 64 tenants, or 7.1% of the
approximately 900 tenants in our consolidated portfolio, to
cash-basis accounting. This assessment required the company to
write off an additional $551,000 and $2.3 million in billed but
uncollected rents for the three months and twelve months ended
October 31, 2020, respectively and $179,000 and $1.1 million in
straight-line rents for the three months and twelve months ended
October 31, 2020, respectively (combined representing $0.09 per
Class A Common share for the year end period). 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 feasible.
- We have $40.8 million of cash and 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 until January 31,
2022.
- We have temporarily redirected our Acquisitions Department’s
efforts to include tenant lease modification negotiations.
- We have taken proactive measures to manage costs, including
reducing, where feasible, our common area maintenance spending. We
have one ongoing construction project withapproximately $4.3
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 re-opened
at less than 50% capacity on May 20, 2020, with employees
encouraged to continue working from home when feasible, consistent
with business needs.
FOURTH QUARTER
2020
- $913,000 net loss attributable to common stockholders ($(0.02)
loss per diluted Class A Common share). This net loss includes a
loss on an asset held for sale of $5.7 million ($(0.15) loss per
diluted Class A Common share) related to the December 2020 sale of
a 29,000 square foot portion of one of our shopping centers to a
national grocery store company, which will operate a grocery store
at the shopping center.
- $12.8 million of FFO ($0.34 per diluted Class A Common
share).
- FFO was reduced by $1.2 million ($0.03 per Class A share) as a
result of the above-noted increases in the COVID-19 related tenant
accounts receivable reserves and write-offs in the quarter.
- 90.4% of our consolidated portfolio was leased at October 31,
2020.
- 10.8% average decrease in base rental rates on new leases over
the last four quarters.
- 1.5% average increase in base rental rates on lease renewals
over the last four quarters.
- On October 17, 2020, we paid a $0.14 per share quarterly cash
dividend on our Class A Common Stock and a $0.125 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 January
29, 2021 to shareholders of record on January 15, 2021.
- 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 lower than pre-pandemic dividends, but unchanged
compared to last quarter’s dividend. The dividend declared 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 first quarter when compared with pre-pandemic common
stock dividend levels. Dividends on the Common shares and Class A
Common shares will be paid on January 15, 2021 to holders of record
on January 5, 2021. The company’s Board of Directors will continue
to monitor the company’s financial performance and economic outlook
and intends to pay Class A Common and Common stock dividends in
fiscal 2021 that are at least equal to 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 earliest and
hardest hit areas of the country, before rebounding to be a model
on how to coexist with this virus pending the availability of an
effective vaccine. Unfortunately, our area is again experiencing
increased infection rates, but all of our shopping centers are
open, functioning and generally bustling with customers who are
acting in a socially-responsible manner by wearing masks and
socially-distancing. 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 throughout the pandemic. Overall, we continue to
focus 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. Our basic strategy is to work with all
of our tenants, particularly our local tenants, to make sure their
businesses survive and thrive coming out the other side of this
pandemic. Our low debt levels, fortress-like balance sheet and
strong resources give us the ability to temporarily support our
tenants that have viable businesses but lack sales as a result of
the pandemic. Our collections of contractual rents (before any
deferrals or abatements or application of security deposits)
averaged approximately 86.0% from April through October and
averaged approximately 89.8% in our fourth quarter. Through
December 10th, we have collected 85.1% for November. At those
levels of collections, we can safely cover our fixed costs and
preferred dividends with additional cash flow remaining to pay some
level of common stock dividends. 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 will end. Along with everyone else, we
are following the positive developments regarding the efficacy of
multiple new vaccines, and we are grateful for the performance of
private industry and government in fast-tracking the development of
these vaccines. We are hopeful that this country will be in a much
better place this coming spring/summer. In the meantime, we are
encouraged by the fact that our leasing team has already started to
see green shoots of leasing activity within our portfolio, with
many strong national retailers looking to lease space in our
shopping centers. It is also encouraging that residential brokers
within the suburban markets around New York City, where our
properties are located, continue to report on an acceleration of
city dwellers looking to move to the suburbs, as we expect this
long-anticipated migration will ultimately help our suburban tenant
businesses.
In September, we completed the zoning entitlement process to
enable us to move forward with the conversion of our Pompton Lakes
shopping center into a condominium and the subsequent sale of a
condominium unit representing a 29,000 square foot portion of the
property to the Lidl supermarket group. This 29,000 square foot
unit consists of a portion of the vacant 63,000 square foot former
A&P supermarket space, which has been vacant since A&P’s
2015 bankruptcy. Lidl plans to build, entirely at its cost, a new
state-of-the-art supermarket. The re-development plan for Pompton
Lakes also includes converting the balance of the former A&P
supermarket space into 4,000 square feet of small shop retail space
and an approximate 50,000 square foot multi-story self-storage
facility, which will be managed by Extra Space Storage. The sales
price that we received from Lidl was below our recorded cost of the
space, and, as required by accounting rules, in the fourth quarter
of 2020, when the entitlements were granted that would enable the
property to be sold, we recorded a loss on this asset held for sale
of $5.7 million. We are excited to be able to restore this property
to being a grocery-anchored center, which will increase leasing
interest from other tenants, and the addition of the self-storage
facility will result in significant value creation. We expect the
self-storage facility, which will be accessed from the back of the
center, to add significant income without detracting materially
from the retail character of the property. In addition, accounting
rules required us to take an additional $0.03 per share charge to
earnings this quarter in COVID-19 related collectability charges.
So far in 2020, we have taken collectability charges of
approximately $0.19 per share. 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 (loss) applicable to Class A Common and Common stockholders
for the fourth quarter of fiscal 2020 was $(913,000) or $(0.02) per
diluted Class A Common share and $(0.02) per diluted Common share,
compared to net income of $3,206,000 or $0.08 per diluted Class A
Common share and $0.07 per diluted Common share in last year’s
fourth quarter. Net income attributable to Class A Common and
Common stockholders for the fiscal year ended 2020 was $8,533,000
or $0.22 per diluted Class A Common share and $0.20 per diluted
Common share, compared to $22,128,000 or $0.58 per diluted Class A
Common share and $0.52 per diluted Common share in the fiscal year
ended 2019. The net loss in the fourth quarter and net income for
the full year of fiscal 2020, included a loss on asset held for
sale in the amount of $5.7 million (approximately $0.15 per diluted
Class A Common share) related to the December 2020 sale of a 29,000
square foot portion of one of our shopping centers to Lidl, which
will operate a grocery store at the shopping center. This loss is
added back to arrive at FFO as more fully described below.
FFO for the fourth quarter of fiscal 2020 was $12,758,000 or
$0.34 per diluted Class A Common share and $0.30 per diluted Common
share, compared with $10,997,000 or $0.29 per diluted Class A
Common share and $0.26 per diluted Common share in last year’s
fourth quarter. In fiscal 2020, FFO amounted to $45,172,000 or
$1.19 per diluted Class A Common share and $1.06 per diluted Common
share, compared to $51,955,000 or $1.37 per diluted Class A Common
share and $1.22 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 twelve months and three months ended
October 31, 2020 were reduced by $7.3 million (approximately $0.19
per Class A Common share) and $1.2 million (approximately $0.03 per
Class A Common share) respectively, primarily related to COVID-19
related collectability adjustments to accounts receivable and
straight-line rent receivable.
At October 31, 2020, the company’s consolidated properties were
90.4% leased (versus 92.9% at the end of fiscal 2019) and 88.5%
occupied (versus 91.4% at the end of fiscal 2019). The company
currently has 436,000 square feet of vacancy in its consolidated
portfolio, 54,200 square feet of which is in the lease negotiation
stage. In addition, the company is negotiating letters of intent
with potential tenants on another 134,500 square feet of vacant
space. Also, as previously discussed, at October 31, 2020, the
leased percentage treats as leased, and the October 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 informed the company that they
are selling the lease to a national retailer, however the
transaction has not closed yet. 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 October 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 5.2 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 203 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)
Year Ended October 31, 2020
and 2019 results
(in thousands, except per share
data)
Year Ended
October 31,
Three Months Ended
October 31,
2020
2019
2020
2019
Unaudited
Unaudited
Unaudited
Revenues
Lease income
$120,941
$132,287
$30,938
$33,220
Lease termination
705
221
245
27
Other
5,099
4,374
1,135
870
Total Revenues
126,745
136,882
32,318
34,117
Expenses
Property operating
19,542
22,151
4,457
5,296
Property taxes
23,464
23,363
5,849
5,760
Depreciation and amortization
29,187
27,930
7,600
7,002
General and administrative
10,643
9,405
2,148
2,256
Directors' fees and expenses
373
346
86
81
Total Operating Expenses
83,209
83,195
20,140
20,395
Operating Income
43,536
53,687
12,178
13,722
Non-Operating Income (Expense):
Interest expense
(13,508)
(14,102)
(3,385)
(3,495)
Equity in net income from unconsolidated
joint ventures
1,433
1,241
273
234
Gain on sale of marketable securities
258
403
-
-
Interest, dividends and other investment
income
398
403
39
175
Gain (loss) on sale of property
(6,047)
(19)
(5,719)
(428)
Net Income
26,070
41,613
3,386
10,208
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(3,887)
(4,333)
(886)
(1,038)
Net income attributable to Urstadt Biddle
Properties Inc.
22,183
37,280
2,500
9,170
Preferred stock dividends
(13,650)
(12,789)
(3,413)
(3,601)
Preferred stock redemption charges
-
(2,363)
-
(2,363)
Net Income (Loss) Applicable to Common
and Class A Common Stockholders
$8,533
$22,128
$(913)
$3,206
Diluted Earnings (Loss) Per
Share:
Per Common Share:
$0.20
$0.52
$(0.02)
$0.07
Per Class A Common Share:
$0.22
$0.58
$(0.02)
$0.08
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,385
9,349
9,190
9,457
Class A Common and Class A Common
Equivalent
29,576
29,654
29,504
29,703
Results of Operations
The following information summarizes our results of operations
for the year ended October 31, 2020 and 2019 (amounts in
thousands):
Year Ended October 31,
Change Attributable to:
Revenues
2020
2019
Increase (Decrease)
% Change
Property Acquisitions/Sales
Properties Held in Both Periods
(Note 1)
Base rents
$
99,387
$
100,459
$
(1,072)
(1.1)%
$
(351)
$
(721)
Recoveries from tenants
28,889
32,784
(3,895)
(11.9)%
(9)
(3,886)
Uncollectible amounts in lease income
(3,916)
(956)
2,960
309.6%
-
2,960
ASC Topic 842 cash basis lease income
reversal
(3,419)
-
(3,419)
(100.0)%
(9)
(3,410)
Lease termination
705
221
484
219.0%
-
484
Other income
5,099
4,374
725
16.6%
(241)
966
Operating Expenses
Property operating
19,542
22,151
(2,609)
(11.8)%
(264)
(2,345)
Property taxes
23,464
23,363
101
0.4%
(74)
175
Depreciation and amortization
29,187
27,930
1,257
4.5%
(99)
1,356
General and administrative
10,643
9,405
1,238
13.2%
n/a
n/a
Non-Operating Income/Expense
Interest expense
13,508
14,102
(594)
(4.2)%
303
(897)
Interest, dividends, and other investment
income
398
403
(5)
(1.2)%
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 1.1% to $99.4 million for the fiscal
year ended October 31, 2020 as compared with $100.5 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 fiscal 2019, we purchased one property totaling 177,000
square feet, and sold one property totaling 10,100 square feet. In
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 year
ended October 31, 2020 when compared with fiscal 2019.
Properties Held in Both
Periods:
Revenues
Base Rent
The net decrease in base rents for the fiscal year ended October
31, 2020, when compared to the corresponding prior period was
predominantly caused 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 Bethel, CT property,
the vacancy of three tenants at our Cos Cob, CT property, the
vacancy of two tenants at our Orange, CT property, the vacancy of
five tenants at our Katonah, NY 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. This net decrease was partially offset 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 and one junior anchor lease for which rental recognition
began in 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. The new junior anchor tenant is TJX at
our property located in Orange, CT.
In fiscal 2020, we leased or renewed approximately 405,000
square feet (or approximately 8.9% of total GLA). At October 31,
2020, the Company’s consolidated properties were 90.4% leased
(92.9% leased at October 31, 2019).
Tenant Recoveries
For the fiscal year ended October 31, 2020, recoveries from
tenants (which represent reimbursements from tenants for operating
expenses and property taxes) decreased by a net $3.9 million when
compared with the corresponding prior period. The decrease was the
result of having lower common area maintenance expenses in fiscal
2020 when compared with 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
and fourth quarters 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 fiscal
2020. 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 fiscal year ended October 31, 2020, uncollectable amounts
in lease income increased by $3.0 million when compared to fiscal
2019. 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 portion of fiscal 2020. 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
The Company adopted ASC Topic 842 "Leases" at the beginning of
fiscal 2020. ASC Topic 842 requires, amongst other things, that if
the collectability of a specific tenant’s 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 in addition, 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, we determined that as a result of the COVID-19
pandemic 64 tenants' future lease payments were no longer probable
of collection (7.1% of our approximate 900 tenants), and as a
result of this assessment in fiscal 2020, we reversed $2.3 million
of previously billed lease income that was uncollected, which
represented 2.4% of our ABR. In addition, as a result of this
assessment, we reversed $1.1 million of accrued straight-line rent
receivables related to these 64 tenants, which equated to an
additional 1.1% of our ABR. These reductions are a direct reduction
of lease income in fiscal 2020.
Expenses
Property Operating
In the fiscal year ended October 31, 2020, property operating
expenses decreased by $2.3 million as a result of a large decrease
in snow removal costs and parking lot repairs in fiscal 2020 when
compared with fiscal 2019 and an overall reduction of other common
area maintenance expenses as a result of COVID-19 pandemic as
discussed above.
Property Taxes
In the fiscal year ended October 31, 2020, property tax expense
was relatively unchanged when compared with the corresponding prior
period. 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 fiscal year ended October 31, 2020, interest expense
decreased by $897,000 when compared with the corresponding prior
period, 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. In addition, the decrease was caused
by our repayment of a mortgage secured by our Rye, NY properties at
the end of fiscal 2019 with available cash, which reduced interest
expense by $183,000.
Depreciation and Amortization
In the fiscal year ended October 31, 2020, depreciation and
amortization increased by $1.4 million when compared with the prior
period, primarily as a result of a write off of tenant improvements
related to tenants that vacated our Danbury, CT, Newington, NH,
Derby, CT and Stamford, CT properties in fiscal 2020 and increased
depreciation for tenant improvements for large re-tenanting
projects at our Orange, CT and Wayne, NJ properties.
General and Administrative
Expenses
In the fiscal year ended October 31, 2020, general and
administrative expenses increased by $1.2 million when compared
with the corresponding prior period, primarily 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.
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 three month and fiscal years ended
October 31, 2020 and 2019. (Amounts in thousands)
(Table Follows)
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
Fiscal Year and fourth 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:
Fiscal Year ended
Three Months Ended
October 31,
October 31,
2020
2019
2020
2019
Net Income (Loss) Applicable to Common and
Class A Common Stockholders
$8,533
$22,128
($913)
$3,206
Real property depreciation
22,662
22,668
5,668
5,738
Amortization of tenant improvements and
allowances
4,694
3,521
1,449
815
Amortization of deferred leasing costs
1,737
1,652
458
429
Depreciation and amortization on
unconsolidated joint ventures
1,499
1,505
377
376
(Gain)/loss on sale of property
6,047
19
5,719
428
Loss on sale of property in unconsolidated
joint venture
-
462
-
5
Funds from Operations Applicable to Common
and Class A Common Stockholders
$45,172
$51,955
$12,758
$10,997
Funds from Operations (Diluted) Per
Share:
Common
$1.06
$1.22
$0.30
$0.26
Class A Common
$1.19
$1.37
$0.34
$0.29
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,385
9,349
9,190
9,457
Class A Common and Class A Common
Equivalent
29,576
29,654
29,503
29,703
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)
Year Ended October 31,
Three Months Ended October
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)
$92,141
$95,700
-3.7%
$22,391
$24,102
-7.1%
Uncollectable amounts in lease income-same
property
(3,802)
(956)
297.7%
(312)
(237)
31.6%
ASC Topic 842 cash-basis lease income
reversal-same property
(2,306)
-
100.0%
(548)
-
100.0%
Recoveries from tenants
27,827
31,706
-12.2%
7,507
7,847
-4.3%
Other property income
852
984
-13.4%
89
159
-44.0%
114,712
127,434
-10.0%
29,127
31,871
-8.6%
Expenses
Property operating
10,834
13,232
-18.1%
2,575
3,239
-20.5%
Property taxes
22,642
22,585
0.3%
5,648
5,546
1.8%
Other non-recoverable operating
expenses
1,696
1,824
-7.0%
402
471
-14.6%
35,172
37,641
-6.6%
8,625
9,256
-6.8%
Same Property Net Operating Income
79,540
89,793
-11.4%
20,502
22,615
-9.3%
Other reconciling
items:
Other non same-property net operating
income
1,850
2,174
456
708
Other Interest income
428
489
93
221
Other Dividend Income
182
97
-
-
Consolidated lease termination income
705
221
245
27
Consolidated amortization of above and
below market leases
706
614
183
166
Consolidated straight line rent income
2,641
914
898
242
Equity in net income of unconsolidated
joint ventures
1,433
1,241
273
234
Taxable REIT subsidiary income/(loss)
920
96
201
(126)
Solar income/(loss)
(72)
(226)
20
(32)
Storage income/(loss)
979
937
265
244
Gain on sale of marketable securities
258
403
-
-
Interest expense
(13,508)
(14,102)
(3,385)
(3,495)
General and administrative expenses
(10,643)
(9,405)
(2,148)
(2,256)
Provision for tenant credit losses
(3,916)
(956)
(426)
(237)
Provision for tenant credit losses-same
property
3,802
956
312
237
ASC Topic 842 cash-basis lease income
reversal
(2,327)
-
(551)
-
ASC Topic 842 cash-basis lease income
reversal-same property
2,306
-
548
-
Directors fees and expenses
(373)
(346)
(86)
(81)
Depreciation and amortization
(29,187)
(27,930)
(7,600)
(7,002)
Adjustment for intercompany expenses and
other
(3,607)
(3,338)
(695)
(829)
Total other -net
(47,423)
(48,161)
(11,397)
(11,979)
Income from continuing operations
32,117
41,632
-22.9%
9,105
10,636
-14.4%
Gain (loss) on sale of real estate
(6,047)
(19)
(5,719)
(428)
Net income
26,070
41,613
-37.4%
3,386
10,208
-66.8%
Net income attributable to noncontrolling
interests
(3,887)
(4,333)
(886)
(1,038)
Net income attributable to Urstadt Biddle
Properties Inc.
$22,183
$37,280
-40.5%
$2,500
$9,170
-72.7%
Same Property Operating Expense Ratio
(Note 1)
83.1%
88.5%
-5.4%
91.3%
89.3%
2.0%
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 three months and fiscal year ended
October 31, 2020 are reduced by approximately $854,000 and $3.4
million, respectively, in rents that were deferred and
approximately $934,000 and $1.4 million, respectively, 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)
October 31,
October 31,
2020
2019
(Unaudited)
Assets
Cash and Cash Equivalents
$40,795
$94,079
Real Estate investments before
accumulated depreciation
$1,149,182
$1,141,770
Investments in and advances to
unconsolidated joint ventures
$28,679
$29,374
Total Assets
$1,010,179
$1,072,304
Liabilities
Revolving credit line
$35,000
$-
Mortgage notes payable and other
loans
$299,434
$306,606
Total Liabilities
$377,037
$414,704
Redeemable Noncontrolling
Interests
$62,071
$77,876
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$571,071
$579,724
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201216005968/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
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