UBA Urstadt Biddle Properties

Urstadt Biddle Properties Inc. (NYSE:UBA and UBP), a real estate investment trust, today reported its operating results for the three and nine month periods ended July 31, 2014.

Diluted Funds from Operations (FFO) for the quarter ended July 31, 2014 was $8,973,000 or $0.29 per Class A Common share and $0.26 per Common share, compared to $9,052,000 or $0.29 per Class A Common share and $0.26 per Common share in last year’s third quarter. For the first nine months of fiscal 2014, diluted FFO amounted to $24,982,000 or $0.81 per Class A Common share and $0.72 per Common share compared to $20,405,000 or $0.66 per Class A Common share and $0.59 per Common share in the corresponding period of fiscal 2013. The above FFO amounts for fiscal 2013 include several significant one-time items. In an effort to assist investors in analyzing changes to FFO, we have included a second FFO reconciliation table at the end of this report which explains the effect of these one-time items on the company’s FFO per share.

Net income applicable to Class A Common and Common stockholders for the third quarter of fiscal 2014 was $3,803,000 or $0.12 per diluted Class A Common share and $0.11 per diluted Common share compared to $4,241,000 or $0.14 per diluted Class A Common share and $0.12 per diluted Common share in last year’s third quarter. Net income applicable to Common and Class A Common stockholders for the first nine months of fiscal 2014 was $22,449,000 or $0.72 per diluted Class A Common share and $0.65 per diluted Common share compared to $6,621,000 or $0.21 per diluted Class A Common share and $0.19 per diluted Common share for the same period last year. Net income applicable to Class A Common and Common stockholders for the nine month period ended July 31, 2014 includes a $12.5 million gain on sale of properties.

The per share amounts for both FFO and net income in the first nine months of fiscal 2013 include the dilutive effect of the issuance of 2.5 million Class A Common shares in a follow-on public offering and 5.175 million shares of a new Series F preferred stock, both in October 2012. The common stock offering raised net proceeds of $48 million and the preferred stock offering raised an additional $125 million, which funds were not fully invested until May 2013. With respect to those funds, $100 million of proceeds from the preferred stock offering was used to redeem the Series E preferred stock in November 2013 and the Series C preferred stock, which was fully redeemed by May 2013. As a result of these redemptions, the company incurred charges to expense the original issue costs of the preferred stock of $68,000 in the third quarter of fiscal 2013, $406,000 in the second quarter of fiscal 2013 and $3.8 million in the first quarter of fiscal 2013. The first two quarters of fiscal 2013 also included payment of $476,000 in preferred stock dividends related to the Series C preferred stock and the third quarter of fiscal 2013 included payment of $153,000 in preferred stock dividends related to the Series C preferred stock, while the first three quarters of fiscal 2014 did not include dividends on this preferred stock as all such shares were redeemed by May of fiscal 2013. In addition, the per share amounts for FFO and net income for the nine months ended July 31, 2014 and 2013 include one-time property acquisition costs of $476,000 and $815,000, respectively.

At July 31, 2014, the Company’s consolidated core properties were 91.2% leased, an increase of 1.0% from the end of fiscal 2013. Overall consolidated core property occupancy increased to 88.6% at July 31, 2014 from 86.8% at the end of fiscal 2013. The Company has equity interests in seven unconsolidated joint ventures (730,000 square feet). At July 31, 2014, these joint ventures were approximately 98.2% leased.

Commenting on the quarter’s operating results, Willing L. Biddle, President and CEO of UBP, said “During our third quarter we had continued success with one of the company’s most important priorities which has been, and will continue to be, leasing the remaining vacant space in our portfolio. This quarter we completed 170,400 square feet of new lease or renewal transactions which increased our consolidated core portfolio leased rate to 91.2%, an increase of 1.0% from the beginning of our fiscal year. Prior to the third quarter, we completed the re-tenanting of nearly all of the previously vacant space in our Meriden, CT shopping center and we are working diligently to complete the re-development of the Westchester Pavilion center in White Plains, NY, where we are seeking a zoning change that will increase the permitted buildable area to 860,000 square feet from the current 187,000 square feet. The re-development of our Chilmark center in Briarcliff Manor, NY, is nearing completion and we delivered a new 14,000 square foot store to CVS on August 1. In addition, the redevelopment includes construction of 3,000 square feet of new retail space, new building façades, relocation of several existing tenants to newly built store fronts, and the leveling and re-paving of the parking lots in the shopping center. Once complete, this redevelopment will have transformed one of our older looking shopping centers to a contemporary property and provided the community and the consumer with an easily accessible and attractive shopping destination.”

Continuing, Mr. Biddle said, “Although the competition for retail properties in our primary marketplace remains extremely competitive, we are fortunate that our pipeline for property acquisitions remains active with grocery anchored retail properties that meet our investment objectives. Shortly after quarter end, we acquired two such properties in Greenwich, CT totaling 89,000 square feet, anchored by a King’s Supermarket and a CVS Pharmacy, respectively. These two properties, coupled with more potential acquisitions in our pipeline, will help us maintain the acquisition momentum we have established in fiscal 2014 going into the fourth quarter and early next year.”

Urstadt Biddle Properties Inc. is a self-administered equity real estate investment trust which owns or has equity interests in 67 properties containing approximately 5.0 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 179 consecutive quarters of uninterrupted dividends to its shareholders since its inception and has raised total dividends to its shareholders for the last 20 consecutive years.

Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

(Table Follows)

   

URSTADT BIDDLE PROPERTIES INC. (NYSE: UBA AND UBP)NINE AND THREE MONTHS ENDED 2014 RESULTS (UNAUDITED)(in thousands, except per share data)

 

 

Nine Months EndedJuly 31,

Three Months EndedJuly 31,

2014   2013 2014   2013   Revenues Base rents $ 55,708 $ 51,947 $ 18,714 $ 17,911 Recoveries from tenants 18,778 17,067 5,645 5,180 Lease termination income 183 148 131 124 Other income   1,433   1,720   465   620 Total Revenues   76,102   70,882   24,955   23,835   Expenses Property operating 14,713 13,612 3,837 3,917 Property taxes 12,772 11,548 4,205 4,011 Depreciation and amortization 14,196 12,904 4,761 4,556 General and administrative 6,074 6,245 1,987 2,099 Provision for tenant credit losses 594 698 235 222 Acquisition costs 476 815 63 537 Directors' fees and expenses   243   250   71   70 Total Operating Expenses   49,068   46,072   15,159   15,412   Operating Income 27,034 24,810 9,796 8,423   Non-Operating Income (Expense): Interest expense (7,611) (6,774) (2,602) (2,531) Gain on sale of marketable securities - 1,460 - 1,460

Equity in net income from unconsolidated jointventures

1,096 950 291 349 Interest, dividends and other investment income   78   1,381   9   139

Income From Continuing Operations Before Discontinued Operations

20,597 21,827 7,494 7,840 Discontinued operations: Income from discontinued operations 141 990 - 225 Gain (loss) on sale of properties   12,525   -   (87)   - Income (loss) from discontinued operations   12,666   990   (87)   225   Net Income 33,263 22,817 7,407 8,065   Noncontrolling interests:

Net income attributable to noncontrollinginterests

  (455)   (467)   (151)   (150)

Net income attributable to Urstadt BiddleProperties Inc.

32,808 22,350 7,256 7,915 Preferred stock dividends (10,359) (11,496) (3,453) (3,606) Redemption of preferred stock   -   (4,233)   -   (68)  

Net Income Applicable to Common and Class A Common Stockholders

$ 22,449 $ 6,621 $ 3,803 $ 4,241   Diluted Earnings Per Share: Per Common Share: Income from continuing operations $ 0.28 $ 0.16 $ 0.11 $ 0.11 Income from discontinued operations $ 0.37 $ 0.03 $ - $ 0.01

Net Income Applicable to Common Stockholders

$ 0.65 $ 0.19 $ 0.11 $ 0.12 Per Class A Common Share: Income from continuing operations $ 0.31 $ 0.18 $ 0.12 $ 0.13 Income from discontinued operations $ 0.41 $ 0.03 $ - $ 0.01

Net Income Applicable to Class A Common Stockholders

$ 0.72 $ 0.21 $ 0.12 $ 0.14   Weighted Average Shares Outstanding (Diluted):   Common   8,497   8,364   8,606   8,454 Class A Common   23,412   23,347   23,452   23,383  

Results of Operations

The following information summarizes the Company’s results of operations for the nine month and three months periods ended July 31,

2014 and 2013 (amounts in thousands):

     

Nine Months EndedJuly 31,

Change Attributable to:

Revenues

2014

 

2013

Increase(decrease)

 

%Change

PropertyAcquisitions

 

Properties HeldIn Both Periods(Note 1)

Base rents $55,708 $51,947 $3,761 7.2% $3,534 $227 Recoveries from tenants 18,778 17,067 1,711 10.0% 1,594 117 Other income 1,433 1,720 (287) -16.7% 35 (322)   Operating Expenses Property operating expenses 14,713 13,612 1,101 8.1% 939 162 Property taxes 12,772 11,548 1,224 10.6% 838 386 Depreciation and amortization 14,196 12,904 1,292 10.0% 1,153 139 General and administrative expenses 6,074 6,245 (171) -2.7% n/a n/a   Other Income/Expenses Interest expense 7,611 6,774 837 12.4% 959 (122)

Interest, dividends and otherinvestment income

78 1,381 (1,303) -94.4% n/a n/a  

Note 1 – Properties held in both periods includes only properties owned for the entire periods of 2014 and 2013. All other properties are included in the property acquisition column. There are no properties excluded from the analysis.

     

Three Months EndedJuly 31,

Change Attributable to:

Revenues

2014

 

2013

Increase(decrease)

 

%Change

PropertyAcquisitions

 

Properties HeldIn Both Periods(Note 2)

Base rents $18,714 $17,911 $803 4.5% $777 $26 Recoveries from tenants 5,645 5,180 465 9.0% 359 106 Other income 465 620 (155) -25.0% 2 (157)   Operating Expenses Property operating expenses 3,837 3,917 (80) -2.0% 190 (270) Property taxes 4,205 4,011 194 4.8% 176 18 Depreciation and amortization 4,761 4,556 205 4.5% 248 (43) General and administrative expenses 1,987 2,099 (112) -5.3% n/a n/a   Other Income/Expenses Interest expense 2,602 2,531 71 2.8% 140 (69)

Interest, dividends and otherinvestment income

9 139 (130) -93.5% n/a n/a  

Note 2 – Properties held in both periods includes only properties owned for the entire periods of 2014 and 2013. All other properties are included in the property acquisition column. There are no properties excluded from the analysis.

Revenues:

Base rents increased by 7.2% to $55.7 million for the nine month period ended July 31, 2014 as compared with $51.9 million in the comparable period of 2013. Base rents increased 4.5% to $18.7 million for the three months ended July 31, 2014 as compared with $17.9 million in the comparable period of 2013. The change in base rentals and the changes in other income statement line items were attributable to:

Property Acquisitions:

In fiscal 2013 and the first nine months of fiscal 2014, the Company purchased equity interests in fourteen properties totaling approximately 327,000 square feet of GLA. These properties accounted for all of the revenue and expense changes attributable to property acquisitions during the nine month and three month periods ended July 31, 2014. In addition, the Company purchased an equity interest in two properties in the first nine months of fiscal 2014 that are accounted for by the equity method of accounting and are not consolidated into the financial statements of the Company and as such are not included in any of the variance analysis presented below.

Properties Held in Both Periods:

Revenues

Base rents increased during the nine month and three month periods ended July 31, 2014 by $227,000 and $26,000, respectively when compared with the corresponding prior periods as the percentage of the portfolio that was leased was increased slightly. In the first nine months of fiscal 2014, the Company leased or renewed 444,700 square feet (or approximately 10.35% of total consolidated core property leasable area). At July 31, 2014, the Company’s consolidated core properties were approximately 91.15% leased, an increase of 1.04% from the end of fiscal 2013. Overall core property occupancy increased to 88.56% at July 31, 2014 up from 86.78% at the end of fiscal 2013.

In the nine month and three month periods ended July 31, 2014, recoveries from tenants for properties owned in both periods (which represents reimbursements from tenants for operating expenses and property taxes) increased by a net $117,000 and $106,000, respectively. This net increase was a result of higher operating expenses at its properties held in the nine month period ended July 31, 2014 when compared to the corresponding prior period due predominantly to an increase in expenses relating to parking lots, building roofs, building repairs and snow removal. The increase in the three month period ended July 31, 2014 when compared to the corresponding prior period was a result of an increase in the proportionate share of common area costs that the Company anticipates it will recover tenants because the percentage of the portfolio under lease increased in the third quarter of fiscal 2014 when compared with the third quarter of fiscal 2013.

Interest, dividends and other investment income decreased in the nine month and three month periods ended July 31, 2014 when compared to the corresponding prior periods by $1.3 million and $130,000, respectively predominantly as a result of the Company investing approximately $28 million of the proceeds from its two equity offerings completed in October 2012 in income producing securities in the first half of fiscal 2013. These securities were sold in the third quarter of fiscal 2013.

Expenses

Property operating expenses for properties held in both periods increased by $162,000 in the nine month period ended July 31, 2014 and decreased by $270,000 in the three month period ended July 31, 2014 when compared with the corresponding prior periods as a result of an increase in expenses relating to parking lots, building roofs, building repairs and snow removal cost in the nine month period and a decrease in non-recoverable operating costs in the three month period ended July 31, 2014 when compared with the prior periods.

Real estate taxes for properties held in both periods increased in the nine month and three month periods ended July 31, 2014 when compared with the corresponding prior periods as a result of normal tax assessment increases.

Interest expense for properties owned in the nine month and three month periods ended July 31, 2014 was relatively unchanged as a result of normal amortization of secured mortgages causing a reduction in interest expense offset by an increase in the outstanding mortgage principal balance in fiscal 2014 as a result of mortgages assumed in property acquisitions in the first nine months of fiscal 2014. In addition, interest expense increased as a result of additional unsecured borrowing in the first nine months of fiscal 2014 when compared to the first nine months of fiscal 2013.

Depreciation and amortization expense from properties held in both periods was relatively unchanged.

General and administrative was relatively unchanged.

Non-GAAP Financial Measure

Funds from Operations (“FFO”)

The Company considers FFO to be a meaningful additional measure of operating performance primarily because it excludes the assumption that the value of its 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. The Company reports FFO in addition to net income applicable to common shareholders and net cash provided by operating activities. FFO is helpful as it excludes various items included in net income that are not indicative of the Company’s operating performance, such as gains (or losses) from sales of property and depreciation and amortization. The Company has adopted the definition suggested by the National Association of Real Estate Investment Trusts (“NAREIT”). The Company defines FFO as net income computed in accordance with generally accepted accounting principles (“GAAP”), excluding gains (or losses) from sales of property plus real estate related depreciation and amortization, and after adjustments for unconsolidated joint ventures. FFO does not represent cash flows from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity. Since all companies do not calculate FFO in a similar fashion, the Company’s calculation of FFO presented herein may not be comparable to similarly titled measures as reported by other companies.

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URSTADT BIDDLE PROPERTIES INC. (NYSE: UBA AND UBP)NINE MONTHS AND THREE MONTHS ENDED JULY 31, 2014 AND 2013 (UNAUDITED)(in thousands, except per share data)

 

Reconciliation of Net Income Available to Commonand Class A Common Stockholders To FundsFrom Operations (in thousands):

Nine Months EndedJuly 31,

Three Months EndedJuly 31,

 

2014

 

2013

2014

 

2013

Net Income Applicable to Common and Class A CommonStockholders

$22,449 $6,621 $3,803 $4,241   Real property depreciation 11,411 10,435 3,714 3,928 Amortization of tenant improvements and allowances 2,330 2,065 880 469 Amortization of deferred leasing costs 402 351 150 140 Depreciation and amortization on discontinued operations - 47 - 13 Depreciation and amortization on unconsolidated joint ventures 915 711 339 261 (Gain)/Loss on sale of property

(12,525)

175

87

-

Funds from Operations Applicable to Common and Class ACommon Stockholders

$24,982

$20,405

$8,973

$9,052

  Funds from Operations (Diluted) Per Share: Common

$.72

$.59

$.26

$.26

Class A Common

$.81

$.66

$.29

$.29

 

The following table reconciles the company’s net income available to Common and Class A Common Stockholders to Funds From Operations for the nine month and three months periods ended July 31, 2014 after removing the preferred stock redemption charges, excess preferred stock dividends, property acquisitions costs and gain on marketable securities. (See Note 1).

   

Reconciliation of Net Income Available to Common and Class A Common Stockholders To Recurring Funds From Operations (in thousands):

Nine Months Ended

July 31,

Three Months Ended

July 31,

2014

 

2013

 

2014

 

2013

Net Income (loss) Applicable to Common and Class A CommonStockholders

$22,449 $6,621 $3,803 $4,241 Add: Redemption of preferred stock charges - 4,233 - 68 Add: Excess preferred stock dividends (Note 1) - 1,106 - 153 Add: Property Acquisition Costs 476 815 63 537 Less: Gain on marketable equity securities

-

(1,460)

-

(1,460)

Net Income Applicable to Common and Class A CommonStockholders

$22,925 11,315 3,866 3,539   Real property depreciation 11,411 10,435 3,714 3,928 Amortization of tenant improvements and allowances 2,330 2,065 880 469 Amortization of deferred leasing costs 402 351 150 140 Depreciation and amortization on discontinued operations - 47 - 13 Depreciation and amortization on unconsolidated joint ventures 915 711 339 261 Loss on sale of property

(12,525)

175

87

-

Funds from Operations Applicable to Common and Class A CommonStockholders

$25,458

$25,099 $9,036 $8,350   Funds from Operations (Diluted) Per Share: Common $.73 $.73 $.26 $.24 Class A Common $.82 $.81 $.29 $.27  

Note 1 – The Company sold preferred stock in October of 2012 for the main purpose of redeeming its Series E and Series C preferred stock. The company redeemed the Series E on November 21, 2012 and redeemed the Series C preferred stock in various stages through May of 2013. The company incurred excess preferred stock dividends of approximately $476,000 in each of the first and second quarters of fiscal 2013 and $153,000 in the third quarter of fiscal 2013 as a result of having the new series of preferred stock outstanding prior to being able to redeem the series C preferred stock.

 

URSTADT BIDDLE PROPERTIES INC. (NYSE: UBA AND UBP)BALANCE SHEET HIGHLIGHTS

    July 31,   October 31,

2014

2013

(Unaudited)

Assets

Cash and Cash Equivalents $3,291 $2,945  

Real Estate investments before accumulated depreciation

$780,353 $732,159   Investments in and advances to unconsolidated joint ventures $39,248 $31,432   Total Assets $695,675 $650,026  

Liabilities

Revolving credit lines $37,600 $9,250   Mortgage notes payable and other loans $178,953 $166,246   Total liabilities $236,283 $192,269   Redeemable Noncontrolling Interests $12,188 $11,843   Total Stockholders’ Equity $447,204 $445,914  

Urstadt Biddle Properties Inc.Willing L. Biddle, 203-863-8200CEOorJohn T. Hayes, 203-863-8200CFO