Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported its operating results for
the first quarter ended January 31, 2016.
Funds from operations (“FFO”) for the first quarter of fiscal
2016 was $8,676,000 or $0.26 per diluted Class A Common share and
$0.23 per diluted Common share compared with $8,080,000 or $0.24
per diluted Class A Common share and $0.21 per diluted Common share
in last year’s first quarter. The FFO amounts above include
significant non-recurring items in the first quarter of fiscal
2015. 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 non-recurring
items on the company’s FFO per diluted share in fiscal 2015.
After removing these non-recurring items from both the first
quarter of fiscal 2016 and 2015, the company’s adjusted FFO for the
first quarter of fiscal 2016 was $8,756,000 or $0.26 per diluted
Class A Common share and $0.23 per diluted Common share compared
with $10,116,000 or $0.30 per diluted Class A Common share and
$0.26 per diluted Common share in last year’s first quarter.
In addition, there were two specific transactions that
negatively affected our operating results in the first quarter of
fiscal 2016 when compared with the same period a year ago.
These included the bankruptcy of one of our largest tenants, The
Great Atlantic and Pacific Tea Company, Inc. ("A&P"), and the
vacating of tenants in our White Plains property, both of which are
more fully discussed below.
Net income applicable to Class A Common and Common stockholders
for the first quarter of fiscal 2016 was $2,877,000 or $0.08 per
diluted Class A Common share and $0.08 per diluted Common share
compared to $2,117,000 or $0.06 per diluted Class A Common share
and $0.06 per diluted Common share in last year’s first
quarter.
The per share amounts for both FFO and net income for the three
months ended January 31, 2016 and 2015 include one-time property
acquisition costs of $80,000 and $1.8 million, respectively. The
first quarter fiscal 2015 acquisition costs of $1.8 million were
incurred when the company purchased four retail properties in New
Jersey in December 2014 (fiscal 2015) for $124.6 million.
In addition, the per share amounts for both FFO and net income
in fiscal 2015 were reduced by $268,000 in preferred stock
dividends as a result of issuing the Series G preferred stock a
month before the redemption of our Series D preferred stock could
take place.
At January 31, 2016, the company’s consolidated properties were
92.45% leased (versus 95.79% at the end of fiscal 2015) and 92.09%
occupied (versus 94.97% at the end of fiscal 2015). The drop in the
Company’s leased rate in the first quarter was predominantly
related to the A&P bankruptcy. During the first quarter of
fiscal 2016, three of nine spaces that A&P occupied became
vacant. Those spaces totaled 130,000 square feet or about 3.3% of
the square footage of the company’s consolidated properties. Six of
the company’s nine A&P leases have been assumed by new
operators. Of the three A&P spaces the company got back, two
have been re-leased. The company leased both the Bloomfield, NJ
former A&P and the Wayne, NJ former A&P spaces to local
grocery store operators subsequent to January 31, 2016. The space
at Wayne was leased for 20 years at an initial base rental rate $2
per square foot more than the former A&P lease and Bloomfield
was leased for 20 years at an initial base rental rate $8.50 per
square foot more than the former A&P lease. Both leases are net
leases and the tenants pay additional rent for their share of CAM
and real estate taxes.
Both the percentage of property leased and the percentage of
property occupied exclude the company’s unconsolidated joint
ventures and the company’s White Plains property. In November,
2014, the company obtained a zoning change from the City of White
Plains to convert this property to a higher and better use. On this
basis, the company is maintaining vacancies to make potential
redevelopment possible. At January 31, 2016, the company had equity
interests in seven unconsolidated joint ventures (749,000 square
feet), which were 98.3% leased (98.1% at October 31, 2015).
Commenting on the quarter’s operating results, Willing L.
Biddle, President and CEO of UBP, said “We are happy to report that
one of our company’s major focuses over the last year, the
bankruptcy of one of our largest tenants, A&P, is drawing to a
close and the overall impact on our company should end up being a
positive one. We had nine A&P leases in our portfolio and as of
today eight have been purchased or re-leased. Five leases were
purchased by ACME supermarkets and one lease was purchased by a Key
Food operator. Five of these six stores are open for business and
one is currently being renovated and is expected to reopen in
April. We were able to negotiate an immediate annual rent increase
of $187,000 at one of the locations in exchange for the granting of
addition options to extend the lease. Of the three remaining
A&P leases, we purchased two leases from A&P as we believed
those leases were under market and we wanted to gain control of the
spaces with all fixtures intact so we could re-lease them to new
supermarket operators. In February, we signed a lease for the first
space located in Bloomfield, NJ at an initial annual rent increase
of approximately $300,000 above what A&P had been paying. In
March, we signed a lease for the second space located in Wayne, NJ
for an initial annual rent increase of approximately $72,000 above
what A&P had been paying. Overall, these two leases will
provide the company with approximately $372,000 of additional base
rent when compared with the former A&P leases. The sole
remaining A&P contains 63,000 square feet in our Pompton Lakes,
New Jersey property which lease was rejected in bankruptcy on
December 31, 2015. We are in the process of marketing this space to
national and local operators. In summary, we expect that the
outcome of the A&P bankruptcy will be net positive for the
company going forward, not only due to the financial strength of
the new operators, but in addition we anticipate the strength of
these new operators will make these eight shopping centers more
vibrant.”
Mr. Biddle continued…..“Even though our consolidated lease
percentage dropped in the first quarter when compared with the end
of last year we continue to have strong leasing momentum. Most of
this drop was related to the three A&P stores we got back, two
of which already have been re-leased. In addition, we have new
leases signed for approximately 85,000 square feet of vacant space
in our portfolio, for which we have not started to accrue rent, and
prospects for several other vacancies; these leases should directly
increase our FFO in the latter part of fiscal 2016. I am also happy
to report that another large focus of our company over the last few
years, completing the steps necessary to ready for sale our
Westchester Pavilion shopping center in White Plains, New York, are
almost done and we hope to finalize this sale later in fiscal 2016.
Once completed, we plan on reinvesting the proceeds of the Pavilion
sale into grocery anchored shopping centers in our core marketplace
which should further improve our operating results.”
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
73 properties containing approximately 4.9 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 184 consecutive quarters
of uninterrupted dividends to its shareholders since its inception
and has raised total dividends to its shareholders for the last 22
consecutive years.
Non-GAAP Financial Measure
Funds from Operations (“FFO”)
The company considers FFO to be a meaningful additional measure
of operating performance because it primarily 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 accounting principles generally accepted in the
United States of America (“U.S. 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 U.S. 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. The company also has presented an alternative
table of reconciliation between Net Income Available to Common and
Class A Common Stockholders to FFO, removing the effects of excess
preferred stock dividends and property acquisition costs from both
fiscal 2015 and fiscal 2016 operating results.
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.
URSTADT BIDDLE PROPERTIES INC. (NYSE: UBA
AND UBP) FIRST QUARTER 2016 RESULTS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended January 31,
2016 2015
(Unaudited) (Unaudited)
Revenues Base rents
$
20,072 $ 21,011 Recoveries from tenants
6,372 7,146
Lease termination income
42 44 Other income
965 305 Total
Revenues
27,451
28,506 Operating Expenses
Property operating
4,767 5,086 Property taxes
4,623
4,462 Depreciation and amortization
5,688 5,526 General and
administrative
2,462 2,268 Provision for tenant credit
losses
239 343 Acquisition costs
80 1,768 Directors'
fees and expenses
83
114 Total Operating Expenses
17,942 19,567
Operating Income 9,509 8,939
Non-Operating Income (Expense): Interest expense
(3,271 ) (3,264 ) Equity in net income from
unconsolidated joint ventures
383 474 Interest, dividends
and other investment income
51
15 Net Income 6,672
6,164
Noncontrolling interests: Net income
attributable to noncontrolling interests
(225 )
(153 ) Net income attributable to Urstadt
Biddle Properties Inc.
6,447 6,011 Preferred stock dividends
(3,570 )
(3,894 ) Net Income Applicable
to Common and Class A Common Stockholders $
2,877 $ 2,117
Diluted Earnings Per Share: Per Common Share:
$ 0.08
$ 0.06 Per Class A Common Share:
$ 0.08
$ 0.06 Weighted Average
Number of Shares Outstanding (Diluted): Common and Common
Equivalent
8,736
8,604 Class A Common and Class A Common
Equivalent
26,174
26,232
The following information summarizes the Company's results of
operations for three month period ended January 31, 2016 and 2015
(amounts in thousands):
Three
Months Ended January 31, Change
Attributable to: Revenues 2016
2015
Increase(decrease)
%Change
PropertyAcquisitions/Sales
Properties HeldIn Both Periods
(Note 1)
Base rents
$ 20,072 $ 21,011 ($939 ) -4.5 % $ 209 $
(1,148 ) Recoveries from tenants
6,372 7,146 (774 ) -10.8 %
107 (881 ) Other income
965 305 660 216.4 % 26 634
Operating Expenses Property operating expenses
4,767
5,086 (319 ) -6.3 % (36 ) (283 ) Property taxes
4,623 4,462
161 3.6 % 74 87 Depreciation and amortization
5,688 5,526
162 2.9 % (101 ) 263 General and administrative expenses
2,462 2,268 194 8.6 % n/a n/a
Other
Income/Expenses Interest expense
3,271 3,264 7 0.2 % 282
(275 ) Interest, dividends and other investment income
51 15
36 240.0 % n/a n/a
Note 1 – Properties held in both periods include only properties
owned for the three month periods of 2016 and 2015. All other
properties are included in the property acquisition/sales column.
There are no properties excluded from the analysis.
Revenues:
Base rents decreased by 4.5% to $20.1 million for the three
month period ended January 31, 2016 as compared with $21.0 million
in the comparable period of 2015. The change in base rentals and
the changes in other income statement line items were attributable
to:
Property Acquisitions/Sales:
In fiscal 2015, the Company purchased equity interests in six
properties totaling approximately 409,000 square feet of GLA and
sold two properties totaling approximately 298,000 square feet.
These properties accounted for all of the revenue and expense
changes attributable to property acquisitions and sales in the
three month period ended January 31, 2016 when compared with the
three month period ended January 31, 2015.
Properties Held in Both
Periods:
Revenues
Base rents decreased during the three month period ended January
31, 2016 by $1.1 million when compared with the corresponding prior
period primarily as a result of a reduction of income related to
the amortization of above/below market rents in the amount of
$372,000. A $555,000 reduction in base rent billed at the company’s
White Plains Property, which had two large tenants vacate at the
end of the first quarter of 2015 when their leases expired, also
contributed to the decrease. The White Plains property currently is
being re-developed and is under contract to be sold. The Company is
maintaining vacancies at this property to facilitate the sale. In
addition, base rents decreased as a result of the vacancy of two
A&P supermarkets (see Liquidity and Capital Resource section in
this Item 2) which reduced base rental income by $151,000. In the
first three months of fiscal 2016, the Company leased or renewed
90,000 square feet (or approximately 2.29% of total consolidated
property leasable area). At January 31, 2016, the Company’s
consolidated properties were 92.45% leased, a decrease of 3.34%
from the end of fiscal 2015. Overall property occupancy decreased
to 92.09% at January 31, 2016, from 94.97% at the end of fiscal
2015.
In the three month period ended January 31, 2016, recoveries
from tenants (which represent reimbursements from tenants for
operating expenses and property taxes) for properties owned in both
periods decreased by $881,000. This decrease was a result of a
decrease in the percentage of the portfolio that is leased, which
causes the Company to bill and collect a lower percentage of
operating costs from its tenants. This net decrease was accentuated
by lower operating costs at these properties which reduced the
amount of revenue billed to tenants for operating costs. This
operating expense decrease was predominantly the result of a
decrease in snow removal costs.
Expenses
Property operating expenses for properties owned in both periods
decreased by $283,000 in the three month period ended January 31,
2016 when compared with the corresponding prior period as a result
of a decrease in expenses relating to snow removal.
Real estate taxes for properties owned in the three month period
ended January 31, 2016 were relatively unchanged when compared with
the corresponding prior period.
Interest expense for properties owned in both periods decreased
by $275,000 in the three month period ended January 31, 2016 when
compared with the corresponding prior period as a result of the
Company repaying a mortgage on the company’s Veteran’s Plaza
property after the first quarter of last year.
Depreciation and amortization expense from properties held in
the three months ended January 31, 2016, when compared to the
corresponding prior period, increased by $263,000 as a result of
increased depreciation related to an increase in capital
improvements and tenant related build-out costs at some of the
Company’s properties.
General and administrative expense increased in
the three months ended January 31, 2016 when compared to the
corresponding prior period predominantly as a result of increased
compensation expense for increased staffing at the Company over the
last three quarters of fiscal 2015 and the first quarter of fiscal
2016 and increased bonus for the company’s employees in fiscal 2016
when compared with fiscal 2015.
URSTADT BIDDLE PROPERTIES INC. (NYSE: UBA
AND UBP) FIRST QUARTER ENDED 2016 RESULTS
(in thousands, except per share data)
Reconciliation of Net Income Available
to Common and Class A Common Stockholders To Funds From
Operations:
Three Months Ended
January 31,
2016 2015 Net Income
Applicable to Common and Class A Common Stockholders
$
2,877 $ 2,117 Real property
depreciation
4,769 4,559 Amortization of tenant
improvements and allowances
777 848 Amortization of
deferred leasing costs
120 102 Depreciation and
amortization on unconsolidated joint ventures
473 348
(Gain)/Loss on sale of asset
(340
) 106 Funds from
Operations Applicable to Common and Class A Common Stockholders
$ 8,676
$ 8,080 Funds
from Operations (Diluted) Per Share: Class A Common
$ .26
$ .24 Common
$ .23
$ .21
The following table reconciles the company’s
net income available to Common and Class A Common Stockholders to
Funds From Operations for the three months ended January 31, 2016
and 2015 after removing excess preferred stock dividends, and
property acquisition costs. (See Note 1).
Reconciliation of Net Income Available
to Common and Class A Common Stockholders To Recurring Funds From Operations:
Three Months Ended
January 31,
2016
2015 Net Income Applicable to Common and Class A
Common Stockholders
$ 2,877 $ 2,117
Add: Excess preferred stock dividends (Note 1)
- 268
Add: Property Acquisition Costs
80
1,768 Net Income Applicable to
Common and Class A Common Stockholders
$ 2,957
4,153 Real property depreciation
4,769
4,559 Amortization of tenant improvements and allowances
777 848 Amortization of deferred leasing costs
120 102 Depreciation and amortization on
unconsolidated joint ventures
473 348 (Gain) on sale
of property
(340 )
106 Funds from Operations Applicable to
Common and Class A Common Stockholders
$
8,756 $
10,116 Funds from Operations
(Diluted) Per Share: Class A Common
$
.26 $
.30 Common
$
.23 $
.26
Note 1 – The Company sold preferred stock in
October and November 2014 for the principal purpose of redeeming
its Series D preferred stock. The Company redeemed the Series D on
November 21, 2014. The Company incurred excess preferred stock
dividends of $268,000 in the first quarter of fiscal 2015 as a
result of having the new series of preferred stock outstanding
prior to being able to redeem the series D preferred stock.
Urstadt Biddle Properties Inc. Balance Sheet
Highlights (in thousands)
January 31, October 31,
2016
2015 (Unaudited)
Assets Cash and Cash
Equivalents $ 3,173
$ 6,623 Real Estate investments
before accumulated depreciation $
945,665 $ 941,690
Investments in and advances to unconsolidated joint
ventures $ 38,974
$ 39,305 Total Assets
$ 862,783 $
861,075 Liabilities Revolving credit
lines $ 29,750
$ 22,750 Mortgage notes payable
and other loans $
259,000 $ 260,457
Total Liabilities $
311,523 $ 304,342
Redeemable Noncontrolling Interests
$ 16,881 $
15,955 Preferred Stock
$ 204,375 $
204,375 Total Stockholders’ Equity
$ 534,379 $
540,778
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Urstadt Biddle Properties Inc.Willing L. Biddle, CEOorJohn T.
Hayes, CFO(203) 863-8200
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