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 six month periods ended April 30, 2016.

Diluted Funds from Operations (FFO) for the quarter ended April 30, 2016 was $10,752,000 or $0.31 per Class A Common share and $0.28 per Common share, compared to $9,549,000 or $0.28 per Class A Common share and $0.25 per Common share in last year’s second quarter. For the first six months of fiscal 2016, diluted FFO amounted to $19,428,000 or $0.57 per Class A Common share and $0.51 per Common share, compared to $17,629,000 or $0.52 per Class A Common share and $0.46 per Common share in the corresponding period of fiscal 2015. The FFO amounts above include significant non-recurring items in fiscal 2015. In an effort to assist investors in analyzing changes to FFO, the company has 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 Diluted FFO. After removing these non-recurring items from both the three and six-month periods of fiscal 2016 and 2015, the company’s adjusted Diluted FFO for the three month period ended April 30, 2016 was $10,801,000 or $0.32 per diluted Class A Common share and $0.28 per diluted Common share, compared to $9,727,000 or $0.29 per diluted Class A Common share and $0.25 per diluted Common share in last year’s second quarter. Our adjusted FFO for the six month period ended April 30, 2016 was $19,557,000 or $0.57 per diluted Class A Common share and $0.51 per diluted Common share, compared to $19,843,000 or $0.58 per diluted Class A Common share and $0.52 per diluted Common share in the first six months of fiscal 2015.

Net income attributable to Class A Common and Common stockholders for the second quarter of fiscal 2016 was $4,769,000 or $0.14 per diluted Class A Common share and $0.12 per diluted Common share, compared to $3,677,000 or $0.11 per diluted Class A Common share and $0.10 per diluted Common share in last year’s second quarter. Net income attributable to Class A Common and Common stockholders for the first six months of fiscal 2016 was $7,646,000 or $0.22 per diluted Class A Common share and $0.20 per diluted Common share, compared to $5,794,000 or $0.17 per diluted Class A Common share and $0.15 per diluted Common share in the first six months of fiscal 2015.

The per share amounts for both FFO and net income for the six months ended April 30, 2016 and 2015 include one-time property acquisition costs of $129,000 and $1.9 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 the company’s Series D preferred stock could take place.

At April 30, 2016, the company’s consolidated properties were 94.43% leased (versus 95.79% at the end of fiscal 2015) and 93.74% occupied (versus 94.97% at the end of fiscal 2015). The drop in the company’s leased rate in the first half of fiscal 2016 when compared to the end of fiscal 2015 was predominantly related to the A&P bankruptcy. During the first quarter of fiscal 2016, three of nine spaces that A&P previously 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 former A&P leases have been assumed by new operators. Of the three A&P spaces the company received back, two have since been re-leased. The company leased the former A&P spaces in Bloomfield and Wayne, NJ to local grocery store operators subsequent to January 31, 2016. The space in Wayne was leased for 20 years at an initial base rental rate $2 per square foot higher than the base rent under the former A&P lease and the Bloomfield location was leased for 20 years at an initial base rental rate $8.50 per square foot higher than the base rent under the former A&P lease. Both leases are net leases, and the new tenants pay additional rent for their share of CAM and real estate taxes. The company is marketing the remaining Pompton Lakes location for lease.

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. The property is in contract to be sold and the Company plans on completing the sale later in fiscal 2016. At April 30, 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, “A key concern of the company over the last few months has been a satisfactory resolution for each of the company’s nine locations previously leased to A&P, one of the company’s largest tenants, which filed for bankruptcy protection in July 2015. We came through the A&P bankruptcy as well as we could have hoped, as six of the nine former A&P spaces in our portfolio were assumed by two well-known supermarket operators as part of the bankruptcy process, and two of the nine spaces were purchased by the company from A&P and subsequently re-leased to new supermarket operators at higher rents than the pre-existing A&P rents. One former A&P space is vacant and is being marketed to supermarket tenants. We also have concluded additional significant leasing at two other centers that had large vacancies. At our Kinnelon, NJ property, we built a new 24,000 square foot space for Marshall’s, and at our Fairfield, CT center, we leased a former 20,500 square foot OfficeMax space to DSW. Both of these new leases will have a positive effect on our earnings for the remainder of fiscal 2016 and into the future. Finally, we also cleared the last obstacle to closing our sale of the Westchester Pavilion property in White Plains, NY by moving the last tenant to its new location in a nearby property. We plan on closing the Pavilion sale later in fiscal 2016.”

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 185 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.

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)

SIX MONTHS AND THREE MONTHS ENDED APRIL 30, 2016 AND 2015

(in thousands, except per share data)

  Six Months Ended Three Months Ended April 30, April 30, 2016     2015 2016     2015   Revenues Base rents $41,570

$42,186

$21,498 $21,175 Recoveries from tenants 12,865 15,648 6,493 8,502 Lease termination income 332 44 290 - Other income 1,850 678 885 373 Total Revenues 56,617 58,556 29,166 30,050   Expenses Property operating 9,740 12,039 4,973 6,953 Property taxes 9,148 9,036 4,525 4,574 Depreciation and amortization 11,347 11,293 5,659 5,767 General and administrative 4,753 4,279 2,291 2,011 Provision for tenant credit losses 608 526 369 183 Acquisition costs 129 1,946 49 178 Directors' fees and expenses 165 191 82 77 Total Operating Expenses 35,890 39,310 17,948 19,743   Operating Income 20,727 19,246 11,218 10,307   Non-Operating Income (Expense): Interest expense (6,520) (6,694) (3,249) (3,430) Equity in net income from unconsolidated joint ventures 921 947 537 473 Interest, dividends and other investment income 100 143 50 128 Net Income 15,228 13,642 8,556 7,478   Noncontrolling interests: Net income attributable to noncontrolling interests (442) (384) (217) (231) Net income attributable to Urstadt Biddle Properties Inc. 14,786 13,258 8,339 7,247 Preferred stock dividends (7,140) (7,464) (3,570) (3,570)   Net Income Applicable to Common and Class A Common Stockholders $7,646 $5,794 $4,769 $3,677   Diluted Earnings Per Share: Per Common Share: $.20 $.15 $.12 $.10 Per Class A Common Share: $.22 $.17 $.14 $.11   Weighted Average Shares Outstanding (Diluted): Common 8,821 8,677 8,906 8,751 Class A Common 26,224 26,324 26,274 26,396  

Results of Operations

The following information summarizes the Company's results of operations for the six month and three month periods ended April 30, 2016 and 2015 (amounts in thousands):

 

Six Months EndedApril 30,

      Change Attributable to: Revenues 2016   2015

Increase(decrease)

 

%Change

PropertyAcquisitions/Sales

 

Properties HeldIn Both Periods(Note 1)

Base rents $41,570 $42,186 ($616) (1.5%) ($933) $317 Recoveries from tenants 12,865 15,648 (2,783) (17.8%) (464) (2,319) Other income 1,850 678 1,172 172.9% 25 1,147   Operating Expenses Property operating expenses 9,740 12,039 (2,299) (19.1%) (601) (1,698) Property taxes 9,148 9,036 112 1.2% (48) 160 Depreciation and amortization 11,347 11,293 54 0.5% (282) 336 General and administrative expenses 4,753 4,279 474 11.1% n/a n/a   Other Income/Expenses Interest expense 6,520 6,694 (174) (2.6%) 270 (444) Interest, dividends and other investment income 101 143 (42) (29.4%) n/a n/a  

Note 1 – Properties held in both periods include only properties owned for the entire periods of 2015 and 2016. All other properties are included in the property acquisition/sales column. There are no properties excluded from the analysis.

 

Three Months EndedApril 30,

      Change Attributable to: Revenues 2016   2015

Increase(decrease)

 

%Change

PropertyAcquisitions/Sales

 

Properties HeldIn Both Periods(Note 2)

Base rents $21,498 $21,175 $323 1.5% $(1,142) $1,465 Recoveries from tenants 6,493 8,502 (2,009) (23.6%) (571) (1,438) Other income 885 373 512 137.3% (1) 513   Operating Expenses Property operating expenses 4,973 6,953 (1,980) (28.5%) (565) (1,415) Property taxes 4,525 4,574 (49) (1.1%) (122) 73 Depreciation and amortization 5,659 5,767 (108) (1.9%) (181) 73 General and administrative expenses 2,291 2,011 280 13.9% n/a n/a   Other Income/Expenses Interest expense 3,249 3,430 (181) (5.3%) (12) (169) Interest, dividends and other investment income 50 128 (78) (60.9%) n/a n/a  

Note 2 – Properties held in both periods include only properties owned for the entire periods of 2015 and 2016. All other properties are included in the property acquisition/sales column. There are no properties excluded from the analysis.

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 six and three month periods ended April 30, 2016 when compared with corresponding periods of 2015.

Properties Held in Both Periods:

Revenues

Base rents increased during the six month and three month periods ended April 30, 2016 by $317,000 and $1.5 million, respectively, when compared with the corresponding prior period primarily as the result of new leases entered into at several properties owned in both periods and for the two new leases entered into in the second quarter of fiscal 2016 at spaces formerly occupied by A&P at a higher base rent per square foot than the former A&P lease. In addition, the Company recorded $743,000 of base rental income in the second quarter of fiscal 2016 related to the recognition of deferred rent in connection with a lease termination with the final tenant occupying space in the Company's Westchester Pavilion property. At the inception of the lease the tenant made a nonrefundable cash payment to the Company representing prepaid rent that was to be earned over the life of the tenants lease. The lease was terminated in April 2016 and the remaining deferred rent was recorded as rental income.

In the first six months of fiscal 2016, the Company leased or renewed 239,000 square feet (or approximately 6.1% of total consolidated property leasable area). At April 30, 2016, the Company’s consolidated properties were approximately 94.4% leased (excluding Pavilion), a decrease of 1.4% from the end of fiscal 2015. Overall property occupancy decreased to 93.74% at April 30, 2016, up from 94.97% at the end of fiscal 2015.

In the six month and three month periods ended April 30, 2016, recoveries from tenants for properties owned in both periods (which represents reimbursements from tenants for operating expenses and property taxes) decreased by a net $2.3 million and $1.4 million, respectively. This decrease was primarily a result of a decrease in the percentage of the portfolio that was leased, which causes the Company to bill and collect a lower percentage of operating costs from its tenants and included three former A&P spaces that were vacant for large portions of the first and second quarters of fiscal 2016. This net decrease was accentuated by lower operating costs at these properties which reduces 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 held in both periods decreased in the six month and three month periods ended April 30, 2016 when compared with the corresponding prior periods by $1.7 million and $1.4 million, respectively, as a result of a decrease in expenses relating to snow removal cost.

Real estate taxes for properties held in both periods increased in the six month and three month periods ended April 30, 2016 when compared with the corresponding prior periods as a result of normal increases in tax assessments.

Depreciation and amortization for properties held in both periods increased in the six month and three month periods ended April 30, 2016 when compared with the corresponding prior periods by $336,000 and $73,000, respectively, as a result of an increase in depreciation as a result of increased capital improvements and tenant related build-out costs at some of the Company’s properties.

General and administrative expense increased in the six month and three month periods ended April 30, 2016 when compared with the corresponding prior periods by $474,000 and $280,000, respectively, 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 compensation for our employees in fiscal 2016 when compared with fiscal 2015.

Interest expense for properties owned in the six month and three month periods ended April 30, 2016 decreased by $444,000 and $169,000, respectively, as a result of two mortgages that were paid off in the second half of fiscal 2015, causing a reduction in interest expense in the first half of fiscal 2016.

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.

 

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

FUNDS FROM OPERATIONS

SIX MONTHS AND THREE MONTHS ENDED APRIL 30, 2016 AND 2015

(in thousands, except per share data)

          Six Months Ended

April 30,

Three Months Ended

April 30,

2016     2015 2016     2015 Net Income Applicable to Common and Class A Common Stockholders $7,646 $5,794 $4,769 $3,677   Real property depreciation 9,605 9,367 4,836 4,808 Amortization of tenant improvements and allowances 1,453 1,670 676 822 Amortization of deferred leasing costs 250 221 130 119 Depreciation and amortization on unconsolidated joint ventures 834 702 361 354 (Gain)/loss on sale of asset (360) (125) (20) (231) Funds from Operations Applicable to Common and Class A Common Stockholders $19,428 $17,629 $10,752 $9,549   Funds from Operations (Diluted) Per Share: Common $.51 $.46 $.28 $.25 Class A Common $.57 $.52 $.31 $.28  

The following table reconciles the company’s net income available to Common and Class A Common Stockholders to Funds From Operations after removing excess preferred stock dividends and acquisition costs for the six months and three months ended April 30, 2016 (Note 1).

Reconciliation of Net Income Available to Common and Class A Common Stockholders To Recurring Funds From Operations:     Six Months Ended

April 30,

      Three Months Ended

April 30,

2016     2015 2016     2015 Net Income Applicable to Common and Class A Common Stockholders $7,646 $5,794 $4,769 $3,677 Add: Acquisition costs 129 1,946 49 178 Add: Excess preferred stock dividends (Note 1) - 268 - - Net Income Applicable to Common and Class A Common Stockholders 7,775 8,008 4,818 3,855   Real property depreciation 9,605 9,367 4,836 4,808 Amortization of tenant improvements and allowances 1,453 1,670 676 822 Amortization of deferred leasing costs 250 221 130 119 Depreciation and amortization on unconsolidated joint ventures 834 702 361 354 (Gain)/loss on sale of asset (360) (125) (20) (231) Funds from Operations Applicable to Common and Class A Common Stockholders $19,557 $19,843 $10,801 $9,727   Funds from Operations (Diluted) Per Share: Common $.51 $.52 $.28 $.25 Class A Common $.57 $.58 $.32 $.29  

Note 1 – The Company sold preferred stock in October and November of 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. (NYSE: UBA AND UBP)

SECOND QUARTER APRIL 30, 2016

(in thousands)

    Balance Sheet Highlights (in thousands)     April 30, October 31, 2016 2015 (Unaudited) Assets Cash and Cash Equivalents $3,399 $6,623   Real Estate investments before accumulated depreciation $951,223 $941,690   Investments in and advances to unconsolidated joint ventures $38,894 $39,305   Total Assets $862,243 $861,075   Liabilities Revolving credit lines $35,250 $22,750   Mortgage notes payable and other loans $257,506 $260,457   Total Liabilities $314,143 $304,342   Redeemable Noncontrolling Interests $17,251 $15,955   Total Stockholders’ Equity $530,849 $540,778

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Urstadt Biddle Properties Inc.Willing L. Biddle, CEOorJohn T. Hayes, CFO203-863-8200