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, 2016.
Net income attributable to Class A Common and Common
stockholders for the third quarter of fiscal 2016 was $5,040,000 or
$0.15 per diluted Class A Common share and $0.13 per diluted Common
share, compared to $4,870,000 or $0.14 per diluted Class A Common
share and $0.13 per diluted Common share in last year’s third
quarter. Net income attributable to Class A Common and Common
stockholders for the first nine months of fiscal 2016 was
$12,686,000 or $0.37 per diluted Class A Common share and $0.33 per
diluted Common share, compared to $10,664,000 or $0.31 per diluted
Class A Common share and $0.28 per diluted Common share in the
first nine months of fiscal 2015.
Diluted Funds from Operations (FFO) for the quarter ended July
31, 2016 was $10,844,000 or $0.31 per Class A Common share and
$0.28 per Common share, compared to $10,749,000 or $0.32 per Class
A Common share and $0.28 per Common share in last year’s third
quarter. For the first nine months of fiscal 2016, diluted FFO
amounted to $30,272,000 or $0.89 per Class A Common share and $0.78
per Common share, compared to $28,378,000 or $0.83 per Class A
Common share and $0.74 per Common share in the corresponding period
of fiscal 2015. The FFO amounts above for fiscal 2015 include
significant acquisition costs and excess preferred stock dividends
due to timing of redemption and issuance of classes of preferred
stock, which in the company’s view are not indicative of operating
performance. 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 items
on the company’s Diluted FFO. After removing these items from both
the three and nine-month periods of fiscal 2016 and 2015, the
company’s adjusted Diluted FFO for the three month period ended
July 31, 2016 was $10,920,000 or $0.32 per diluted Class A Common
share and $0.28 per diluted Common share, compared to $10,823,000
or $0.32 per diluted Class A Common share and $0.28 per diluted
Common share in last year’s third quarter. Our adjusted FFO for the
nine month period ended July 31, 2016 was $30,477,000 or $0.89 per
diluted Class A Common share and $0.79 per diluted Common share,
compared to $30,666,000 or $0.90 per diluted Class A Common share
and $0.80 per diluted Common share in the first nine months of
fiscal 2015.
The per share amounts for both FFO and net income for the nine
months ended July 31, 2016 and 2015 include property acquisition
costs of $205,000 and $2.0 million, respectively. The first quarter
fiscal 2015 acquisition costs of $2.0 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 July 31, 2016, the company’s consolidated properties were
94.18% leased (versus 95.79% at the end of fiscal 2015) and 93.90%
occupied (versus 94.97% at the end of fiscal 2015). The drop in the
company’s leased rate in the first nine months 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 in our portfolio
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 were
assumed by new grocery stores. Of the three A&P spaces that
became vacant (Pompton Lakes, Bloomfield and Wayne, NJ), two
(Bloomfield and Wayne) have been leased to new grocery store
operators in the second quarter of fiscal 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,
with the new tenants paying for their share of CAM and real estate
taxes. The company is marketing the remaining Pompton Lakes, NJ
location for lease.
Both the percentage of property leased and the percentage of
property occupied referenced in the preceding paragraph 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
July 31, 2016, the company had equity interests in seven
unconsolidated joint ventures (754,000 square feet), which were
97.6% leased (98.1% at October 31, 2015).
Commenting on the quarter’s operating results, Willing L.
Biddle, President and CEO of UBP, said “With the A&P bankruptcy
issue mostly behind us and the closing of the sale of our
Westchester Pavilion property scheduled to take place in October,
we can redouble our efforts to leasing the few remaining large
vacant spaces we have in our portfolio. We currently have 3 vacant
spaces of more than 10,000 square feet in our existing portfolio
that are our priority to lease. Two of the spaces are in our
Yorktown property and we are currently working with several
prospective tenants interested in leasing those two spaces. The
remaining large space (63,000 sf in Pompton Lakes, NJ) is the only
former A&P tenant space we have left to lease, and we are
optimistic that space will be leased shortly. If we can lease these
three spaces, our consolidated occupancy will increase by 2.6%, as
these three spaces represent 45% of our remaining consolidated
vacant space.”
Mr. Biddle continued, “We have also been busy on the finance
side of our business taking advantage of favorable borrowing and
capital market conditions. In July we successfully completed a
follow-on offering of our Class A common stock, selling 2.75
million shares (plus the overallotment) at a time when our stock
price was close to an all-time high, raising $73.7 million in
proceeds. We immediately put all that cash to work by closing on
the $45.3 million acquisition of the Newfield Green Shopping Center
located in Stamford, CT and repaying all outstanding balances on
our credit line. Newfield is a 72,000 square foot shopping center
anchored by a Grade A (Shop Rite) grocery store and includes
tenants CVS and Chase, along with other local retailers and service
establishments. We funded half of the purchase price with a 15-year
secured mortgage with a fixed interest rate of 3.89%. In June, we
took advantage of favorable interest rate market conditions and
entered into a mortgage commitment to refinance the company’s
largest mortgage secured by our largest property, Ridgeway in
Stamford. When the new mortgage is refinanced in July 2017, it will
have a principal balance of $50 million (currently $45 million) and
be for a term of ten years at a fixed interest rate of 3.398%
(currently 5.52%). In addition, in August we completed the
refinancing of the company’s unsecured credit facility, increasing
the new facility’s capacity from $80 million to $100 million and
reducing the interest rate at all levels of the interest rate grid,
with the low end of the pricing grid being reduced from 1.50% to
1.35%. The new term of the revolver is four years with a company
option for a one-year extension. These transactions will have a
material positive effect on our future FFO and put the wind at the
back of the company for the foreseeable future.”
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
74 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 186 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)
NINE MONTHS AND THREE MONTHS ENDED JULY
31, 2016 AND 2015
(in thousands, except per share data)
Nine Months Ended Three Months Ended
July 31,
July 31,
2016
2015
2016
2015
Revenues Base rents
$63,175 $63,228
$21,605 $21,042 Recoveries from tenants
18,743 22,676
5,878 7,028 Lease termination income
380 147
48 103 Other income
2,595
1,324
745
646
Total Revenues
84,893
87,375
28,276
28,819
Expenses Property operating
13,770 16,423
4,030 4,384 Property taxes
13,740 13,667
4,592
4,631 Depreciation and amortization
16,802 16,834
5,455 5,541 General and administrative
7,140 6,493
2,387 2,214 Provision for tenant credit losses
835
738
227 212 Acquisition costs
205 2,020
76 74
Directors' fees and expenses
235
261
70
70
Total Operating Expenses
52,727
56,436
16,837
17,126
Operating Income 32,166 30,939
11,439
11,693
Non-Operating Income (Expense): Interest
expense
(9,751) (10,111)
(3,231) (3,417) Equity in
net income from unconsolidated joint ventures
1,484 1,414
564 467 Interest, dividends and other investment income
156
185
55
42
Net Income 24,055 22,427
8,827
8,785 Noncontrolling interests: Net
income attributable to noncontrolling interests
(659)
(728)
(217)
(344)
Net income attributable to Urstadt Biddle Properties Inc.
23,396 21,669
8,610 8,441 Preferred stock dividends
(10,710)
(11,035)
(3,570)
(3,571)
Net Income Applicable to
Commonand Class A Common Stockholders
$12,686
$10,664
$5,040
$4,870
Diluted Earnings Per Share: Per Common Share:
$.33 $.28 $.13
$.13 Per Class A Common Share:
$.37 $.31 $.15
$.14 Weighted Average Shares Outstanding
(Diluted): Common
8,881 8,702
9,001 8,752 Class A
Common
26,315 26,343
26,495 26,380
Results of Operations
The following information summarizes the company's results of
operations for the nine month and three month periods ended July
31, 2016 and 2015 (amounts in thousands):
Nine Months Ended
July
31,
Change Attributable
to:
Revenues
2016
2015
Increase(decrease)
%Change
PropertyAcquisitions/Sales
Properties Held
In Both Periods(Note
1)
Base rents
$63,175 $63,228 $(53) -0.1% $(2,043) $1,990
Recoveries from tenants
18,743 22,676 (3,933) -17.3% (930)
(3,003) Other income
2,595 1,324 1,271 96.0% (48) 1,319
Operating Expenses Property operating expenses
13,770 16,423 (2,653) -16.2% (731) (1,922) Property taxes
13,740 13,667 73 0.5% (181) 254 Depreciation and
amortization
16,802 16,834 (32) -0.2% (144) 112 General and
administrative expenses
7,140 6,493 647 10.0% n/a n/a
Other Income/Expenses Interest expense
9,751 10,111
(360) -3.6% 288 (648) Interest, dividends and other investment
income
156 185 (29) -15.7% 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 Ended
July
31,
Change Attributable
to:
Revenues
2016
2015
Increase(decrease)
%
Change
PropertyAcquisitions/Sales
Properties Held
In Both Periods(Note
2)
Base rents
$21,605 $21,042 $563 2.7% $(1,110) $1,673
Recoveries from tenants
5,878 7,028 (1,150) -16.4% (466)
(684) Other income
745 646 99 15.3% (73) 172
Operating Expenses Property operating expenses
4,030
4,384 (354) -8.1% (131) (223) Property taxes
4,592 4,631
(39) -0.8% (133) 94 Depreciation and amortization
5,455
5,541 (86) -1.6% 138 (224) General and administrative expenses
2,387 2,214 173 7.8% n/a n/a
Other
Income/Expenses Interest expense
3,231 3,417 (186) -5.4%
18 (204) Interest, dividends and other investment income
55
42 13 31.0% 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 and
in fiscal 2016 purchased one property totaling 72,000 square feet.
These properties accounted for all of the revenue and expense
changes attributable to property acquisitions and sales in the nine
and three month periods ended July 31, 2016 when compared with
corresponding periods of 2015.
Properties Held in Both
Periods:
Revenues
Base rents increased during the nine month and three month
periods ended July 31, 2016 by $2.0 million and $1.7 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 variance for the nine month
period ended July 31, 2016 includes $743,000 of base rental income
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 addition,
the variance for both the nine and three month periods ended July
31, 2016 include the company receiving $1.8 million and $1.4
million, respectively, in rental payments from Lennar Multi Family
while it waits to purchase the property from the company.
In the first nine months of fiscal 2016, the company leased or
renewed 300,200 square feet (or approximately 7.5% of total
consolidated property leasable area). New leases for vacant spaces
were signed for 171,100 square feet at an average rental increase
of 9.41% on a cash basis. Renewals for 129,100 square feet of space
previously occupied were signed at an average rental increase of
1.63% on a cash basis. At July 31, 2016, the company’s consolidated
properties were approximately 94.2% leased (excluding Pavilion), a
decrease of 1.6% from the end of fiscal 2015. Overall property
occupancy decreased to 93.9% at July 31, 2016, down from 94.97% at
the end of fiscal 2015.
In the nine month and three month periods ended July 31, 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 $3.0 million and $684,000,
respectively. This decrease during the quarter was primarily the
result of having two anchor stores formerly occupied by A&P be
vacant for most of the first and second quarters which lowered the
company’s recovery rate for operating costs. In addition, this
negative effect was increased by having lower snow removal costs
during the first half of the year which reduced operating expense
recoveries to tenants overall.
Expenses
Property operating expenses for properties held in both periods
decreased in the nine month and three month periods ended July 31,
2016 when compared with the corresponding prior periods by $1.9
million and $223,000, respectively, as a result of a decrease in
expenses relating to snow removal cost.
Real estate taxes for properties held in both periods has small
increases in the nine month and three month periods ended July 31,
2016 when compared with the corresponding prior periods as a result
of increases in tax assessments.
Depreciation and amortization for properties held in both
periods increased by $112,000 in the nine month period ended July
31, 2016 when compared with the corresponding prior period and
decreased by $224,000 in the three month period ended July 31, 2016
when compared to the corresponding prior period as a result of an
increase in depreciation due to increased capital improvements and
tenant related build-out costs at some of the company’s properties,
offset by the reduction of depreciation on the company’s
Westchester Pavilion property which was classified as held for sale
beginning at the end of the second quarter of fiscal 2016.
General and administrative expense in the nine month and three
month periods ended July 31, 2016 when compared with the
corresponding prior periods increased by $647,000 and $173,000,
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, along with an increase in legal fees in the third
quarter of fiscal 2016 when compared with fiscal 2015.
Interest expense for properties owned in the nine month and
three month periods ended July 31, 2016 decreased by $648,000 and
$204,000, respectively, as a result of two mortgages that were paid
off in the second half of fiscal 2015 and one mortgage that was
paid off in the third quarter of fiscal 2016, causing a reduction
in interest expense in fiscal 2016 versus fiscal 2015.
Non-GAAP Financial MeasureFunds 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
NINE MONTHS AND THREE MONTHS ENDED JULY
31, 2016 AND 2015
(in thousands, except per share data)
Nine Months Ended
July 31,
Three Months Ended
July 31,
2016
2015
2016
2015
Net Income Applicable to Common and Class A Common Stockholders
$12,686 $10,664
$5,040 $4,870 Real property
depreciation
14,116 14,097
4,512 4,730 Amortization
of tenant improvements and allowances
2,241 2,350
788
680 Amortization of deferred leasing costs
384 332
134 111 Depreciation and amortization on unconsolidated
joint ventures
1,204 1,058
370 356 (Gain)/loss on
sale of asset
(359)
(123)
-
2
Funds from Operations Applicable to Common and Class A Common
Stockholders
$30,272 $28,378
$10,844 $10,749 Funds
from Operations (Diluted) Per Share: Common
$.78 $.74 $.28
$.28 Class A Common
$.89
$.83 $.31 $.32
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 nine months and three months ended July
31, 2016 (Note 1).
Reconciliation of Net Income Available
to Common and Class ACommon Stockholders To Recurring Funds
From Operations:
Nine Months Ended
July 31,
Three Months Ended
July 31,
2016
2015
2016
2015
Net Income Applicable to Common and Class A Common Stockholders
$12,686 $10,664
$5,040 $4,870 Add: Acquisition costs
205 2,020
76 74 Add: Excess preferred stock dividends
(Note 1)
- 268
- - Net Income Applicable to
Common and Class A Common Stockholders
12,891 12,952
5,116 4,944 Real property depreciation
14,116
14,097
4,512 4,730 Amortization of tenant improvements and
allowances
2,241 2,350
788 680 Amortization of
deferred leasing costs
384 332
134 111 Depreciation
and amortization on unconsolidated joint ventures
1,204
1,058
370 356 (Gain)/loss on sale of asset
(359)
(123)
-
2
Funds from Operations Applicable to Common and Class A Common
Stockholders
$30,477 $30,666
$10,920 $10,823 Funds
from Operations (Diluted) Per Share: Common
$.79 $.80 $.28
$.28 Class A Common
$.89
$.90 $.32 $.32
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)
THIRD QUARTER JULY 31, 2016
Balance Sheet Highlights
(in thousands)
July 31, October 31,
2016
2015
(Unaudited)
Assets Cash and Cash Equivalents
$6,121
$6,623
Real Estate investments before accumulated
depreciation
$999,978
$941,690
Investments in and advances to unconsolidated joint
ventures
$38,590
$39,305 Total Assets
$906,645 $861,075
Liabilities Revolving credit lines
$3,000
$22,750
Mortgage notes payable and other loans
$270,946
$260,457
Total Liabilities
$298,696
$304,342
Redeemable Noncontrolling Interests
$19,837
$15,955
Total Stockholders’ Equity
$588,112 $540,778
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version on businesswire.com: http://www.businesswire.com/news/home/20160908006696/en/
Urstadt Biddle Properties Inc.Willing L. Biddle, CEOorJohn T.
Hayes, CFO203-863-8200
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