Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported financial and operating
results for the three and six months ended April 30, 2021, 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
May 22, 2021)
- Of our 80 properties, 67 are shopping centers, 3 are
free-standing, net-leased retail bank branches and 3 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 73 of our shopping centers, free-standing, net-leased
retail bank branches and restaurant properties are open and
operating, with 99.6% of our total tenants open and operating based
on Annualized Base Rent (“ABR”).
- All of our shopping centers include necessity-based tenants,
with approximately 71.1% 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 99.6% open.
- Of the 863 tenants in our consolidated portfolio, we have
received rent relief requests from 401 tenants, with most requests
received during the early days of the pandemic when stay-at-home
orders were in place and many businesses were required to close.
Subsequently, 118 of such 401 tenants withdrew their requests for
rent relief or paid rent in full. We continue to receive a small
number of new requests, and, in some cases, follow-on requests from
tenants to which we had previously provided temporary rent relief,
but these requests are tapering off and no new requests from
tenants who had not previously requested rent relief were received
during the quarter ended April 30, 2021. 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. Each
negotiation has been specific to the individual tenant. Some
concessions have been granted in the form of deferred rent and some
have been in the form of rent abatements, in each case for some
portion of rents due during calendar 2020 and/or 2021-2023. From
the beginning of the pandemic through April 30, 2021, we have
completed 274 lease modifications, consisting of base rent
deferrals totaling $3.8 million, or 3.9% of our ABR, and rent
abatements totaling $3.7 million, or 3.8% of our ABR. Included in
these amounts were 8 rent deferrals and abatements completed in the
three months ended April 30, 2021, which deferred $26,000 of base
rents, or 0.03% of our ABR, and abated $287,000 of base rents, or
0.3% of our ABR. Included in the $287,000 aforementioned amount is
$84,000 of base rents for periods subsequent to April 30,
2021.
RENTAL COLLECTIONS
UPDATE (as of June 1, 2021)
- 91.2% of the total base rent, common area maintenance charges
(“CAM”) and real estate taxes payable for the period of April 2020
through April 2021 has been paid. This percentage is based on
collections of pre-pandemic contractual lease amounts billed,
exclusive of the application of any security deposits.
- 92.4% of the total base rent, CAM and real estate taxes payable
for the second quarter of 2021 has been paid. This percentage is
based on collections of pre-pandemic contractual lease amounts
billed, exclusive of the application of any security deposits.
- 85.7% of the total base rent, CAM and real estate taxes payable
for May 2021 has been paid to date. This percentage is based on
collections of pre-pandemic contractual lease amounts billed,
exclusive of the application of any security deposits.
- We increased our provision for uncollectable tenant accounts
receivable by $725,000 and $1.4 million for the three and six month
periods ended April 30, 2021, respectively ($0.02 per Class A
Common share in the three month period and $0.04 per Class A share
in the six month 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 tenants, we have re-evaluated all of
the tenants in our consolidated portfolio, and, as a result of this
assessment, we have switched 89 tenants (9 tenants converted for
the three months ended April 30, 2021 and 25 tenants converted for
the six months ended April 30, 2021), or 10.3% of the approximately
863 tenants in our consolidated portfolio, to cash-basis
accounting. This assessment required the company to write-off an
additional $893,000 and $1.9 million in billed but uncollected
rents related to these 89 tenants, for the three and six month
periods ended April 30, 2021, respectively, and an additional
$814,000 and $1.3 million in straight-line rent receivables in the
three and six month periods ended April 30, 2021, respectively,
related to the 9 tenants converted to cash-basis accounting for the
three months ended April 30, 2021 and the 25 tenants converted to
cash-basis accounting for the six months ended April 30, 2021
(combined representing $0.04 per Class A Common share for the three
month period and $0.08 per Class A Common share for the six month
period). There were no such write-offs in the corresponding periods
of fiscal 2020. These figures represent 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 $38.4 million of cash and cash equivalents currently on
our balance sheet.
- We have $89 million available on our unsecured revolving credit
facility.
- We have no material mortgage debt maturing until January 31,
2022.
- We have one ongoing construction project with approximately
$300,000 remaining to complete the project. Otherwise, only minimal
construction is underway, although other projects are under
consideration or in the early planning stages.
SECOND QUARTER
2021
- $4.6 million net income attributable to common stockholders
($0.12 income per diluted Class A Common share).
- $11.7 million of FFO ($0.31 per diluted Class A Common
share).
- FFO was reduced by $2.4 million ($0.06 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.
- 90.1% of our consolidated portfolio Gross Leasable Area (“GLA”)
was leased at April 30, 2021.
- 13.5% average decrease in base rental rates on new leases over
the last two quarters
- 2.2% average decrease in base rental rates on lease renewals
over the last two quarters.
- On April 16, 2021, 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.
- On June 4, 2021, our Board of Directors increased the dividend
level (see below).
(1) A reconciliation of GAAP net income to FFO is provided at
the end of this press release.
Dividend
Declarations
- On June 4, 2021, the company’s Board of Directors declared a
quarterly dividend of $0.207 per Common share and $0.23 per Class A
Common share that will be paid on July 16, 2021 to holders of
record on July 2, 2021. The Board determined that the increased
level is appropriate, after taking into account the improved
liquidity position of the Company, the significant progress made in
vaccinating the U.S. public, the resulting decline in COVID-19
cases, and the early signs of business improvement as operating
restrictions are relaxed and individuals begin returning to
pre-pandemic activities. Also, as a REIT, the company is required
to distribute at least 90% of the company’s taxable income to its
stockholders. Based on the company’s estimates, this level of
Common Stock dividend, when combined with the company’s preferred
stock dividends, based on the company’s estimates, will satisfy
that requirement (excluding any gains on sales of property). The
Board will continue to monitor the on-going COVID-19 situation
going forward and its continued effect on the company, and the
Board will make future dividend decisions based on this and other
information available to them.
- In addition, in June 2021, the Board declared the regular
contractual quarterly dividend with respect to each of the
company’s Series H and Series K cumulative redeemable preferred
stock that will be paid on July 30, 2021 to shareholders of record
on July 16, 2021.
“Like everyone else in our nation, we are excited to see rising
vaccination rates, a population on the verge of reaching a
relatively safe level of immunity, swelling, pent-up consumer
demand, and an overriding sense of optimism that we in the U.S. are
largely through the pandemic. Our thoughts and prayers continue to
go out to all of those impacted by the pandemic, along with great
appreciation and respect for those who have led the fight against
the virus on the front lines. The past 12 months have been very
difficult and have validated our policy of maintaining a strong
balance sheet and liquidity as underpinnings of our company’s
success. Well-located, grocery-anchored community and neighborhood
shopping centers have held up relatively well compared to most
property types,” said Willing L. Biddle, President and Chief
Executive Officer. Mr. Biddle continued…. “Certain categories of
tenants such as health and fitness, day care, dry-cleaning, buffet
restaurants, sit-down restaurants without outdoor seating and
certain hair and nail salons have been slower to emerge from the
crisis, partly as a result of government restrictions on their
businesses and partly as a result of the public’s fears.
Thankfully, due to our long-term strategy, 84% of our properties,
measured by square footage, are anchored by grocery stores,
wholesale clubs or pharmacies, and these businesses have remained
open throughout the pandemic. Today, all of our shopping centers
are open, functioning and generally bustling with customers. Like
nearly all our retail REIT peers, however, our earnings have been
negatively impacted as a result of pandemic-induced reductions in
tenant collections. Rent collections were relatively solid in the
first two quarters of fiscal 2021, averaging 93.2% for the first
quarter and 92.4% for the second quarter versus 92.7% in the fourth
quarter of fiscal 2020, and we anticipate that our collections are
likely to improve each month. While our monthly collection rate is
important, what is most important is that our tenants have
businesses that are rebounding and will once again produce
profitable enterprises operating in locations in our properties
that are so important to their success. Our anchor grocery stores,
drug stores, and wholesale clubs continue to experience strong
sales, and we are very encouraged to see increased leasing activity
across our portfolio. We renewed 373,000 square feet of space and
signed 51,000 square feet of new leases in the first half of fiscal
2021, which increased the percentage of our portfolio leased to
over 90%. A couple of specifically noteworthy items are that the
previously-announced new Lidl supermarket at our Pompton Lakes, NJ
property is under construction with a projected fall 2021 opening
and that a development we completed in Stratford, CT, which
includes a 130,000 square foot self-storage facility, is leasing up
quickly. Over 25% of the self-storage space has been leased in just
the first three months of operations. In addition, this quarter we
completed the refinancing of our revolving credit facility,
increasing the capacity to $125 million from $100 million and
extending the maturity three years, with a one-year extension
option. We are also in contract to sell our last non-core shopping
center located in Newington, NH for a sale price of $13.4 million,
which will result in a substantial gain. This sale is consistent
with our long-standing strategy of focusing on high quality,
grocery-anchored neighborhood and community shopping centers in the
metropolitan tri-state area outside of the City of New York. As a
result of the increasing stability of our tenants, and the positive
economic news within our region, our Board of Directors approved an
increased dividend payable in July, which restores our dividend to
a level that we consider appropriate given the company’s earnings
and the overall economic trajectory of our region and of the nation
as a whole. In summary, we are very much looking forward to the
remaining months of the year, when we expect to see an increase in
business for our tenants and to realize the rewards of working hard
to fill our remaining vacant space. While we are unsure when market
equilibrium will be achieved and rents strengthen, we do see
increasing demand for space.”
Net income applicable to Class A Common and Common stockholders
for the second quarter of fiscal 2021 was $4,621,000 or $0.12 per
diluted Class A Common share and $0.11 per diluted Common share,
compared to $2,799,000 or $0.07 per diluted Class A Common share
and $0.07 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 2021 was $9,100,000 or $0.24 per
diluted Class A Common share and $0.21 per diluted Common share,
compared to $7,870,000 or $0.21 per diluted Class A Common share
and $0.18 per diluted Common share in the first six months of
fiscal 2020.
FFO for the second quarter of fiscal 2021 was $11,728,000 or
$0.31 per diluted Class A Common share and $0.27 per diluted Common
share, compared with $10,287,000 or $0.27 per diluted Class A
Common share and $0.24 per diluted Common share in last year’s
second quarter. For the first six months of fiscal 2021, FFO
amounted to $24,103,000 or $0.63 per diluted Class A Common share
and $0.56 per diluted Common share, compared to $23,184,000 or
$0.61 per diluted Class A Common share and $0.54 per diluted Common
share in the corresponding period of fiscal 2020.
Both net income applicable to Class A Common and Common
stockholders and FFO for the six and three months ended April 30,
2021 were reduced by a reversal of lease income, including
straight-line rent lease income, in the amounts of $3.3 million and
$1.6 million, respectively, related to 89 tenants in the portfolio
who were converted to cash-basis accounting as required by GAAP
accounting rules as their future lease payments were not probable
of collection as these tenants were specifically negatively
affected by the COVID-19 pandemic. These amounts represented a
reduction of $0.08 per Class A share in the six month period and
$0.04 per Class A share in the three month period ended April 30,
2021. There were no such adjustments in last year’s first or second
quarters. In addition, both net income applicable to Class A Common
and Common stockholders and FFO for the six and three months ended
April 30, 2020 were reduced by $1.4 million (or $0.04 per share)
relating to the acceleration of amortization of the grant value of
restricted stock upon the death of our former Chairman Emeritus,
Charles J. Urstadt, in March of 2020.
At April 30, 2021, the company’s consolidated properties were
90.1% leased (versus 90.4% at the end of fiscal 2020) and 88.2%
occupied (versus 88.5% at the end of fiscal 2020). The company
currently has 445,100 square feet of vacancy in its consolidated
portfolio, 66,800 square feet of which is in the lease negotiation
stage. In addition, the company is negotiating letters of intent
with potential tenants on another 133,000 square feet of vacant
space. Also, as previously discussed, at April 30, 2021, the leased
percentage treats as leased, and the April 30, 2021 occupancy
percentage treats as unoccupied, 65,700 square feet of retail space
(1.5% 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 owner of this ground
lease, which acquired the lease out of the Toys “R” Us bankruptcy
process, has opened and is operating an Ocean State Job Lot in
45,000 square feet of the 65,700 square feet.
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 April 30, 2021, the
company had equity interests in six unconsolidated joint ventures
(719,000 square feet), which were 94.2% leased (versus 91.1% at
October 31, 2020).
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
80 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 205 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)
SIX MONTHS AND THREE MONTHS
ENDED APRIL 30, 2021 AND 2020 RESULTS (UNAUDITED)
(in thousands, except per share
data)
Six Months
Ended
Three
Months Ended
April
30,
April
30,
2021
2020
2021
2020
Revenues
Lease income
$64,278
$63,148
$31,795
$30,203
Lease termination income
705
348
-
139
Other income
2,220
2,132
1,131
938
Total Revenues
67,203
65,628
32,926
31,280
Operating Expenses
Property operating
12,449
10,730
6,135
4,801
Property taxes
11,776
11,718
5,915
5,908
Depreciation and amortization
14,710
14,283
7,192
7,148
General and administrative
4,737
6,384
2,093
3,607
Directors' fees and expenses
198
193
89
88
Total Operating Expenses
43,870
43,308
21,424
21,552
Operating Income
23,333
22,320
11,502
9,728
Non-Operating Income (Expense):
Interest expense
(6,733)
(6,648)
(3,341)
(3,309)
Equity in net income from unconsolidated
joint ventures
660
976
310
463
Unrealized holding gains arising during
the period
-
109
-
109
Gain (loss) on sale of properties
406
(328)
434
11
Interest, dividends and other investment
income
96
332
53
238
Net Income
17,762
16,761
8,958
7,240
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(1,837)
(2,066)
(925)
(1,028)
Net income attributable to Urstadt Biddle
Properties Inc.
15,925
14,695
8,033
6,212
Preferred stock dividends
(6,825)
(6,825)
(3,412)
(3,413)
Net Income Applicable to Common and
Class A Common Stockholders
$9,100
$7,870
$4,621
$2,799
Diluted Earnings Per Share:
Per Common Share:
$0.21
$0.18
$0.11
$0.07
Per Class A Common Share:
$0.24
$0.21
$0.12
$0.07
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,498
9,534
9,603
9,447
Class A Common and Class A Common
Equivalent
29,667
29,643
29,764
29,631
Results of Operations
The following information summarizes our results of operations
for the six months and three months ended April 30, 2021 and 2020
(amounts in thousands):
Six months ended
April 30,
Change Attributable to
Revenues
2021
2020
Increase (Decrease)
% Change
Property Acquisitions/Sales
Properties Held In Both Periods
(Note 1)
Base rents
$48,757
$50,883
$(2,126)
-4.2%
$112
$(2,238)
Recoveries from tenants
18,792
14,110
4,682
33.2%
33
4,649
Uncollectible amounts in lease income
(1,379)
(1,845)
466
-25.3%
-
466
ASC Topic 842 cash basis lease income
reversal
(1,892)
-
(1,892)
100.0%
-
(1,892)
Lease termination
705
348
357
102.6%
-
357
Other income
2,220
2,132
88
4.1%
(16)
104
Operating Expenses
Property operating
12,449
10,730
1,719
16.0%
25
1,694
Property taxes
11,776
11,718
58
0.5%
22
36
Depreciation and amortization
14,710
14,283
427
3.0%
182
245
General and administrative
4,737
6,384
(1,647)
-25.8%
n/a
n/a
Non-Operating Income/Expense
Interest expense
6,733
6,648
85
1.3%
-
85
Interest, dividends, and other investment
income
96
332
(236)
-71.1%
n/a
n/a
Three Months Ended
April 30,
Change Attributable to
Revenues
2021
2020
Increase (Decrease)
% Change
Property Acquisitions/Sales
Properties Held In Both Periods
(Note 1)
Base rents
$24,598
$25,591
$(993)
-3.9%
$46
$(1,039)
Recoveries from tenants
8,814
6,115
2,699
44.1%
33
2,666
Uncollectible amounts in lease income
(724)
(1,503)
779
-51.8%
-
779
ASC Topic 842 cash basis lease income
reversal
(893)
-
(893)
100.0%
-
(893)
Lease termination
-
139
(139)
-100%
-
(139)
Other income
1,131
938
193
20.6%
8
185
Operating Expenses
Property operating
6,135
4,801
1,334
27.8%
32
1,302
Property taxes
5,915
5,908
7
0.1%
23
(16)
Depreciation and amortization
7,192
7,148
44
0.6%
106
(62)
General and administrative
2,093
3,607
(1,514)
-42.0%
n/a
n/a
Non-Operating Income/Expense
Interest expense
3,341
3,309
32
1.0%
-
32
Interest, dividends, and other investment
income
53
238
(185)
-77.7%
n/a
n/a
Note 1 – Properties held in both periods includes only
properties owned for the entire periods of 2021 and 2020 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 4.2% to $48.8 million for the six month
period ended April 30, 2021 as compared with $50.9 million in the
comparable period of 2020. Base rents decreased by 3.9% to $24.6
million for the three months ended April 30, 2021 as compared with
$25.6 million in the comparable period of 2020. 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 the first six months of fiscal 2020, we sold two properties
totaling 18,100 square feet. In the second quarter of fiscal 2021
we sold one property totaling 2,500 square feet. These properties
accounted for all of the revenue and expense changes attributable
to property acquisitions and sales in the six months ended April
30, 2021 when compared with fiscal 2020.
Properties Held in Both
Periods:
Revenues
Base Rent The net decrease in base
rents for the six month and three month periods ended April 30,
2021, when compared to the corresponding prior periods, was
predominantly caused by a reduction of $1.3 million and $814,000 in
the six months and three months ended April 30, 2021, respectively,
for a reversal of straight-line rents for tenants whose revenue
recognition was switched to cash-basis accounting in accordance
with ASC Topic 842. There was no such reversal in the six months or
three months ended April 30, 2020. In addition, the reduction of
base rents was caused by a decrease in occupancy rates in the six
months and three months ended April 30, 2021 when compared with the
corresponding prior periods, predominantly related to the vacancies
at 8 properties.
In the first six months of fiscal 2021, we leased or renewed
approximately 424,000 square feet (or approximately 9.4% of total
GLA). At April 30, 2021, the Company’s consolidated properties were
90.1% leased (90.4% leased at October 31, 2020).
Tenant Recoveries In the six month
and three month periods ended April 30, 2021, recoveries from
tenants (which represent reimbursements from tenants for operating
expenses and property taxes) increased by a net $4.6 million and
$2.7 million, respectively when compared with the corresponding
prior period.
The increase in tenant recoveries was the result of having
higher common area maintenance expenses in the six months and three
months of fiscal 2021 when compared with the corresponding prior
periods related to snow removal and parking lot repairs. In
addition, we completed the 2020 annual reconciliations for both
common area maintenance and real estate taxes in the first half of
fiscal 2021 and those reconciliations resulted in us billing our
tenants more than we had anticipated and accrued for in the prior
period, which increased tenant reimbursement income in the first
half of fiscal 2021.
Uncollectable Amounts in Lease
Income In the six month and three month periods ended April
30, 2021, uncollectable amounts in lease income decreased by
$466,000 and $779,000, respectively. In the second quarter of
fiscal 2020, we significantly increased our uncollectable amounts
in lease income based on our assessment of the collectability of
existing non-credit small shop tenants' receivables given the
on-set of the COVID-19 pandemic in March 2020. A number of
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 the second and third quarters of fiscal 2020. This
placed stress on our small shop tenants and made it difficult for
many of them to pay their rents when due. Our assessment was that
any billed but unpaid rents would likely be uncollectable. During
the first six months ended April 30, 2021, many of our tenants saw
early signs of business improvement as regulatory restrictions were
relaxed and individuals began returning to pre-pandemic activities
following significant progress made in vaccinating the U.S. public
and the resulting decline in COVID-19 cases. As a result, the
uncollectable amounts in lease income has been declining.
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
continuing to analyze our entire tenant base, we have determined
that as a result of the COVID-19 pandemic, 89 tenants' future lease
payments are no longer probable of collection (10.3% of our
approximate 863 tenants), including 9 tenants who were converted to
cash-basis accounting in this second quarter of fiscal 2021. As a
result of this assessment in the six month and three month periods
ended April 30, 2021, we reversed $1.3 million and $814,000,
respectively, of lease income, consisting of billed but uncollected
lease income for all 89 tenants, and prior billed but uncollected
accounts receivable related to the 9 tenants converted to
cash-basis accounting in the second quarter of fiscal 2021. This
reduction is a direct reduction of lease income in the consolidated
statement of income for the six months and three months ended April
30, 2021. We did not have any reversal of lease income for tenants
converted to cash basis accounting in the six months and three
months ended April 30, 2020.
Expenses
Property Operating In the six month
and three month periods ended April 30, 2021, property operating
expenses increased by $1.7 million and $1.3 million, respectively,
as a result of having higher common area maintenance expenses in
the six months and three months of fiscal 2021 when compared with
the corresponding prior periods related to snow removal and parking
lot repairs.
Property Taxes In the six month and
three month periods ended April 30, 2021, property tax expense was
relatively unchanged when compared with the corresponding prior
period.
Interest In the six month and three
month periods ended April 30, 2021, interest expense was relatively
unchanged when compared with the corresponding prior period.
Depreciation and Amortization In
the six month period ended April 30, 2021, depreciation and
amortization increased by $245,000 when compared with the prior
period, primarily as a result of a write-off of tenant improvements
related to a tenant that vacated six locations in our portfolio in
fiscal 2021 and increased depreciation for tenant improvements for
two large grocery store re-tenanting projects at our Eastchester,
NY and Wayne, NJ properties after the first quarter of fiscal 2020.
Depreciation and amortization was relatively unchanged for the
three months ended April 30, 2021 when compared with the
corresponding prior period.
General and Administrative Expenses
In the six month and three month periods ended April 30, 2021,
general and administrative expenses decreased by $1.6 million and
$1.5 million, respectively, when compared with the corresponding
prior period, predominantly related to a decrease in compensation
and benefits expense. The decrease was the result of accelerated
vesting of restricted stock grant value upon the death of our
former Chairman Emeritus 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 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 the six month and three month
periods ended April 30, 2021 and 2020 (amounts in thousands):
(Table Follows)
URSTADT BIDDLE PROPERTIES INC.
(NYSE: UBA AND UBP)
SIX MONTHS AND THREE MONTHS
ENDED APRIL 30, 2021 AND 2020
(in thousands, except per share
data)
Reconciliation of Net Income Available
to Common and Class A Common Stockholders To Funds From
Operations:
Six Months
Ended April 30,
Three
Months Ended April 30,
2021
2020
2021
2020
Net Income Applicable to Common and Class
A Common Stockholders
$9,100
$7,870
$4,621
$2,799
Real property depreciation
11,461
11,336
5,759
5,665
Amortization of tenant improvements and
allowances
2,352
2,075
1,037
1,039
Amortization of deferred leasing costs
846
828
370
421
Depreciation and amortization on
unconsolidated joint ventures
750
747
375
374
(Gain)/loss on sale of property
(406)
328
(434)
(11)
Funds from Operations Applicable to Common
and Class A Common Stockholders
$24,103
$23,184
$11,728
$10,287
Funds from Operations (Diluted) Per
Share:
Common
$0.56
$0.54
$0.27
$0.24
Class A Common
$0.63
$0.61
$0.31
$0.27
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,498
9,534
9,603
9,447
Class A Common and Class A Common
Equivalent
29,667
29,643
29,764
29,631
FFO amounted to $24.1 million in the six months ended April 30,
2021 compared to $23.2 million in the comparable period of fiscal
2020. The net increase in FFO is attributable, among other things
to:
Increases:
- An increase in variable lease income (cost recovery income)
related to an under-accrual adjustment in recoveries from tenants
for real estate taxes and common area maintenance in the first six
months of fiscal 2021, which resulted in a positive variance in the
first half of fiscal 2021 when compared to the same period of
fiscal 2020 .
- A $357,000 increase in lease termination income in the first
six months of fiscal 2021 when compared with the corresponding
prior period as a result of one tenant who occupied multiple spaces
in our portfolio ceasing operations and buying out the remaining
terms of their leases.
- A net decrease in general and administrative expenses of $1.6
million, predominantly related to a decrease in compensation and
benefits expense in the six months ended April 30, 2021 when
compared to the corresponding prior period. The decrease was the
result of accelerated vesting of restricted stock grant value upon
the death of our former Chairman Emeritus in the second quarter of
fiscal 2020.
- A decrease in uncollectable amounts in lease income of
$466,000. In the second quarter of fiscal 2020, we significantly
increased our uncollectable amounts in lease income based on our
assessment of the collectability of existing non-credit small shop
tenants' receivables given the on-set of the COVID-19 pandemic in
March 2020. A number of 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 the second and third quarters of
fiscal 2020. This placed stress on our small shop tenants and made
it difficult for many of them to pay their rents when due. Our
assessment was that any billed but unpaid rents for such tenants
would likely be uncollectable. During the first six months ended
April 30, 2021, many of our tenants saw early signs of business
improvement as regulatory restrictions were relaxed and individuals
began returning to pre-pandemic activities following significant
progress made in vaccinating the U.S. public and the resulting
decline in COVID-19 cases. As a result, the uncollectable amounts
in lease income has been declining.
- A decrease of $229,000 in net income to noncontrolling
interests. This decrease was caused by our redemption of
noncontrolling units in the second half of fiscal 2020 and first
half of fiscal 2021. In addition, distributions decreased to
noncontrolling unit owners whose distributions per unit were based
on the dividend rate of our Class A Common stock, which was
significantly reduced in the six months ended April 30, 2021 when
compared to the corresponding prior period.
Decreases:
- A decrease in lease income related to additional vacancies in
the portfolio in the first six months of 2021 , predominantly at 8
properties. In addition, the vacancy rate increased at our six
unconsolidated joint venture properties in the six months ended
April 30, 2021 when compared to the first six months of fiscal
2020. This reduced the amount of equity in earnings we record for
those joint ventures.
- An increase in the write-off of lease income in the first six
months of 2021 for tenants in our portfolio whose future lease
payments were deemed to be not probable of collection, requiring us
under GAAP to convert revenue recognition for those tenants to
cash-basis accounting. This caused a write-off of lease income in
the six months ended April 30, 2021 of $1.9 million, which
consisted of the reversal of billed but uncollected lease income
for all 89 tenants converted to cash-basis accounting and the
write-off of accounts receivable related to the 9 tenants converted
to cash-basis accounting in the second quarter of fiscal 2021.
There were no such reversals in the six month periods ended April
30, 2020 . In addition, we reversed accrued straight-line rents
receivable for tenants converted to cash basis in the six months
ended April 30, 2021 of $1.3 million. There were no such reversals
of lease income in the six months ended April 30, 2020 .
FFO amounted to $11.7 million in the three months ended April
30, 2021 compared to $10.3 million in the comparable period of
fiscal 2020. The net increase in FFO is attributable, among other
things to:
Increases:
- An increase in variable lease income (cost recovery income)
related to an under-accrual adjustment in recoveries from tenants
for common area maintenance in the second quarter of fiscal 2021,
which resulted in a positive variance in the second quarter of
fiscal 2021 when compared to the same period of fiscal 2020 .
- A net decrease in general and administrative expenses of $1.5
million, predominantly related to a decrease in compensation and
benefits expense in the second quarter of fiscal 2021 when compared
to the corresponding prior period. The decrease was the result of
accelerated vesting of restricted stock grant value upon the death
of our former Chairman Emeritus in the second quarter of fiscal
2020.
- A decrease in uncollectable amounts in lease income of
$779,000. In the second quarter of fiscal 2020, we significantly
increased our uncollectable amounts in lease income based on our
assessment of the collectability of existing non-credit small shop
tenants' receivables given the on-set of the COVID-19 pandemic in
March 2020. A number of 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 the second and third quarters of
fiscal 2020. This placed stress on our small shop tenants and made
it difficult for many of them to pay their rents when due. Our
assessment was that any billed but unpaid rents for such tenants
would likely be uncollectable. During the first six months ended
April 30, 2021, many of our tenants saw early signs of business
improvement as regulatory restrictions were relaxed and individuals
began returning to pre-pandemic activities following significant
progress made in vaccinating the U.S. public and the resulting
decline in COVID-19 cases. As a result, the uncollectable amounts
in lease income has been declining.
- A decrease of $103,000 in net income to noncontrolling
interests. This decrease was caused by our redemption of
noncontrolling units in the second half of fiscal 2020 and first
half of fiscal 2021. In addition, distributions decreased to
noncontrolling unit owners whose distributions per unit were based
on the dividend rate of our Class A Common stock, which was
significantly reduced in the second quarter of fiscal 2021 when
compared to the corresponding prior period.
Decreases:
- A decrease in lease income related to additional vacancies in
the portfolio in the three months ended April 30, 2021 when
compared to the corresponding prior period, predominantly at 8
properties. In addition, the vacancy rate increased at our six
unconsolidated joint venture properties in the three months ended
April 30, 2021 when compared to the corresponding prior period.
This reduced the amount of equity in earnings we record for those
joint ventures.
- An increase in the write-off of lease income in the three
months ended April 30, 2021 when compared to the corresponding
prior period. This increase was related to tenants in our portfolio
whose future lease payments were deemed to be not probable of
collection, requiring us under GAAP to convert revenue recognition
for those tenants to cash-basis accounting. This caused a write-off
of lease income in the amount of $893,000, which consisted of the
reversal of billed but uncollected lease income for all 89 tenants
converted to cash-basis accounting and the write-off of accounts
receivable related to the 9 tenants converted to cash-basis
accounting in the second quarter of fiscal 2021. There were no such
reversals in the three months ended April 30, 2020 . In addition,
we reversed accrued straight-line rents receivable for these
aforementioned 9 tenants in the three months ended April 30, 2021
of $814,000. There were no such reversals of lease income in the
three months ended April 30, 2020.
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)
Six Months Ended April 30,
Three Months Ended April 30,
2021
2020
% Change
2021
2020
% Change
Same Property Operating Results:
Number of Properties (Note 3)
75
75
Revenue (Note 2)
Base Rent (Note 3)
$50,619
$49,906
1.4%
$26,066
$24,890
4.7%
Uncollectable amounts in lease income-same
property
(1,379)
(1,845)
-25.3%
(725)
(1,502)
-51.7%
ASC Topic 842 cash-basis
lease income reversal-same property
(1,892)
-
100.0%
(893)
-
100.0%
Recoveries from tenants
18,755
14,116
32.9%
8,783
6,125
43.4%
Other property income
222
211
5.2%
178
79
125.3%
66,325
62,388
6.3%
33,409
29,592
12.9%
Expenses
Property operating
7,842
6,437
21.8%
3,939
3,054
29.0%
Property taxes
11,746
11,712
0.3%
5,892
5,910
-0.3%
Other non-recoverable operating
expenses
1,032
841
22.7%
668
414
61.4%
20,620
18,990
8.6%
10,499
9,378
12.0%
Same Property Net Operating Income
$45,705
$43,398
5.3%
$22,910
$20,214
13.3%
Reconciliation of Same Property NOI to
Most Directly Comparable GAAP Measure:
Other reconciling items:
Other non same-property net operating
income
103
81
73
39
Other Interest income
231
248
123
107
Other Dividend Income
-
182
-
182
Consolidated lease termination income
704
348
-
139
Consolidated amortization of above and
below market leases
289
350
179
173
Consolidated straight line rent income
(2,331)
550
(1,763)
488
Equity in net income of unconsolidated
joint ventures
660
976
310
463
Taxable REIT subsidiary income/(loss)
254
326
(126)
195
Solar income/(loss)
(247)
(198)
(93)
(86)
Storage income/(loss)
445
474
192
238
Unrealized holding gains arising during
the periods
-
109
-
109
Interest expense
(6,733)
(6,648)
(3,341)
(3,309)
General and administrative expenses
(4,737)
(6,384)
(2,093)
(3,607)
Uncollectable amounts in lease income
(1,379)
(1,845)
(725)
(1,502)
Uncollectable amounts in lease income-same
property
1,379
1,845
725
1,502
ASC Topic 842 cash-basis lease income
reversal
(1,892)
-
(893)
-
ASC Topic 842 cash-basis lease income
reversal-same property
1,892
-
893
-
Directors fees and expenses
(198)
(193)
(89)
(88)
Depreciation and amortization
(14,710)
(14,283)
(7,192)
(7,148)
Adjustment for intercompany expenses and
other
(2,079)
(2,247)
(566)
(880)
Total other -net
(28,349)
(26,309)
(14,386)
(12,985)
Income from continuing operations
17,356
17,089
1.6%
8,524
7,229
17.9%
Gain (loss) on sale of real estate
406
(328)
434
11
Net income
17,762
16,761
6.0%
8,958
7,240
23.7%
Net income attributable to noncontrolling
interests
(1,837)
(2,066)
(925)
(1,028)
Net income attributable to Urstadt Biddle
Properties Inc.
$15,925
$14,695
8.4%
8,033
6,212
29.3%
Same Property Operating Expense Ratio
(Note 1)
95.7%
77.8%
18.0%
89.3%
68.3%
21.0%
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, lease termination income.
Note 3
-
Base rents for the three and six month
periods ended April 30, 2021 are reduced by approximately $26,000
and $425,700, respectively, in rents that were deferred and
approximately $202,000 and $1.2 million, in rents that were abated
because of COVID-19. Base rents for the three and six month periods
ended April 30, 2021, are increased by approximately $690,000 and
$1.7 million, respectively, in COVID-19 deferred rents that were
billed and collected in the fiscal 2021 periods.
Note 4
-
Includes only properties owned for the
entire period of both periods presented
Urstadt Biddle Properties
Inc.
Balance Sheet
Highlights
(in thousands)
April 30,
October 31,
2021
2020
(Unaudited)
Assets
Cash and Cash Equivalents
$38,446
$40,795
Marketable Securities
$-
$-
Real Estate investments before
accumulated depreciation
$1,150,941
$1,149,182
Investments in and advances to
unconsolidated joint ventures
$29,247
$28,679
Total Assets
$1,001,733
$1,010,179
Liabilities
Revolving credit line
$35,000
$35,000
Mortgage notes payable and other
loans
$295,773
$299,434
Total Liabilities
$367,625
$377,037
Redeemable Noncontrolling
Interests
$66,081
$62,071
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$568,027
$571,071
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210607005670/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
Urstadt Biddle Properties (NYSE:UBP)
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