Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported financial and operating
results for the three and nine months ended July 31, 2021, and
provided information regarding financial and operational activities
in light of the ongoing COVID-19 pandemic.
The following is a discussion of our current dividend levels and
statistics about our portfolio that are useful in assessing the
impact of COVID-19 on our business:
Dividend
Declarations
- On September 2, 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 October 15, 2021 to holders of
record on October 1, 2021. The Board determined that this level of
dividend, which was instituted beginning with our July 2021
dividend, is appropriate, after taking into account the improved
liquidity position of the Company, the significant progress made in
vaccinating the U.S. public and the signs of general business
improvement in our markets. 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, will satisfy that requirement (excluding
any gains on sales of property). The Board will continue to monitor
the ongoing COVID-19 situation and its impact on the company, and
make future dividend decisions based on this and other information
available to it.
- In addition, in September 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 October 29, 2021 to shareholders of
record on October 15, 2021.
COVID-19 UPDATE (as of
July 31, 2021)
- Of our 79 properties, 66 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 former
childcare center in Chester, NJ.
- All 72 of our shopping centers, free-standing, net-leased
retail bank branches and restaurant properties are open and
operating, with 99.4% of our total tenants based on Annualized Base
Rent (“ABR”) open and operating.
- All of our shopping centers include necessity-based tenants,
with approximately 70.9% 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 99.8% open.
- Similar to other retail landlords across the United States, we
received a number of requests for rent relief from 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. We continued to receive a smaller number of new requests
even after businesses began to re-open, and, in some cases,
follow-on requests from tenants to whom we had already provided
rent relief, but these requests have tapered off, and we received
no new requests during the quarter ended July 31, 2021 from tenants
who had not previously requested rent relief.
- As of July 31, 2021, we have received 402 rent relief requests
from the approximately 860 tenants in our consolidated portfolio.
Approximately 117 of the 402 tenants withdrew their requests for
rent relief or paid their rent in full. From the beginning of
COVID-19 through July 31, 2021, we have completed 284 lease
modifications, consisting of base rent deferrals totaling $3.9
million, or 4.1% of our annualized ABR, and rent abatements
totaling $4.1 million, or 4.3% of our ABR. Included in the
aforementioned amounts are the rent deferrals and abatements
completed in the three months ended July 31, 2021, which amounted
to 10 rent deferrals or abatements, which deferred $99,000 of base
rents and abated $414,000 of base rents.
RENTAL COLLECTIONS
UPDATE (as of September 1, 2021)
- 92.8% of the total base rent, common area maintenance charges
(“CAM”) and real estate taxes payable for the period of April 2020
through July 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.
- 94.1% of the total base rent, CAM and real estate taxes payable
for the third quarter of fiscal 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.
- 91.6% of the total base rent, CAM and real estate taxes payable
for August 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.
- From the beginning of the COVID-19 pandemic through the end of
the second quarter of fiscal 2021, we converted 89 tenants to cash
basis accounting in accordance with ASC Topic 842. We did not
convert any additional tenants to cash basis accounting in the
three months ended July 31, 2021 . In addition, when one of the
Company’s tenants is converted to cash basis accounting in
accordance with ASC Topic 842, all previously recorded
straight-line rent receivables need to be reversed in the period
that the tenant is converted to cash basis revenue recognition.
During the nine months ended July 31, 2021 and 2020 , we recognized
collectability adjustments totaling $ 4.5 million ($0.12 per Class
A Common share) and $ 6.2 million ($0.16 per Class A Common share),
respectively. During the three months ended July 31, 2020 , we
recognized collectability adjustments totaling $ 4.3 million ($0.11
per Class A Common share). We did not have any reductions of lease
income for collectability adjustments in the three months ended
July 31, 2021 as the amount of collections received from tenants
for previously reserved rents, as well as from tenants accounted
for on a cash basis in accordance with ASC Topic 842, equaled or
exceeded any new reserves for uncollectable receivables or the
quarterly billings for tenants accounted for on a cash basis. In
addition, as a result of not converting any tenants to cash basis
accounting in the three months ended July 31, 2021 , we did not
have any write-offs during such period of previously recorded
straight-line rents. As of July 31, 2021 , the revenue from
approximately 10.3% of our tenants (based on total commercial
leases) is being recognized on a cash basis. 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 $23.0 million of cash and cash equivalents currently on
our balance sheet.
- We have $119 million currently available on our unsecured
revolving credit facility.
- We have no material mortgage debt maturing until January 31,
2022.
THIRD QUARTER
2021
- $18.4 million net income attributable to common stockholders
($0.48 income per diluted Class A Common share).
- $14.0 million of FFO ($0.36 per diluted Class A Common share).
(1)
- $7.5 million or 44.1% increase in same property net operating
income in fiscal 2021 when compared with fiscal 2020. (2)
- 91.2% of our consolidated portfolio Gross Leasable Area (“GLA”)
was leased at July 31, 2021.
- 4.1% average increase in base rental rates on new leases in our
third quarter of fiscal 2021.
- 1.1% average increase in base rental rates on lease renewals in
our third quarter of fiscal 2021.
- On July 16, 2021, we paid a $0.23 per share quarterly cash
dividend on our Class A Common Stock and a $0.207 per share
quarterly cash dividend on our Common Stock.
(1) A reconciliation of GAAP net income to FFO is provided at
the end of this press release. (2) A reconciliation of income from
continuing operations to same property net operating income is
provided at the end of this press release.
“After 18 months of the Covid pandemic’s disruption to the
shopping center business, we are encouraged to see a strong rebound
in our tenants’ businesses and in new demand for vacant space at
our properties. We are excited to report that we renewed 471,000
square feet of space and signed 89,000 square feet of new leases in
the first three quarters of fiscal 2021. In the third quarter, the
percentage of our portfolio leased increased by 1.1% to 91.2%.
Following five quarters of rental rate declines due to the
pandemic, this trend reversed in the third quarter, with rental
rates on renewals rising 1.1% and rental rates on new leases rising
4.1%. Leasing demand is strong, and we are hopeful these trends
will continue based on the leasing deals we have in our pipeline.
The period since March 2020 has been a difficult one for our
business, and we are grateful for the strong efforts and
perseverance of our tenants and our UBP team in working together to
get through this. 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, and continue to
lead, the fight against the virus on the front lines.” said Willing
L. Biddle, President and Chief Executive Officer.
Mr. Biddle continued…. “Although public health and business
conditions are improving, certain categories of our tenants,
including health and fitness, day care, hair and nail salons and
other personal services, continue to be impacted. In addition,
work-from-home trends have decreased the demand for dry cleaning,
and certain sit-down restaurants, particularly those without
outdoor seating, continue to struggle. Thankfully, due to our
long-term strategy, 86% of our properties, measured by square
footage, are anchored by grocery stores, wholesale clubs or
pharmacies, and these businesses have remained solid throughout the
pandemic. While our earnings continue to be negatively impacted as
a result of pandemic-induced reductions in tenant collections, as
is also true with nearly all of our retail REIT peers, this quarter
we collected 94% of our rents billed and our allowance for doubtful
accounts significantly decreased. We also collected over $2.4
million in the quarter from tenants that we are required to account
for on a cash basis in accordance with GAAP. As a result, we did
not have a reduction of earnings or FFO for cash basis tenants.
Given that we collected approximately 95% of deferred tenant
billings that were scheduled to be repaid in the first nine months
of fiscal 2021, as well as the fact that we had far fewer rent
abatements in both our nine and three month periods of fiscal 2021
when compared with those periods last year, our same property
operating income significantly improved. Rent collections were
relatively solid in the first three quarters of fiscal 2021,
amounting to 94.3% for the first quarter, 94.4% for the second
quarter and 94.1% in our third quarter. Additionally, we anticipate
that our collections will continue to improve going forward, as
demand for space is growing. This, of course, gives us the
opportunity to fill existing vacancies and replace struggling
tenants. On that note, what is most important is that our tenants’
businesses are rebounding to once again become healthy, profitable
and positioned for long-term 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. Our strong balance sheet and liquidity are
the underpinnings of our company’s success, and well-located,
grocery-anchored community and neighborhood shopping centers have
proven to be solid investments even in unforeseen pandemics. Other
noteworthy events this quarter include the sale of our last
non-core property, which was located in Newington, NH. The
Newington sales price was $13.4 million, and we recognized a gain
on sale of $11.8 million. This sale is consistent with our
long-standing strategy of concentrating our portfolio in high
quality, grocery-anchored neighborhood and community shopping
centers in the metropolitan tri-state area outside of the City of
New York. In addition, the previously-announced new Lidl
supermarket at our Pompton Lake property opened for business on
September 1 with lines out the door even on a rainy day. We remain
confident in the future due to the improving stability of our
tenants, the positive demographic trend of people moving to the
suburbs around New York City and the increased leasing demand we
are seeing. Our Board of Directors approved a dividend payment for
the third quarter at the same level as the previous quarter. In
summary, we are very much looking forward to increasing our
occupancy over the remaining months of the year, and we hope to
execute on some acquisitions we have in our pipeline.”
Net income applicable to Class A Common and Common stockholders
for the third quarter of fiscal 2021 was $18,375,000 or $0.48 per
diluted Class A Common share and $0.43 per diluted Common share,
compared to $1,576,000 or $0.04 per diluted Class A Common share
and $0.04 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 2021 was $27,475,000 or $0.72
per diluted Class A Common share and $0.64 per diluted Common
share, compared to $9,446,000 or $0.25 per diluted Class A Common
share and $0.22 per diluted Common share in the first nine months
of fiscal 2020.
Net income during both the nine and three-month periods ended
July 31, 2021 includes $11.8 million gain on the sale of our
Newington, NH property, which was sold in June 2021.
FFO for the third quarter of fiscal 2021 was $14,004,000 or
$0.36 per diluted Class A Common share and $0.33 per diluted Common
share, compared with $9,230,000 or $0.24 per diluted Class A Common
share and $0.22 per diluted Common share in last year’s third
quarter. For the first nine months of fiscal 2021, FFO amounted to
$38,107,000 or $1.00 per diluted Class A Common share and $0.89 per
diluted Common share, compared to $32,414,000 or $0.85 per diluted
Class A Common share and $0.76 per diluted Common share in the
corresponding period of fiscal 2020.
At July 31, 2021, the company’s consolidated properties were
91.2% leased (versus 90.4% at the end of fiscal 2020). The company
currently has 387,000 square feet of vacancy in its consolidated
portfolio, 93,000 square feet of which is in the lease negotiation
stage. In addition, the company is negotiating letters of intent
with potential tenants on another 131,000 square feet of vacant
space.
The percentage of property leased in the preceding paragraph
excludes the company’s unconsolidated joint ventures. At July 31,
2021, the company had equity interests in six unconsolidated joint
ventures (718,000 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
79 properties containing approximately 5.1 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 206 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)
Nine Months and Three Months
Ended July 31, 2021 and 2020 results (Unaudited)
(in thousands, except per share
data)
Nine Months
Ended
Three
Months Ended
July
31,
July
31,
2021
2020
2021
2020
Revenues
Lease income
$97,329
$90,003
$33,051
$26,855
Lease termination income
801
460
96
112
Other income
3,403
3,964
1,183
1,832
Total Revenues
101,533
94,427
34,330
28,799
Operating Expenses
Property operating
17,733
15,085
5,284
4,355
Property taxes
17,785
17,615
6,009
5,897
Depreciation and amortization
21,773
21,587
7,063
7,304
General and administrative
6,876
8,495
2,139
2,111
Directors' fees and expenses
277
287
79
94
Total Operating Expenses
64,444
63,069
20,574
19,761
Operating Income
37,089
31,358
13,756
9,038
Non-Operating Income (Expense):
Interest expense
(10,062)
(10,123)
(3,329)
(3,475)
Equity in net income from unconsolidated
joint ventures
1,025
1,160
365
184
Unrealized holding gains arising during
the period
-
-
-
(109)
Gain on sale of marketable securities
-
258
-
258
Gain (loss) on sale of properties
12,214
(328)
11,808
-
Interest, dividends and other investment
income
171
359
75
27
Net Income
40,437
22,684
22,675
5,923
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(2,724)
(3,001)
(887)
(935)
Net income attributable to Urstadt Biddle
Properties Inc.
37,713
19,683
21,788
4,988
Preferred stock dividends
(10,238)
(10,237)
(3,413)
(3,412)
Net Income Applicable to Common and
Class A Common Stockholders
$27,475
$9,446
$18,375
$1,576
Diluted Earnings Per Share:
Per Common Share:
$0.64
$0.22
$0.43
$0.04
Per Class A Common Share:
$0.72
$0.25
$0.48
$0.04
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,564
9,479
9,697
9,281
Class A Common and Class A Common
Equivalent
29,722
29,610
29,828
29,540
Results of Operations
The following information summarizes our results of operations
for the nine months and three months ended July 31, 2021 and 2020
(amounts in thousands):
Nine months ended
Change Attributable to
July 31,
Increase
Property
Properties Held In
Revenues
2021
2020
(Decrease)
% Change
Acquisitions/Sales
Both Periods (Note 1)
Base rents
$74,802
$75,013
$(211)
(0.3)%
$(125)
$(86)
Recoveries from tenants
27,043
21,166
5,877
27.8%
(9)
5,886
Uncollectable amounts in lease income
(1,379)
(3,490)
2,111
(60.5)%
-
2,111
ASC Topic 842 cash basis lease income
reversal (including straight-line rent)
(3,137)
(2,686)
(451)
16.8%
158
(609)
Lease termination
801
460
341
74.1%
-
341
Other income
3,403
3,964
(561)
(14.2)%
(12)
(549)
Operating Expenses
Property operating
17,733
15,085
2,648
17.6%
181
2,467
Property taxes
17,785
17,615
170
1.0%
108
62
Depreciation and amortization
21,773
21,587
186
0.9%
218
(32)
General and administrative
6,876
8,495
(1,619)
(19.1)%
n/a
n/a
Non-Operating Income/Expense
Interest expense
10,062
10,123
(61)
(0.6)%
-
(61)
Interest, dividends, and other investment
income
171
359
(188)
(52.4)%
n/a
n/a
Three Months Ended
Change Attributable to
July 31,
Increase
Property
Properties Held In
Revenues
2021
2020
(Decrease)
% Change
Acquisitions/Sales
Both Periods (Note 1)
Base rents
$24,790
$24,130
$660
2.7%
$(99)
$759
Recoveries from tenants
8,251
7,056
1,195
16.9%
(4)
1,199
Uncollectible amounts in lease income
-
(1,645)
1,645
(100.0)%
-
1,645
ASC Topic 842 cash basis lease income
reversal (including straight-line rent)
10
(2,686)
2,696
(100.4)%
158
2,538
Lease termination income
96
112
(16)
(14.3)%
-
(16)
Other income
1,183
1,832
(649)
(35.4)%
(21)
(628)
Operating Expenses
Property operating
5,284
4,355
929
21.3%
92
837
Property taxes
6,009
5,897
112
1.9%
84
28
Depreciation and amortization
7,063
7,304
(241)
(3.3)%
81
(322)
General and administrative
2,139
2,111
28
1.3%
n/a
n/a
Non-Operating Income/Expense
Interest expense
3,329
3,475
(146)
(4.2)%
-
(146)
Interest, dividends, and other investment
income
75
27
48
177.8%
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 0.3% to $74.8 million for the nine month
period ended July 31, 2021 as compared with $75.0 million in the
comparable period of 2020. Base rents increased by 2.7% to $24.8
million for the three months ended July 31, 2021 as compared with
$24.1 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 nine months of fiscal 2020, we sold two properties
totaling 18,100 square feet. In the first nine months of fiscal
2021 we sold two properties totaling 105,800 square feet. These
properties accounted for all of the revenue and expense changes
attributable to property acquisitions and sales in the nine months
ended July 31, 2021 when compared with fiscal 2020.
Properties Held in Both
Periods:
Revenues
Base Rent
In the nine month period ended July 31, 2021, base rent for
properties held in both periods was relatively unchanged when
compared with the corresponding prior periods.
In the three month period ended July 31, 2021, base rent for
properties held in both period increased by $759,000 when compared
with the corresponding prior period as a result of new leasing
completed after the third quarter of fiscal 2020 at approximately 6
properties.
In the first nine months of fiscal 2021, we leased or renewed
approximately 560,000 square feet (or approximately 12.7% of total
GLA). At July 31, 2021, the Company’s consolidated properties were
91.2% leased (90.4% leased at October 31, 2020).
Tenant Recoveries
In the nine month and three month periods ended July 31, 2021,
recoveries from tenants (which represent reimbursements from
tenants for operating expenses and property taxes) increased by a
net $5.9 million and $1.2 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 nine 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. In addition, the percentage of common area
maintenance and real estate tax costs that we recover from our
tenants generally increased in fiscal 2021 when compared with
fiscal 2020 as the effects of the pandemic on our tenants
businesses is lessening.
Uncollectable Amounts in Lease
Income
In the nine month and three month periods ended July 31, 2021,
uncollectable amounts in lease income decreased by $2.1 million and
$1.6 million, 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 nine months ended July
31, 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. As a result, the
uncollectable amounts in lease income have 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 860
tenants). All of these tenants were converted to cash basis after
our second quarter of fiscal 2020 and prior to our third quarter of
fiscal 2021. As a result of this assessment we reversed $345,000
more in straight-line rent reversals for cash basis tenants in the
nine months ended July 31, 2021 when compared to the prior
period.
For the three months ended July 31, 2021 we did not convert any
tenants to cash basis, and as a result, we did not reverse any
straight-line rent receivables, which created a $910,000 positive
variance. In addition, in the three months ended July 31, 2021, we
did not have any reductions of lease income for collectability
adjustments for cash basis tenants as the amount of collections
received from those tenants equaled or exceeded the quarterly
billings for tenants accounted for on a cash basis, which created a
positive variance of $1.8 million.
Expenses
Property Operating
In the nine month and three month periods ended July 31, 2021,
property operating expenses increased by $2.5 million and $
837,000, respectively, as a result of having higher common area
maintenance expenses in the nine 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 nine month and three month periods ended July 31, 2021,
property tax expense was relatively unchanged when compared with
the corresponding prior period.
Interest
In the nine month and three month periods ended July 31, 2021,
interest expense was relatively unchanged when compared with the
corresponding prior period.
Depreciation and Amortization
In the nine month period ended July 31, 2021, depreciation and
amortization was relatively unchanged when compared with the
corresponding prior period. In the three month period ended July
31, 2021, depreciation and amortization decreased by $322,000 when
compared with the corresponding prior period as a result of the
write-off of tenant improvements for tenants who vacated the
portfolio in fiscal 2020.
General and Administrative
Expenses
In the nine month period ended July 31, 2021, general and
administrative expenses decreased by $1.6 million 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. General and administrative expenses was relatively
unchanged for the three month period ended July 31, 2021.
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 to be 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 nine month and three month
periods ended July 31, 2021 and 2020 (amounts in thousands):
(Table Follows)
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
Nine Months and Three Months
Ended July 31, 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:
Nine months ended
Three Months Ended
July
31,
July
31,
2021
2020
2021
2020
Net Income Applicable to Common and Class
A Common Stockholders
$27,475
$9,446
$18,375
$1,576
Real property depreciation
17,198
16,994
5,737
5,658
Amortization of tenant improvements and
allowances
3,312
3,245
960
1,170
Amortization of deferred leasing costs
1,209
1,279
363
451
Depreciation and amortization on
unconsolidated joint ventures
1,126
1,122
376
375
(Gain)/loss on sale of property
(12,213)
328
(11,807)
-
Funds from Operations Applicable to Common
and Class A Common Stockholders
$38,107
$32,414
$14,004
$9,230
Funds from Operations (Diluted) Per
Share:
Common
$0.89
$0.76
$0.33
$0.22
Class A Common
$1.00
$0.85
$0.36
$0.24
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,564
9,479
9,697
9,281
Class A Common and Class A Common
Equivalent
29,722
29,610
29,828
29,540
FFO amounted to $38.1 million in the nine months ended July 31,
2021 compared to $32.4 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 nine
months of fiscal 2021 and a general increase in the rate at which
we recover costs from our tenants as a result of the reduced impact
of the COVID-19 pandemic on our tenants businesses, which resulted
in a positive variance in the first nine months of fiscal 2021 when
compared to the same period of fiscal 2020.
- A $341,000 increase in lease termination income in the first
nine months of fiscal 2021 when compared with the corresponding
prior period as a result of one tenant that occupied multiple
spaces in our portfolio ceasing operations and buying out the
remaining terms of its 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 nine months ended July 31, 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 $2.1
million. 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 onset 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 nine month period ended
July 31, 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. As a result, the
uncollectable amounts in lease income have been declining. We have
even recovered receivables that were previously reserved for.
- A decrease of $277,000 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
nine months 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 first half of fiscal 2021 when
compared to the corresponding prior period.
Decreases:
- An increase in the reversals of straight-line rent for tenants
accounted for on a cash basis in accordance with ASC Topic 842 in
the first nine months of fiscal 2021 when compared with the first
nine months of fiscal 2020.
FFO amounted to $14.0 million in the three months ended July 31,
2021 compared to $9.2 million in the comparable period of fiscal
2020. The net increase in FFO is attributable, among other things
to:
Increases:
- A decrease in uncollectable amounts in lease income of $1.6
million. In the third 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 onset 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 three months ended July
31, 2021 , many of our tenants continued to see 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 for vaccinated persons. As a result, the
uncollectable amounts in lease income have been declining. We have
even recovered receivables that were previously reserved for.
- In the three months ended July 31, 2021, we did not have any
reductions of lease income for collectability adjustments related
to the 89 tenants in our portfolio that we account for on a cash
basis in accordance with ASC Topic 842, as the amount of
collections equaled or exceeded the quarterly billings for tenants
accounted for on a cash basis, which created a $1.8 million
positive variance. In addition, as a result of not converting any
tenants to cash basis accounting in the three months ended July 31,
2021 , we did not have any write-offs of previously recorded
straight-line rent in the three months ended July 31, 2021 and we
had $910,000 in write-offs of straight-line rents in the third
quarter of fiscal 2020 relating to cash basis tenants.
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)
Nine Months Ended July 31,
Three Months Ended July 31,
2021
2020
% Change
2021
2020
% Change
Same Property Operating Results:
Number of Properties (Note 4)
74
74
Revenue (Note 2)
Base Rent (Note 3)
$74,627
$70,673
5.6%
$24,659
$21,529
14.5%
Uncollectable amounts in lease income-same
property
(1,380)
(3,460)
-60.1%
-
(1,615)
-100.0%
ASC Topic 842 cash-basis
lease income reversal-same property
(1,882)
(1,776)
6.0%
10
(1,776)
-100.6%
Recoveries from tenants
26,742
20,857
28.2%
9,273
6,960
33.2%
Other property income
304
787
-61.4%
88
576
-84.9%
98,411
87,081
13.0%
34,030
25,674
32.5%
Expenses
Property operating
10,977
8,609
27.5%
3,269
2,361
38.5%
Property taxes
17,586
17,521
0.4%
5,902
5,869
0.6%
Other non-recoverable operating
expenses
1,464
1,315
11.3%
453
502
-9.8%
30,027
27,445
9.4%
9,624
8,732
10.2%
Same Property Net Operating Income
68,384
59,636
14.7%
24,406
16,942
44.1%
Reconciliation of Same Property NOI to
Most Directly Comparable GAAP Measure:
Other reconciling
items:
Other non same-property net operating
income
804
1,088
89
313
Other Interest income
349
336
118
88
Other Dividend Income
-
182
-
-
Consolidated lease termination income
801
460
97
112
Consolidated amortization of above and
below market leases
455
525
166
175
Consolidated straight line rent income
(2,702)
1,780
(371)
1,230
Equity in net income of unconsolidated
joint ventures
1,025
1,160
365
184
Taxable REIT subsidiary income/(loss)
419
719
165
393
Solar income/(loss)
(159)
(91)
88
107
Storage income/(loss)
805
714
360
240
Unrealized holding gains arising during
the periods
-
-
-
(109)
Gain on sale of marketable securities
-
258
-
258
Interest expense
(10,062)
(10,123)
(3,329)
(3,475)
General and administrative expenses
(6,876)
(8,495)
(2,139)
(2,111)
Uncollectable amounts in lease income
(1,380)
(3,490)
-
(1,645)
Uncollectable amounts in lease income-same
property
1,380
3,460
-
1,615
ASC Topic 842 cash-basis lease income
reversal
(1,882)
(1,776)
10
(1,776)
ASC Topic 842 cash-basis lease income
reversal-same property
1,882
1,776
(10)
1,776
Directors fees and expenses
(277)
(287)
(79)
(94)
Depreciation and amortization
(21,773)
(21,587)
(7,063)
(7,304)
Adjustment for intercompany expenses and
other
(2,970)
(3,233)
(2,006)
(996)
Total other -net
(40,161)
(36,624)
(13,539)
(11,019)
Income from continuing operations
28,223
23,012
22.6%
10,867
5,923
83.5%
Gain (loss) on sale of real estate
12,214
(328)
11,808
-
Net income
40,437
22,684
78.3%
22,675
5,923
282.8%
Net income attributable to noncontrolling
interests
(2,724)
(3,001)
(887)
(935)
Net income attributable to Urstadt Biddle
Properties Inc.
$37,713
$19,683
91.6%
$21,788
$4,988
336.8%
Same Property Operating Expense Ratio
(Note 1)
93.6%
79.8%
13.8%
101.1%
84.6%
16.5%
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 nine month
periods ended July 31, 2021 are reduced by approximately $99,000
and $538,000, respectively, in rents that were deferred and
approximately $414,000 and $2.7 million, in rents that were abated
because of COVID-19. Base rents for the three and nine month
periods ended July 31, 2021, are increased by approximately
$826,000 and $2.8 million, respectively, in COVID-19 deferred rents
that were billed and collected in those periods. Base rents for the
nine and three months ended July 31, 2020 are reduced by
approximately $1.9 million in rents that were deferred and
approximately $492,000 in rents that were abated as a result of
COVID-19.
Note 4 -
Includes only properties owned for the
entire period of both periods presented
Urstadt Biddle Properties
Inc.
Balance Sheet
Highlights
(in thousands)
July 31,
October 31,
2021
2020
(Unaudited)
Assets
Cash and Cash Equivalents
$22,991
$40,795
Real Estate investments before
accumulated depreciation
$1,146,941
$1,149,182
Investments in and advances to
unconsolidated joint ventures
$28,807
$28,679
Total Assets
$982,122
$1,010,179
Liabilities
Revolving credit line
$5,000
$35,000
Mortgage notes payable and other
loans
$293,975
$299,434
Total Liabilities
$339,957
$377,037
Redeemable Noncontrolling
Interests
$67,396
$62,071
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$574,769
$571,071
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210908005969/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
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