Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported financial and operating
results for the fiscal year ended October 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 December 15, 2021, the company’s Board of Directors declared
a quarterly dividend of $0.2375 per Class A Common share and
$0.2145 per Common share that will be paid on January 14, 2022 to
holders of record on January 5, 2022. This increase represents an
increase of $0.03 per share per annum on both the Class A Common
and Common stock. The Board determined that this level of dividend
is appropriate, after taking into account the improved liquidity
and financial position of the company and the signs of general
business improvement in our markets, including our tenants’
businesses. 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 December 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 January 31, 2022 to shareholders of
record on January 14, 2022.
COVID-19 UPDATE (as of
October 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. The Chester property was sold in
December 2021.
- All 72 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 based on Annualized Base
Rent (“ABR”) open and operating.
- All of our shopping centers include necessity-based tenants,
with approximately 70.4% 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. These requests have tapered off and we received only
four new requests during the quarter ended October 31, 2021 from
tenants who had not previously requested rent relief.
- As of October 31, 2021, we have received 402 rent relief
requests from the approximately 832 tenants in our consolidated
portfolio. 117 of the 402 tenants withdrew their requests for rent
relief or paid their rent in full. From the beginning of COVID-19
through October 31, 2021, we completed 288 lease modifications
consisting of base rent deferrals totaling $3.9 million, or 4.0% of
our annualized ABR, and rent abatements totaling $4.4 million, or
4.5% of our ABR. Included in the aforementioned amounts are the
rent deferrals and abatements completed in the three months ended
October 31, 2021, which amounted to 10 rent deferrals or
abatements, which deferred $27,000 of base rents and abated
$309,000 of base rents. We have collected approximately 93% of
deferred tenant billings that were scheduled to be repaid in fiscal
2021.
RENTAL COLLECTIONS
UPDATE (as of December 1, 2021)
- 94.0% of the total base rent, common area maintenance charges
(“CAM”) and real estate taxes payable for the period of April 2020
through October 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.
- 95.7% of the total base rent, CAM and real estate taxes payable
for the fourth 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.
- 92.6% of the total base rent, CAM and real estate taxes payable
for November 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 our
third quarter ended July 31, 2021 or in our fourth quarter ended
October 31, 2021. As of October 31, 2021, 27 of the 89 tenants are
no longer tenants in the company's properties. 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 fourth quarter of fiscal 2021, we restored 13 of the
original 89 tenants to accrual-basis revenue recognition as those
tenants paid all of their billed rents for six consecutive months
and have no significant unpaid billings as of October 31, 2021,
leaving 49 tenants on cash-basis accounting. When a tenant is
restored to accrual-basis revenue recognition, the company records
revenue on a straight-line basis. As such, the company recorded
straight-line rent revenue in the amount of $582,000 for these 13
tenants in the quarter ended October 31, 2021.
- During the fiscal years ended 2021 and 2020 , we recognized
collectability adjustments totaling $4.2 million ($0.11 per Class A
Common share) and $7.3 million ($0.19 per Class A Common share),
respectively. During the quarter ended October 31, 2021, we
recovered previous collectability adjustments of $303,000 ($0.01
per Class A Common share). During the quarter ended October 31,
2020, we recognized collectability adjustments of $1.2 million
($0.03 per Class A Common share). As of October 31, 2021, the
revenue from approximately 5.9% or 49 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 $24.1 million of cash and cash equivalents currently on
our balance sheet.
- We have $124 million currently available on our unsecured
revolving credit facility.
- We have no material mortgage debt maturing until March 31,
2022, and that mortgage debt is in the process of being refinanced
at a lower interest rate than under the existing mortgage.
HIGHLIGHTS FOR FOURTH
QUARTER 2021
- $6.2 million net income attributable to common stockholders
($0.16 income per diluted Class A Common share).
- $14.1 million of FFO ($0.37 per diluted Class A Common
share).(1)
- $1.9 million or 9.1% increase in same property net operating
income in the fourth quarter of fiscal 2021 when compared with the
fourth quarter of fiscal 2020.(2)
- 92.1% of our portfolio Gross Leasable Area (“GLA”) was leased
at October 31, 2021, an increase of 1.6% from the end of fiscal
2020.
- 4.9% average decrease in base rental rates on new leases in our
fourth quarter of fiscal 2021.
- 9.4% average increase in base rental rates on lease renewals in
our fourth quarter of fiscal 2021.
- On October 15, 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.
Commenting on the operating results, Willing L. Biddle,
President and CEO of Urstadt Biddle Properties Inc., said “After
almost two years of the Covid-19 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. As a result of the continued improvement, our Board
of Directors declared an increased dividend of $0.03 cents per
annum on both classes of common stock. This dividend represents a
3.3% increase over the prior Class A Common Stock dividend level.
We are pleased to report that we renewed 600,000 square feet of
existing tenant leases and signed 142,000 square feet of new leases
in fiscal 2021. Demand for space is increasing, and in the fourth
quarter we signed 53,000 square feet of new leases, with the
percentage of our portfolio leased increasing by 0.4% to 92.1%. We
are encouraged that the increased demand is leading to increased
rents, and this is the second consecutive quarter of increasing
rents on renewals, following five consecutive quarters of rental
rate decreases on renewals. In our fourth quarter, rental rates on
renewals increased 9.4% and rental rates on new leases decreased by
4.9%. We believe the surge of retailer demand will continue, and
our leasing team is very busy with a strong pipeline of new leasing
deals in process. We are grateful for the tremendous efforts and
perseverance of our tenants and of our UBP team, who have worked
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 viruses on the front lines.”
Mr. Biddle continued…. “Although public health and business
conditions are improving, certain categories of our tenants,
including certain smaller health and fitness providers, day care
operators, hair and nail salons and other personal service tenants,
continue to be impacted by the pandemic to various degrees, and
tenant collections remain difficult for those tenant categories.
Work-from-home trends have decreased the demand for dry cleaning,
for example, and certain full-service restaurants, particularly
those without outdoor seating, continue to struggle. We will
continue to work with those tenants who we believe will have a
viable business model when greater demand returns for their
services. 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. Although our earnings and
FFO have bounced back close to pre-pandemic levels, there is still
room to grow the income of our existing portfolio, as our
properties have an average vacancy rate of 8% and demand for space
is growing. In fact, we hope to be able to increase our occupancy
rate back to our historical occupancy average of 95% in the
not-too-distant future. This quarter, we collected 95.7% of our
rents billed, and our allowance for doubtful accounts significantly
decreased. We also collected approximately 93% of deferred tenant
billings that were scheduled to be repaid in fiscal 2021, and we
had far fewer rent abatements in both our fourth quarter and in
fiscal 2021 when compared with those periods last year. As a
result, our same property operating income significantly improved.
Rent collections were relatively solid in fiscal 2021, amounting to
94.9% for the first quarter, 94.7% for the second quarter, 95.6%
for the third quarter and 95.7% for the fourth quarter. We
anticipate that our collections will continue to improve going
forward, as demand for space is growing, which should give us the
opportunity to fill existing vacancies and replace those tenants
who are struggling and cannot return to paying full rent. 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
in good times and bad. After fiscal year-end, we sold our single
tenant building located in Chester, New Jersey, which we acquired
several years ago as part of a two property transaction with a
grocery-anchored shopping center. This sale reinforces our strategy
of continuing to concentrate our portfolio in grocery, pharmacy or
wholesale club-anchored properties located in the suburban
communities that surround New York City. We remain confident about
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. Many
major companies occupying New York City office buildings have yet
to fully re-open their offices, and it seems clear that working
from home on at least a partial basis to avoid health risks, as
well as to limit the cost, time and difficulty of commuting, is
going to continue to be the norm. More people working at home or at
satellite offices in the suburbs is good for UBP’s business.”
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
78 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 207 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)
Year Ended October 31, 2021
and 2020 results
(in thousands, except per share
data)
Year Ended
October 31,
Three Months Ended
October 31,
2021
2020
2021
2020
Unaudited
Unaudited
Unaudited
Revenues
Lease income
$130,364
$120,941
$33,035
$30,938
Lease termination
967
705
166
245
Other
4,250
5,099
847
1,135
Total Revenues
135,581
126,745
34,048
32,318
Expenses
Property operating
22,938
19,542
5,205
4,457
Property taxes
23,674
23,464
5,889
5,849
Depreciation and amortization
29,032
29,187
7,259
7,600
General and administrative
8,985
10,643
2,109
2,148
Directors' fees and expenses
355
373
78
86
Total Operating Expenses
84,984
83,209
20,540
20,140
Operating Income
50,597
43,536
13,508
12,178
Non-Operating Income (Expense):
Interest expense
(13,087)
(13,508)
(3,025)
(3,385)
Equity in net income from unconsolidated
joint ventures
1,323
1,433
298
273
Gain on sale of marketable securities
-
258
-
-
Interest, dividends and other investment
income
231
398
59
39
Gain (loss) on sale of property
11,864
(6,047)
(349)
(5,719)
Net Income
50,928
26,070
10,491
3,386
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(3,645)
(3,887)
(921)
(886)
Net income attributable to Urstadt Biddle
Properties Inc.
47,283
22,183
9,570
2,500
Preferred stock dividends
(13,650)
(13,650)
(3,412)
(3,413)
Net Income (Loss) Applicable to Common
and Class A Common Stockholders
$33,633
$8,533
$6,158
$(913)
Diluted Earnings (Loss) Per
Share:
Per Common Share:
$0.79
$0.20
$0.14
$(0.02)
Per Class A Common Share:
$0.88
$0.22
$0.16
$(0.02)
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,608
9,385
9,741
9,190
Class A Common and Class A Common
Equivalent
29,753
29,576
29,845
29,504
Results of Operations
The following information summarizes our results of operations
for the year ended October 31, 2021 and 2020 (amounts in
thousands):
Year Ended October 31,
Change Attributable to:
Revenues
2021
2020
Increase
(Decrease)
%
Change
Property
Acquisitions/Sales
Properties Held in
Both Periods (Note 1)
Base rents
$
99,488
$
99,387
$
101
0.1%
$
(113)
$
214
Recoveries from tenants
35,090
28,889
6,201
21.5%
(105)
6,306
Less uncollectable amounts in lease
income
1,529
3,916
(2,387)
(61.0)%
-
(2,387)
Less ASC Topic 842 cash basis lease income
reversal
2,685
3,419
(734)
(21.5)%
(158)
(576)
Total lease income
130,364
120,941
Lease termination
967
705
262
37.2%
-
262
Other income
4,250
5,099
(849)
(16.7)%
(10)
(839)
Operating Expenses
Property operating
22,938
19,542
3,396
17.4%
220
3,176
Property taxes
23,674
23,464
210
0.9%
52
158
Depreciation and amortization
29,032
29,187
(155)
(0.5)%
73
(228)
General and administrative
8,985
10,643
(1,658)
(15.6)%
n/a
n/a
Non-Operating Income/Expense
Interest expense
13,087
13,508
(421)
(3.1)%
-
(421)
Interest, dividends, and other investment
income
231
398
(167)
(42.0)%
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 increased by 0.1% to $99.5 million for the fiscal
year ended October 31, 2021 as compared with $99.4 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 fiscal 2020, we sold two properties totaling 18,100 square
feet. In 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
fiscal year ended October 31, 2021 when compared with fiscal
2020.
Properties Held in Both
Periods:
Revenues
Base Rent
In the fiscal year ended October 31, 2021, base rent for
properties held in both periods increased by $214,000 when compared
with the corresponding prior periods as a result of additional
leasing in the portfolio in fiscal 2021 when compared to the
corresponding prior period.
In fiscal 2021, we leased or renewed approximately 742,000
square feet (or approximately 16.8% of total consolidated GLA). At
October 31, 2021, the Company’s consolidated properties were 91.9%
leased (90.4% leased at October 31, 2020).
Tenant Recoveries
In the fiscal year ended October 31, 2021, recoveries from
tenants (which represent reimbursements from tenants for operating
expenses and property taxes) increased by a net $6.3 million when
compared with the corresponding prior period.
The increase in tenant recoveries was the result of having
higher common area maintenance expenses in the fiscal year ended
October 31, 2021 when compared with the corresponding prior period
related to snow removal, landscaping 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 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 fiscal year ended October 31, 2021, uncollectable amounts
in lease income decreased by $2.4 million when compared with the
prior year. 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 fiscal year ended 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 determined that as a result of
the COVID-19 pandemic, 89 tenants' future lease payments were no
longer probable of collection. 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 of October 31, 2021, 27 of the
89 tenants are no longer tenants in the Company's properties.
During the three months ended October 31, 2021, we restored 13 of
the 89 tenants to accrual-basis accounting as those tenants have
now demonstrated their ability to service the payments due under
their leases and have no arrears balances. As of October 31, 2021,
49 tenants continue to be accounted for on a cash-basis, or 5.9% of
our approximate 832 tenants. As a result of this assessment, we
reversed $576,000 more in billed but uncollected rent and
straight-line rent for cash basis tenants in the fiscal year ended
October 31, 2020 than we did in fiscal 2021.
Expenses
Property Operating
In the fiscal year ended October 31, 2021, property operating
expenses increased by $3.2 million when compared to the prior
period as a result of having higher common area maintenance
expenses related to snow removal, landscaping and parking lot
repairs.
Property Taxes
In the fiscal year ended October 31, 2021, property tax expense
was relatively unchanged when compared with the corresponding prior
period.
Interest
In the fiscal year ended October 31, 2021, interest expense
decreased by $421,000 when compared with the corresponding prior
period, predominantly related to the refinancing of a mortgage
secured by our New Providence, NJ property in fiscal 2021 and by
repaying all outstanding amounts on our Facility in fiscal
2021.
Depreciation and Amortization
In the fiscal year ended October 31, 2021, depreciation and
amortization was relatively unchanged when compared with the
corresponding prior period.
General and Administrative
Expenses
In the fiscal year ended October 31, 2021, general and
administrative expenses decreased by $1.7 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.
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 three month and fiscal years ended
October 31, 2021 and 2020. (Amounts in thousands).
(Table Follows)
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
Fiscal Year and fourth quarter
ended 2021 results
(in thousands, except per share
data)
Reconciliation of Net Income (Loss)
Available to Common and Class A Common Stockholders to Funds From
Operations:
Fiscal Year ended
Three Months Ended
October 31,
October 31,
2021
2020
2021
2020
Net Income (Loss) Applicable to Common and
Class A Common Stockholders
$33,633
$8,533
$6,158
($913)
Real property depreciation
22,936
22,662
5,738
5,668
Amortization of tenant improvements and
allowances
4,429
4,694
1,117
1,449
Amortization of deferred leasing costs
1,599
1,737
390
458
Depreciation and amortization on
unconsolidated joint ventures
1,518
1,499
392
377
(Gain)/loss on sale of property
(11,864)
6,047
349
5,719
Funds from Operations Applicable to Common
and Class A Common Stockholders
$52,251
$45,172
$14,144
$12,758
Funds from Operations (Diluted) Per
Share:
Common
$1.22
$1.06
$0.33
$0.30
Class A Common
$1.36
$1.19
$0.37
$0.34
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,608
9,385
9,741
9,190
Class A Common and Class A Common
Equivalent
29,753
29,576
29,845
29,503
FFO amounted to $52.3 million in fiscal 2021 compared to $45.2
million in fiscal 2020.
The net increase in FFO in fiscal 2021 when compared with fiscal
2020 was predominantly 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 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 fiscal 2021 when compared to the same period of fiscal
2020.
- A $262,000 increase in lease termination income in 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 $1.7
million, predominantly related to a decrease in compensation and
benefits expense in 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 $2.4
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 fiscal year ended October
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 in the reversal of lease income as a result of the
application of ASC Topic 842 "Leases" in fiscal 2021 when compared
with 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 determined that as a result of
the COVID-19 pandemic, 89 tenants' future lease payments were no
longer probable of collection. 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 of October 31, 2021, 27 of the
89 tenants are no longer tenants in the Company's properties.
During the three months ended October 31, 2021, we restored 13 of
the 89 tenants to accrual-basis accounting as those tenants have
now demonstrated their ability to service the payments due under
their leases and have no significant arrears balances. As of
October 31, 2021, 49 tenants continue to be accounted for on a
cash-basis, or 5.9% of our approximate 832 tenants. As a result of
this assessment, we reversed $734,000 more in billed but
uncollected rent and straight-line rent for cash basis tenants in
the fiscal year ended October 31, 2020 than we did in fiscal 2021.
In addition, as the effect of the pandemic has lessened, even
tenants accounted for on a cash-basis have paid more of their rents
in fiscal 2021 than they did in fiscal 2020 and that created a
positive variance in FFO in fiscal 2021 when compared with fiscal
2020.
- A decrease of $242,000 in net income to noncontrolling
interests. This decrease was caused by our redemption of
noncontrolling units in fiscal 2020 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:
- A decrease in gain on marketable securities as we had invested
excess cash in marketable securities and sold them in fiscal 2020
realizing a gain of $258,000 in fiscal 2020. We did not have
similar gains in fiscal 2021, which creates a negative variance if
fiscal 2021 when compared with fiscal 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)
Twelve Months Ended October
31,
Three Months Ended October
31,
2021
2020
% Change
2021
2020
% Change
Same Property Operating Results:
Number of Properties (Note 1)
74
74
Revenue (Note 2)
Base Rent (Note 3)
$ 99,136
$ 93,564
6.0%
$ 24,509
$ 22,891
7.1%
Uncollectable amounts in lease income
(1,528)
(3,802)
(59.8)%
(148)
(342)
(56.7)%
ASC Topic 842 cash-basis lease income
reversal-same property
(2,011)
(2,306)
(12.8)%
(129)
(530)
(75.7)%
Recoveries from tenants
34,788
28,503
22.1%
8,046
7,646
5.2%
Other property income
402
879
(54.3)%
98
92
6.5%
130,787
116,838
11.9%
32,376
29,757
8.8%
Expenses
Property operating
14,084
11,248
25.2%
3,107
2,639
17.7%
Property taxes
23,522
23,343
0.8%
5,936
5,822
2.0%
Other non-recoverable operating
expenses
2,037
1,758
15.9%
573
443
29.3%
39,643
36,349
9.1%
9,616
8,904
8.0%
Same Property Net Operating Income
$
91,144
$
80,489
13.2%
$
22,760
$
20,853
9.1%
Reconciliation of Same Property NOI to
Most Directly Comparable GAAP Measure:
Other reconciling
items:
Other non same-property net operating
income
884
1,284
80
196
Other Interest income
471
428
122
92
Other Dividend Income
-
182
-
-
Consolidated lease termination income
967
705
166
245
Consolidated amortization of above and
below market leases
632
706
177
183
Consolidated straight line rent income
(2,396)
2,678
306
898
Equity in net income of unconsolidated
joint ventures
1,323
1,433
298
273
Taxable REIT subsidiary income/(loss)
303
920
(116)
201
Solar income/(loss)
(163)
(72)
(4)
19
Storage income/(loss)
1,236
979
431
265
Unrealized holding gains arising during
the periods
-
-
-
-
Gain on sale of marketable securities
-
258
-
-
Interest expense
(13,087)
(13,508)
(3,025)
(3,385)
General and administrative expenses
(8,985)
(10,643)
(2,109)
(2,148)
Uncollectable amounts in lease income
(1,529)
(3,916)
(149)
(426)
Uncollectable amounts in lease income -
same property
1,529
3,802
149
342
ASC Topic 842 cash-basis lease income
reversal
(2,011)
(2,327)
(129)
(551)
ASC Topic 842 cash-basis lease income
reversal-same property
2,011
2,306
129
530
Directors fees and expenses
(355)
(373)
(78)
(86)
Depreciation and amortization
(29,032)
(29,187)
(7,259)
(7,600)
Adjustment for intercompany expenses and
other
(3,878)
(4,027)
(908)
(796)
Total other -net
(52,080)
(48,372)
(11,919)
(11,748)
Income from continuing operations
39,064
32,117
21.6%
10,841
9,105
19.1%
Gain (loss) on sale of real estate
11,864
(6,047)
(350)
(5,719)
Net income
50,928
26,070
95.4%
10,491
3,386
209.8%
Net income attributable to noncontrolling
interests
(3,645)
(3,887)
(921)
(886)
Net income attributable to Urstadt Biddle
Properties Inc.
$47,283
$22,183
113.1%
$9,570
$2,500
282.8%
Same Property Operating Expense Ratio
(Note 4)
92.5%
82.4%
10.1%
89.0%
90.4%
(1.4)%
Note 1 - Includes only properties owned for the entire period of
both periods presented.
Note 2 - Excludes straight line rent, above/below market lease
rent, lease termination income.
Note 3 - Base rents for the three and twelve month periods ended
October 31, 2021 are reduced by approximately $27,000 and $552,000,
respectively, in rents that were deferred and approximately
$309,000 and $3.0 million, in rents that were abated because of
COVID-19. Base rents for the three and twelve month periods ended
October 31, 2021, are increased by approximately $346,000 and $3.2
million, respectively, in COVID-19 deferred rents that were billed
and collected in those periods.
Base rents for the three and twelve month periods ended October
31, 2020 are reduced by approximately $854,000 and $3.4 million,
respectively, in rents that were deferred and approximately
$934,000 and $1.4 million, in rents that were abated because of
COVID-19.
Note 4 -Represents the percentage of property operating expense
and real estate tax
Urstadt Biddle Properties
Inc.
Balance Sheet
Highlights
(in thousands)
October 31,
October 31,
2021
2020
(Unaudited)
Assets
Cash and Cash Equivalents
$24,057
$40,795
Real Estate investments before
accumulated depreciation
$1,148,382
$1,149,182
Investments in and advances to
unconsolidated joint ventures
$29,027
$28,679
Total Assets
$973,852
$1,010,179
Liabilities
Revolving credit line
$-
$35,000
Mortgage notes payable and other
loans
$296,449
$299,434
Total Liabilities
$330,553
$377,037
Redeemable Noncontrolling
Interests
$67,395
$62,071
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$575,904
$571,071
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211216005934/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
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