Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real
estate investment trust, today reported its operating results for
the quarter ended April 30, 2022 and provided information regarding
financial and operational activities.
FINANCIAL HIGHLIGHTS
FOR SECOND QUARTER FISCAL 2022
- $7.1 million net income attributable to common stockholders
($0.18 per diluted Class A Common share).
- $14.3 million of FFO ($0.37 per diluted Class A Common
share).(1)
- $1.1 million or a 4.7% increase in same property net operating
income in the second quarter of fiscal 2022, when compared with the
second quarter of fiscal 2021.(2)
- Purchased for $33.6 million a 186,000 square foot
grocery-anchored shopping center located in Shelton, CT.
- 92.1% of our consolidated portfolio Gross Leasable Area (“GLA”)
was leased at April 30, 2022, an increase of 0.2% from the end of
fiscal 2021.
- 2.5% average increase in base rental rates on new leases signed
in our second quarter of fiscal 2022.
- 3.5% average increase in base rental rates on lease renewals
signed in our second quarter of fiscal 2022.
- On April 14, 2022, we paid a $0.2375 per share quarterly cash
dividend on our Class A Common Stock and a $0.2145 per share
quarterly cash dividend on our Common Stock.
- We have $15.9 million of cash and cash equivalents currently on
our balance sheet.
- We have $114 million currently available on our unsecured
revolving credit facility.
- We have no material mortgage debt maturing until 2024.
(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.
Dividend
Declarations
- On June 6, 2022, 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 July 15, 2022 to holders of
record on July 1, 2022. This represents an increase of $0.03 per
share per annum on both the Class A Common and Common stock when
compared with the dividend level in fiscal 2021. The Board
determined that this level of dividend was 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 June 2022, 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 29, 2022 to shareholders of record
on July 15, 2022.
Commenting on the operating results, Willing L. Biddle,
President and CEO of Urstadt Biddle Properties Inc., said “After
more than two years of the Covid-19 pandemic’s disruption to the
shopping center business, we are encouraged to see a continued
rebound in our tenants’ businesses and demand for vacant space at
our properties. This quarter, we renewed 249,700 square feet of
existing tenant leases and signed 27,200 square feet of new leases
in our portfolio, leaving the percentage of our consolidated
portfolio leased at 92.1% as of April 30, 2022. The demand is
leading to increased rents, and this quarter renewal rents
increased by 3.5%, our fourth consecutive quarterly increase.
Rental rates on new leases increased by 2.5%. We believe the
increasing demand for space will continue, particularly as supply
becomes more constrained. Our leasing and management teams are very
busy working to deliver space for our new tenants and have a strong
pipeline of new leasing deals in process. We currently have 68,700
square feet of new leases in the negotiation stage as well as
letters of intent for over 159,000 square feet. We are grateful for
the tremendous efforts and perseverance of our tenants and our
team, who have worked together to get through the last two plus
years.”
Mr. Biddle continued…. “Although public health and business
conditions continue to improve, certain categories of our tenants,
like dry cleaners and small format fitness, continue to be
impacted. This list, however, is decreasing monthly, and we
continue to work with those of our tenants with good business plans
that we feel will eventually rebound. Thankfully, due to our
long-term strategy, 87% 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 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 7% and demand for space is growing. Our collection rate on rents
billed has returned to pre-pandemic levels, and our allowance for
doubtful accounts continues to decline. Requests for rent
abatements or deferrals have mostly stopped. As a result, our same
property operating income continues to improve from pandemic levels
and increased 4.7% from our second quarter of fiscal 2021. 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. During our second quarter, we continued to
strengthen our balance sheet by refinancing our mortgage on the
Dock Shopping Center, increasing the principal from $23 million to
$35 million while reducing the fixed interest rate from 4.85% to
3.0525%. Also, during the second quarter, we purchased Shelton
Square Shopping Center, a 186,000 square foot,
supermarket-anchored, community shopping center located in Shelton,
CT. The 20+ acre property is 96.5% leased, anchored by a 67,000
square foot Stop & Shop, and includes other well-known tenants
such as Edge Fitness, Hawley Lane Shoes, People’s United Bank, St.
Vincent’s/Hartford Health, Burger King and Sports Clips, along with
local tenants. The purchase of Shelton Square coupled with the sale
this quarter of two free standing restaurant properties (at a
profit in each case), continues our strategy of concentrating our
portfolio in grocery, pharmacy and wholesale club-anchored
properties.”
Net income applicable to Class A Common and Common stockholders
for the second quarter of fiscal 2022 was $7,109,000 or $0.18 per
diluted Class A Common share and $0.17 per diluted Common share,
compared to net income of $4,621,000 or $0.12 per diluted Class A
Common share and $0.11 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 2022 was
$12,506,000 or $0.32 per diluted Class A Common share and $0.29 per
diluted Common share, compared to $9,100,000 or $0.24 per diluted
Class A Common share and $0.21 per diluted Common share in the
first six months of fiscal 2021.
FFO for the second quarter of fiscal 2022 was $14,269,000 or
$0.37 per diluted Class A Common share and $0.33 per diluted Common
share, compared with $11,728,000 or $0.31 per diluted Class A
Common share and $0.27 per diluted Common share in last year’s
second quarter. For the first six months of fiscal 2022, FFO
amounted to $27,165,000 or $0.70 per diluted Class A Common share
and $0.64 per diluted Common share, compared to $24,103,000 or
$0.63 per diluted Class A Common share and $0.56 per diluted Common
share in the corresponding period of fiscal 2021.
Urstadt Biddle Properties Inc. is a self-administered equity
real estate investment trust which owns or has equity interests in
77 properties containing approximately 5.3 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 209 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 and Three Months Ended
April 30, 2022 and 2021 Results (Unaudited)
(in thousands, except per share
data)
Six Months Ended
Three Months Ended
April 30,
April 30,
2022
2021
2022
2021
Revenues
Lease income
$
68,743
$
64,278
$
34,656
$
31,795
Lease termination income
60
705
32
-
Other income
2,752
2,220
1,312
1,131
Total Revenues
71,555
67,203
36,000
32,926
Operating Expenses
Property operating
13,449
12,449
6,447
6,135
Property taxes
11,811
11,776
5,888
5,915
Depreciation and amortization
14,716
14,710
7,572
7,192
General and administrative
5,188
4,737
2,508
2,093
Directors' fees and expenses
201
198
94
89
Total Operating Expenses
45,365
43,870
22,509
21,424
Operating Income
26,190
23,333
13,491
11,502
Non-Operating Income (Expense):
Interest expense
(6,564
)
(6,733
)
(3,262
)
(3,341
)
Equity in net income from unconsolidated
joint ventures
590
660
323
310
Gain (loss) on sale of properties
768
406
766
434
Interest, dividends and other investment
income
161
96
106
53
Net Income
21,145
17,762
11,424
8,958
Noncontrolling interests:
Net income attributable to noncontrolling
interests
(1,814
)
(1,837
)
(903
)
(925
)
Net income attributable to Urstadt Biddle
Properties Inc.
19,331
15,925
10,521
8,033
Preferred stock dividends
(6,825
)
(6,825
)
(3,412
)
(3,412
)
Net Income Applicable to Common and
Class A Common Stockholders
$
12,506
$
9,100
$
7,109
$
4,621
Diluted Earnings Per Share:
Per Common Share:
$
0.29
$
0.21
$
0.17
$
0.11
Per Class A Common Share:
$
0.32
$
0.24
$
0.18
$
0.12
Weighted Average Number of Shares
Outstanding (Diluted):
Common and Common Equivalent
9,751
9,498
9,793
9,603
Class A Common and Class A Common
Equivalent
29,800
29,667
29,831
29,764
Results of Operations
The following information summarizes our results of operations
for the six months and three months ended April 30, 2022 and 2021
(amounts in thousands):
Six Months Ended
Change Attributable to
April 30,
Increase
Property
Properties Held In
Revenues
2022
2021
(Decrease)
% Change
Acquisitions/Sales
Both Periods (Note 1)
Base rents
$
51,246
$
48,757
$
2,489
5.1
%
$
160
$
2,329
Recoveries from tenants
17,657
18,792
(1,135
)
(6.0
)%
47
(1,182
)
Uncollectable amounts in lease income
(151
)
(1,379
)
1,228
(89.1
)%
-
1,228
ASC Topic 842 cash basis lease income
reversal (including straight-line rent)
(9
)
(1,892
)
1,883
(99.5
)%
-
1,883
Total lease income
68,743
64,278
Lease termination
60
705
(645
)
(91.5
)%
-
(645
)
Other income
2,752
2,220
532
24.0
%
4
528
Operating Expenses
Property operating
13,449
12,449
1,000
8.0
%
(26
)
1,026
Property taxes
11,811
11,776
35
0.3
%
51
(16
)
Depreciation and amortization
14,716
14,710
6
-
232
(226
)
General and administrative
5,188
4,737
451
9.5
%
n/a
n/a
Non-Operating Income/Expense
Interest expense
6,564
6,733
(169
)
(2.5
)%
-
(169
)
Interest, dividends, and other investment
income
161
96
65
67.7
%
n/a
n/a
Three Months Ended
Change Attributable to
April 30,
Increase
Property
Properties Held In
Revenues
2022
2021
(Decrease)
% Change
Acquisitions/Sales
Both Periods (Note 1)
Base rents
$
26,233
$
24,598
$
1,635
$6.6%
$
501
$
1,134
Recoveries from tenants
8,383
8,814
(431
)
(4.9
)%
174
(605
)
Uncollectable amounts in lease income
(38
)
(724
)
686
(94.8
)%
-
686
ASC Topic 842 cash basis lease income
reversal (including straight-line rent)
78
(893
)
971
(108.7
)%
-
971
Total lease income
34,656
31,795
Lease termination
32
-
32
100.0
%
-
32
Other income
1,312
1,131
181
16.0
%
11
170
Operating Expenses
Property operating
6,447
6,135
312
5.1
%
58
254
Property taxes
5,888
5,915
(27
)
(0.5
)%
76
(103
)
Depreciation and amortization
7,573
7,192
381
5.3
%
266
115
General and administrative
2,508
2,093
415
19.8
%
n/a
n/a
Non-Operating Income/Expense
Interest expense
3,262
3,341
(79
)
(2.4
)%
-
(79
)
Interest, dividends, and other investment
income
106
53
53
100.0
%
n/a
n/a
Note 1 – Properties held in both periods includes only
properties owned for the entire periods of 2022 and 2021 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 5.1% to $51.2 million for the six months
ended April 30, 2022, as compared with $48.8 million in the
corresponding period of 2021. Base rents increased by 6.6% to $26.2
million for the three months ended April 30, 2022, as compared with
$24.6 million in the corresponding period of 2021. 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 2022, we acquired one property
totaling 186,000 square feet and sold three properties totaling
14,300 square feet. In fiscal 2021, we sold two properties totaling
105,000 square feet. These properties accounted for all of the
revenue and expense changes attributable to property acquisitions
and sales in the six and three month periods ended April 30, 2022,
when compared with the corresponding periods in fiscal 2021.
Properties Held in Both
Periods:
Revenues
Base Rent
For properties held in both periods, base rent for the six and
three month periods ended April 30, 2022 increased by $2.3 million
and $1.1 million, respectively, when compared with the
corresponding prior period. This increase was primarily a result of
new leasing completed after the first quarter of fiscal 2021.
In the first six months of fiscal 2022, we leased or renewed
approximately 508,000 square feet (or approximately 11.1% of total
GLA). At April 30, 2022, our consolidated properties were 92.1%
leased (91.9% leased at October 31, 2021).
Tenant Recoveries
In the six and three month periods ended April 30, 2022,
recoveries from tenants (which represent reimbursements from
tenants for operating expenses and property taxes) decreased by a
net $1.2 million and $605,000, respectively, when compared with the
corresponding prior periods. The decrease in tenant recoveries was
the result of an under-accrual adjustment in the first quarter of
fiscal 2021. We completed the 2020 annual reconciliations for both
common area maintenance and real estate taxes in the first quarter
of fiscal 2021, and those reconciliations resulted in us billing
our tenants more than we had anticipated and accrued for in the
prior period. This increased tenant reimbursement income in the
first quarter of fiscal 2021, and caused a negative variance in the
first quarter of fiscal 2022. This net decrease was offset by an
increase in property operating expenses in the six and three month
periods ended April 30, 2022, when compared to the corresponding
prior periods, predominantly related to insurance, environmental
costs and roof repairs.
Uncollectable Amounts in Lease
Income
In the six and three month periods ended April 30, 2022,
uncollectable amounts in lease income decreased by $1.2 million and
$686,000, 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 in
which they operate and 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. This stress continued through the first half of
fiscal 2021. Our assessment was that any billed but unpaid rents
would likely be uncollectable. During the six months ended April
30, 2022, many of our tenants experienced business improvement as
regulatory restrictions continued to ease and individuals continued
to return to pre-pandemic activities. As a result, the
uncollectable amounts in lease income declined during such periods,
when compared with the corresponding periods of the prior year.
ASC Topic 842 Cash Basis Lease Income
Reversals
We adopted ASC Topic 842 "Leases" at the beginning of fiscal
2020. ASC Topic 842 requires, among 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. 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 such tenants were converted to
cash basis after our second quarter of fiscal 2020 and prior to our
third quarter of fiscal 2021. As of April 30, 2022, 32 of these 89
tenants are no longer tenants in the Company's properties. As a
result, of converting these tenants to cash-basis accounting we
reversed straight-line rent receivables in the amount of $1.9
million and $893,000 in the six and three month periods ended April
30, 2021.
During the fourth quarter of fiscal 2021, we restored 13 of the
original 89 tenants to accrual-basis revenue recognition, and we
restored an additional 3 tenants to accrual-basis accounting in the
three months ended January 31, 2022 and an additional 5 tenants to
accrual basis accounting in the three months ended April 30, 2022.
The tenants that were restored to accrual-basis accounting had paid
all of their billed rents for six consecutive months and had no
significant unpaid billings outstanding when restored to
accrual-basis accounting. As a result of the restoration of the 8
and 5 tenants in the six months and three months ended April 30,
2022, we recorded $50,000 and $26,000, respectively in
straight-line rent related to the aforementioned tenants.
As of April 30, 2022, 36 tenants continue to be accounted for on
a cash basis, or approximately 4.0% of our tenants. Many of our
cash-basis tenants are now paying a larger portion of their billed
rents, which results in an increase in revenue recognition for
those tenants accounted for on a cash basis when compared with the
corresponding period of the prior year.
Expenses
Property Operating
In the six and three month periods ended April 30, 2022,
property operating expenses increased by $1 million and $254,000,
respectively, when compared with the corresponding prior periods.
This was primarily a result of having higher common area
maintenance expenses in the six and three month periods ended April
30, 2022, when compared with the corresponding prior periods,
related to insurance, environmental costs and roof repairs.
Property Taxes
In the six and three month periods ended April 30, 2022,
property tax expenses were relatively unchanged, when compared with
the corresponding prior periods.
Interest
In the six and three month periods ended April 30, 2022,
interest expense was relatively unchanged, when compared with the
corresponding prior periods.
Depreciation and Amortization
In the six and three month periods ended April 30, 2022,
depreciation and amortization was relatively unchanged, when
compared with the corresponding prior periods.
General and Administrative
Expenses
In the six and three month periods ended April 30, 2022, general
and administrative expenses increased by $451,000 and $415,000,
respectively, when compared with the corresponding prior periods.
This was primarily a result of an increase in employee compensation
and professional fees in both periods.
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 FFO 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
period ended April 30, 2022 and 2021. (Amounts in thousands)
(Table Follows)
Urstadt Biddle Properties Inc.
(NYSE: UBA and UBP)
Six Months and Three Months
Ended April 30, 2022 and 2021
(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
Three Months Ended
April 30,
April 30,
2022
2021
2022
2021
Net Income Applicable to Common and Class
A Common Stockholders
$
12,506
$
9,100
$
7,109
$
4,621
Real property depreciation
11,622
11,461
5,884
5,759
Amortization of tenant improvements and
allowances
2,123
2,352
1,132
1,037
Amortization of deferred leasing costs
936
846
539
370
Depreciation and amortization on
unconsolidated joint ventures
746
750
371
375
(Gain)/loss on sale of property
(768
)
(406
)
(766
)
(434
)
Funds from Operations Applicable to Common
and Class A Common Stockholders
$
27,165
$
24,103
$
14,269
$
11,728
FFO amounted to $27.2 million in the six months ended April 30,
2022, compared to $24.1 million in the corresponding period of
fiscal 2021. The net increase in FFO is attributable, among other
things to:
Increases:
- An increase in base rent for new leasing in the portfolio after
the first quarter of fiscal 2021.
- A decrease in uncollectable amounts in lease income of $1.2
million in the six months ended April 30, 2022 , when compared with
the corresponding prior period. 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 in which they operate and 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. This stress
continued through our first quarter of fiscal 2021. Our assessment
was that any billed but unpaid rents would likely be uncollectable.
During the six months ended April 30, 2022 , many of our tenants
continued to see signs of business improvement as regulatory
restrictions continued to ease and individuals continued to return
to pre-pandemic activities. As a result, the uncollectable amounts
in lease income declined during such period, when compared with the
corresponding period of the prior year.
- We adopted ASC Topic 842 "Leases" at the beginning of fiscal
2020. ASC Topic 842 requires, among 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. 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 such tenants were converted to
cash basis after our second quarter of fiscal 2020 and prior to our
third quarter of fiscal 2021. As of April 30, 2022 , 32 of these 89
tenants are no longer tenants in the Company's properties. As a
result, of converting these tenants to cash-basis accounting we
reversed straight-line rent receivables in the amount of $1.9
million and $893,000 in the six and three month periods ended April
30, 2021.
During the fourth quarter of fiscal 2021, we
restored 13 of the original 89 tenants to accrual-basis revenue
recognition, and we restored an additional 3 tenants to
accrual-basis accounting in the three months ended January 31, 2022
and an additional 5 tenants to accrual basis accounting in the
three months ended April 30, 2022. The tenants that were restored
to accrual-basis accounting had paid all of their billed rents for
six consecutive months and had no significant unpaid billings
outstanding when restored to accrual-basis accounting. As a result
of the restoration of the 8 and 5 tenants in the six months and
three months ended April 30, 2022, we recorded $50,000 and $26,000,
respectively in straight-line rent related to the aforementioned
tenants.
As of April 30, 2022, 36 tenants continue to
be accounted for on a cash basis, or approximately 4.0% of our
tenants. Many of our cash-basis tenants are now paying a larger
portion of their billed rents, which results in an increase in
revenue recognition for those tenants accounted for on a cash basis
when compared with the corresponding period of the prior year.
Decreases:
- A $645,000 decrease in lease termination income in the first
quarter of fiscal 2022, when compared with the corresponding prior
period, primarily as a result of a multi-site lease buyout in the
first quarter of fiscal 2021 from one tenant that had occupied
multiple spaces in our portfolio.
- A decrease 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
quarter of fiscal 2021, which increased revenue in the first
quarter of fiscal 2021 and caused a negative variance in the first
half of fiscal 2022.
- A $374,000 increase in employee compensation and professional
fees in the first half of fiscal 2022, when compared to the
corresponding prior period.
FFO amounted to $14.3 million in the three months ended April
30, 2022, compared to $11.7 million in the corresponding period of
fiscal 2021. The net increase in FFO is attributable, among other
things to:
Increases:
- An increase in base rent for new leasing in the portfolio after
the first quarter of fiscal 2021.
- A decrease in uncollectable amounts in lease income of $686,000
in the three months ended April 30, 2022 , when compared with the
corresponding prior period. 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 in which they operate and 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. This stress
continued through our first quarter of fiscal 2021. Our assessment
was that any billed but unpaid rents would likely be uncollectable.
During the three months ended April 30, 2022 , many of our tenants
continued to see signs of business improvement as regulatory
restrictions continued to ease and individuals continued to return
to pre-pandemic activities. As a result, the uncollectable amounts
in lease income declined during such period, when compared with the
corresponding period of the prior year.
- We adopted ASC Topic 842 "Leases" at the beginning of fiscal
2020. ASC Topic 842 requires, among 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. 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 such tenants were converted to
cash basis after our second quarter of fiscal 2020 and prior to our
third quarter of fiscal 2021. As of April 30, 2022 , 32 of these 89
tenants are no longer tenants in the Company's properties. As a
result, of converting these tenants to cash-basis accounting we
reversed straight-line rent receivables in the amount of $893,000
in the three month periods ended April 30, 2021.
During the fourth quarter of fiscal 2021, we
restored 13 of the original 89 tenants to accrual-basis revenue
recognition, and we restored an additional 3 tenants to
accrual-basis accounting in the three months ended January 31, 2022
and an additional 5 tenants to accrual basis accounting in the
three months ended April 30, 2022. The tenants that were restored
to accrual-basis accounting had paid all of their billed rents for
six consecutive months and had no significant unpaid billings
outstanding when restored to accrual-basis accounting. As a result
of the restoration of the 5 tenants in the three months ended April
30, 2022, we recorded $26,000, respectively in straight-line rent
related to the aforementioned tenants.
As of April 30, 2022, 36 tenants continue to
be accounted for on a cash basis, or approximately 4.0% of our
tenants. Many of our cash-basis tenants are now paying a larger
portion of their billed rents, which results in an increase in
revenue recognition for those tenants accounted for on a cash basis
when compared with the corresponding period of the prior year.
Decreases:
- A decrease 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 half
of fiscal 2021, which increased revenue in the first half of fiscal
2021 and caused a negative variance in the second quarter of fiscal
2022.
- A $323,000 increase in employee compensation and professional
fees in the first half of fiscal 2022, when compared to the
corresponding prior period.
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 we 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,
2022
2021
% Change
2022
2021
% Change
Same Property Operating Results:
Number of Properties (Note 1)
72
72
Revenue (Note 2)
Base Rent (Note 3)
$49,601
$49,924
(0.6)%
$25,053
$25,759
(2.7)%
Uncollectable amounts in lease income-same
property
(152)
(1,379)
(89.0)%
(39)
(725)
(94.6)%
ASC Topic 842 cash-basis
lease income reversal-same property
(10)
(1,855)
(99.5)%
49
(856)
(105.7)%
Recoveries from tenants
17,429
18,612
(6.4)%
8,158
8,767
(6.9)%
Other property income
1,130
226
400.0%
794
178
346.1%
67,998
65,528
3.8%
34,015
33,123
2.7%
Expenses
Property operating
7,802
7,720
1.1%
3,997
3,920
2.0%
Property taxes
11,677
11,698
(0.2)%
5,768
5,872
(1.8)%
Other non-recoverable operating
expenses
962
1,016
(5.3)%
466
618
(24.6)%
20,441
20,434
-
10,231
10,410
(1.7)%
Same Property Net Operating Income
$47,557
$45,094
5.5%
$23,784
$22,713
4.7%
Reconciliation of Same Property NOI to
Most Directly Comparable GAAP Measure:
Other reconciling
items:
Other non same-property net operating
income
750
750
754
351
Other Interest income
286
231
161
123
Other Dividend Income
-
-
-
-
Consolidated lease termination income
60
704
32
-
Consolidated amortization of above and
below market leases
396
289
222
179
Consolidated straight line rent income
(55)
(2,331)
(60)
(1,763)
Equity in net income of unconsolidated
joint ventures
590
660
323
310
Taxable REIT subsidiary income/(loss)
(135)
254
(321)
(126)
Solar income/(loss)
(292)
(247)
(81)
(93)
Storage income/(loss)
1,001
445
475
192
Unrealized holding gains arising during
the periods
-
-
-
-
Gain on marketable securities
-
-
-
-
Interest expense
(6,564)
(6,733)
(3,262)
(3,341)
General and administrative expenses
(5,188)
(4,737)
(2,508)
(2,093)
Uncollectable amounts in lease income
(152)
(1,379)
(39)
(725)
Uncollectable amounts in lease income-same
property
152
1,379
39
725
ASC Topic 842 cash-basis lease income
reversal
(10)
(1,892)
77
(893)
ASC Topic 842 cash-basis lease income
reversal-same property
10
1,855
(49)
856
Directors fees and expenses
(201)
(198)
(94)
(89)
Depreciation and amortization
(14,716)
(14,710)
(7,572)
(7,192)
Adjustment for intercompany expenses and
other
(3,112)
(2,078)
(1,223)
(610)
Total other -net
(27,180)
(27,738)
(13,126)
(14,189)
Income from continuing operations
20,377
17,356
17.4%
10,658
8,524
25.0%
Gain (loss) on sale of real estate
768
406
766
434
Net income
21,145
17,762
19.0%
11,424
8,958
27.5%
Net income attributable to noncontrolling
interests
(1,814)
(1,837)
(903)
(925)
Net income attributable to Urstadt Biddle
Properties Inc.
$19,331
$15,925
21.4%
$10,521
$8,033
31.0%
Same Property Operating Expense Ratio
(Note 4)
89.5%
95.8%
(6.4)%
83.5%
89.5%
(6.0)%
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 six month periods ended
April 30, 2022 are reduced by approximately $37,000 and $87,000,
respectively, in rents that were deferred and approximately $33,000
and $156,000, in rents that were abated because of COVID-19. Base
rents for the three and six month periods ended April 30, 2022, are
increased by approximately $92,000 and $382,000, respectively, in
COVID-19 deferred rents that were billed and collected in the
fiscal 2022 periods.
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
$286,000 and $2.3 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 -Represents the percentage of property operating expense
and real estate tax
Urstadt Biddle Properties
Inc.
Balance Sheet
Highlights
(in thousands)
April 30,
October 31,
2022
2021
(Unaudited)
Assets
Cash and Cash Equivalents
$15,893
$24,057
Real Estate investments before
accumulated depreciation
$1,180,269
$1,148,382
Investments in and advances to
unconsolidated joint ventures
$29,043
$29,027
Total Assets
$996,656
$973,852
Liabilities
Revolving credit line
$10,000
$0
Mortgage notes payable and other
loans
$306,079
$296,449
Total Liabilities
$345,056
$330,553
Redeemable Noncontrolling
Interests
$63,906
$67,395
Preferred Stock
$225,000
$225,000
Total Stockholders’ Equity
$587,694
$575,904
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220608006002/en/
Willing L. Biddle, CEO or John T. Hayes, CFO Urstadt Biddle
Properties Inc. (203) 863-8200
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