United States
Securities And Exchange Commission
Washington, DC 20549

Form 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2022

OR

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File Number 1-12803

graphic

URSTADT BIDDLE PROPERTIES INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland
04-2458042
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
   
321 Railroad Avenue, Greenwich CT
06830
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code:  (203) 863-8200

N/A
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
         
Common Stock, par value $.01 per share
 
UBP
 
New York Stock Exchange
         
Class A Common Stock, par value $.01 per share
 
UBA
 
New York Stock Exchange
         
6.25% Series H Cumulative Preferred Stock
 
UBPPRH
 
New York Stock Exchange
         
5.875% Series K Cumulative Preferred Stock
 
UBPPRK
 
New York Stock Exchange
         
Common Stock Rights to Purchase Preferred Shares
 
N/A
 
New York Stock Exchange
         
Class A Common Stock Rights to Purchase Preferred Shares
 
N/A
 
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer 
   
Non-accelerated filer
Smaller reporting company
   
Emerging growth company
 
   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No

As of June 3, 2022 (latest date practicable), the number of shares of the Registrant's classes of Common Stock and Class A Common Stock outstanding was: 10,264,968 Common Shares, par value $.01 per share, and 30,162,196 Class A Common Shares, par value $.01 per share.






Index
 
Urstadt Biddle Properties Inc.
   
   
   
Part I. Financial Information
 
   
Item 1.
Financial Statements (Unaudited)
 
     
 
1
     
 
2
     
 
3
     
 
4
     
 
5
     
 
9
     
Item 2.
23
     
Item 3.
32
     
Item 4.
33
     
     
Part II. Other Information
 
     
Item 1.
34
     
Item 2.
35
     
Item 6.
36
     
37


URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

 
April 30, 2022
   
October 31, 2021
 
   
(Unaudited)
       
Assets
           
Real Estate Investments:
           
Real Estate– at cost
 
$
1,180,269
   
$
1,148,382
 
Less: Accumulated depreciation
   
(290,489
)
   
(278,605
)
     
889,780
     
869,777
 
Investments in and advances to unconsolidated joint ventures
   
29,043
     
29,027
 
     
918,823
     
898,804
 
                 
Cash and cash equivalents
   
15,893
     
24,057
 
Tenant receivables-net
   
22,363
     
23,806
 
Prepaid expenses and other assets
   
30,225
     
19,175
 
Deferred charges, net of accumulated amortization
   
9,352
     
8,010
 
Total Assets
 
$
996,656
   
$
973,852
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
Liabilities:
               
Revolving credit line
 
$
10,000
   
$
-
 
Mortgage notes payable and other loans
   
306,079
     
296,449
 
Accounts payable and accrued expenses
   
5,879
     
11,443
 
Deferred compensation – officers
   
48
     
62
 
Other liabilities
   
23,050
     
22,599
 
Total Liabilities
   
345,056
     
330,553
 
                 
Redeemable Noncontrolling Interests
   
63,906
     
67,395
 
                 
Commitments and Contingencies
   
     
 
                 
Stockholders’ Equity:
               
6.25% Series H Cumulative Preferred Stock (liquidation preference of $25 per share); 4,600,000 shares issued and outstanding
   
115,000
     
115,000
 
5.875% Series K Cumulative Preferred Stock (liquidation preference of $25 per share); 4,400,000 shares issued and outstanding
   
110,000
     
110,000
 
Excess Stock, par value $0.01 per share; 20,000,000 shares authorized; none issued and outstanding
   
-
     
-
 
Common Stock, par value $0.01 per share; 30,000,000 shares authorized; 10,264,968 and 10,153,689 shares issued and outstanding
   
104
     
103
 
Class A Common Stock, par value $0.01 per share; 100,000,000 shares authorized; 30,162,196 and 30,073,807 shares issued and outstanding
   
302
     
301
 
Additional paid in capital
   
529,845
     
528,713
 
Cumulative distributions in excess of net income
   
(175,031
)
   
(170,493
)
Accumulated other comprehensive income (loss)
   
7,474
     
(7,720
)
Total Stockholders' Equity
   
587,694
     
575,904
 
Total Liabilities and Stockholders' Equity
 
$
996,656
   
$
973,852
 

The accompanying notes to consolidated financial statements are an integral part of these statements.

1

URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
 
Six Months Ended
April 30,
   
Three Months Ended
April 30,
 
   
2022
   
2021
   
2022
   
2021
 
                         
Revenues
                       
Lease income
 
$
68,743
   
$
64,278
   
$
34,656
   
$
31,795
 
Lease termination
   
60
     
705
     
32
     
-
 
Other
   
2,752
     
2,220
     
1,312
     
1,131
 
Total Revenues
   
71,555
     
67,203
     
36,000
     
32,926
 
                                 
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 property
   
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
 
                                 
Basic Earnings Per Share:
                               
Per Common Share:
 
$
0.30
   
$
0.21
   
$
0.17
   
$
0.11
 
Per Class A Common Share:
 
$
0.33
   
$
0.24
   
$
0.19
   
$
0.12
 
                                 
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
 
                                 
Dividends Per Share:
                               
 Common
 
$
0.429
   
$
0.25
   
$
0.2145
   
$
0.125
 
  Class A Common
 
$
0.475
   
$
0.28
   
$
0.2375
   
$
0.14
 

The accompanying notes to consolidated financial statements are an integral part of these statements.

2

URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In thousands)

 
Six Months Ended
April 30,
   
Three Months Ended
April 30,
 
   
2022
   
2021
   
2022
   
2021
 
                         
Net Income
 
$
21,145
   
$
17,762
   
$
11,424
   
$
8,958
 
                                 
Other comprehensive income (loss):
                               
Change in unrealized gains on interest rate swaps
   
13,691
     
5,006
     
10,220
     
3,507
 
Change in unrealized gains on interest rate swaps-equity investees
   
1,503
     
728
     
1,151
     
470
 
                                 
Total comprehensive income (loss)
   
36,339
     
23,496
     
22,795
     
12,935
 
Comprehensive income attributable to noncontrolling interests
   
(1,814
)
   
(1,837
)
   
(903
)
   
(925
)
                                 
Total comprehensive income (loss) attributable to Urstadt Biddle Properties Inc.
   
34,525
     
21,659
     
21,892
     
12,010
 
Preferred stock dividends
   
(6,825
)
   
(6,825
)
   
(3,412
)
   
(3,412
)
Total comprehensive income (loss) applicable to Common and Class A Common Stockholders
 
$
27,700
   
$
14,834
   
$
18,480
   
$
8,598
 

The accompanying notes to consolidated financial statements are an integral part of these statements.

3

URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
Six Months Ended
April 30,
 
   
2022
   
2021
 
Cash Flows from Operating Activities:
           
Net income
 
$
21,145
   
$
17,762
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
14,716
     
14,710
 
Straight-line rent adjustment
   
55
     
2,331
 
Provision for tenant credit losses
   
161
     
3,271
 
(Gain)/loss on sale of property
   
(768
)
   
(406
)
Restricted stock compensation expense and other adjustments
   
1,627
     
1,932
 
Deferred compensation arrangement
   
(14
)
   
21
 
Equity in net (income) of unconsolidated joint ventures
   
(590
)
   
(660
)
Distributions of operating income from unconsolidated joint ventures
   
590
     
660
 
Changes in operating assets and liabilities:
               
Tenant receivables
   
1,227
     
(2,786
)
Accounts payable and accrued expenses
   
537
     
1,221
 
Other assets and other liabilities, net
   
(3,803
)
   
(3,439
)
Net Cash Flow Provided by Operating Activities
   
34,883
     
34,617
 
                 
Cash Flows from Investing Activities:
               
Acquisitions of real estate investments
   
(33,161
)
   
-
 
Proceeds from sale of property
   
4,400
     
4,035
 
Improvements to properties and deferred charges
   
(6,263
)
   
(11,621
)
Investment in note receivable
   
-
     
(1,621
)
Return of capital from unconsolidated affiliates
   
1,543
     
104
 
Net Cash Flow (Used in) Investing Activities
   
(33,481
)
   
(9,103
)
                 
Cash Flows from Financing Activities:
               
Dividends paid -- Common and Class A Common Stock
   
(18,673
)
   
(10,973
)
Dividends paid -- Preferred Stock
   
(6,825
)
   
(6,825
)
Principal amortization repayments on mortgage notes payable
   
(3,489
)
   
(3,400
)
Repayment of mortgage note payable
   
(32,412
)
   
-
 
Proceeds from mortgage note payable
   
46,000
     
-
 
Proceeds from revolving credit facility
   
20,000
     
-
 
Repayment of revolving credit facility
   
(10,000
)
   
-
 
Acquisitions of noncontrolling interests
   
(1,860
)
   
(4,566
)
Distributions to noncontrolling interests
   
(1,814
)
   
(1,837
)
Payment of taxes on shares withheld for employee taxes
   
(590
)
   
(320
)
Net proceeds from the issuance of Common and Class A Common Stock
   
97
     
58
 
Net Cash Flow (Used in) Financing Activities
   
(9,566
)
   
(27,863
)
                 
Net Increase/(Decrease) In Cash and Cash Equivalents
   
(8,164
)
   
(2,349
)
Cash and Cash Equivalents at Beginning of Period
   
24,057
     
40,795
 
                 
Cash and Cash Equivalents at End of Period
 
$
15,893
   
$
38,446
 
                 
Supplemental Cash Flow Disclosures:
               
Interest Paid
 
$
6,199
   
$
6,669
 

The accompanying notes to consolidated financial statements are an integral part of these statements.

4

URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
Six Months Ended April 30, 2022 and 2021
(In thousands, except share and per share data)

 
Series H
Preferred
Stock
Issued
   
Series H
Preferred
Stock Amount
   
Series K
Preferred
Stock
Issued
   
Series K
Preferred
Stock
Amount
   
Common
Stock
Issued
   
Common
Stock
Amount
   
Class A
Common
Stock
Issued
   
Class A
Common
Stock
Amount
   
Additional
Paid In
Capital
   
Cumulative
Distributions
In Excess of
Net Income
   
Accumulated
Other
Comprehensive
Income (loss)
   
Total
Stockholders’
Equity
 
                                                                         
Balances - October 31, 2021
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,153,689
   
$
103
     
30,073,807
   
$
301
   
$
528,713
   
$
(170,493
)
 
$
(7,720
)
 
$
575,904
 
Net income applicable to Common and Class A common stockholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
12,506
     
-
     
12,506
 
Change in unrealized losses on interest rate swap
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
15,194
     
15,194
 
Cash dividends paid :
                                                                                               
Common stock ($0.429 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(4,403
)
   
-
     
(4,403
)
Class A common stock ($0.475 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(14,270
)
   
-
     
(14,270
)
Issuance of shares under dividend reinvestment plan
   
-
     
-
     
-
     
-
     
1,779
     
-
     
3,369
     
-
     
97
     
-
     
-
     
97
 
Shares issued under restricted stock plan
   
-
     
-
     
-
     
-
     
109,500
     
1
     
149,000
     
1
     
(2
)
   
-
     
-
     
-
 
Shares withheld for employee taxes
   
-
     
-
     
-
     
-
     
-
     
-
     
(27,680
)
   
-
     
(590
)
   
-
     
-
     
(590
)
Forfeiture of restricted stock
   
-
     
-
     
-
     
-
     
-
     
-
     
(36,300
)
   
-
     
-
     
-
     
-
     
-
 
Restricted stock compensation and other adjustments
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
1,627
     
-
     
-
     
1,627
 
Adjustments to redeemable noncontrolling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
1,629
     
-
     
1,629
 
Balances - April 30, 2022
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,264,968
   
$
104
     
30,162,196
   
$
302
   
$
529,845
   
$
(175,031
)
 
$
7,474
   
$
587,694
 
5



 
Series H
Preferred
Stock
Issued
   
Series H
Preferred
Stock Amount
   
Series K
Preferred
Stock
Issued
   
Series K
Preferred
Stock
Amount
   
Common
Stock
Issued
   
Common
Stock
Amount
   
Class A
Common
Stock
Issued
   
Class A
Common
Stock
Amount
   
Additional
Paid In
Capital
   
Cumulative
Distributions
In Excess of
Net Income
   
Accumulated
Other
Comprehensive
Income
   
Total
Stockholders’
Equity
 
                                                                         
Balances - October 31, 2020
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,073,652
   
$
102
     
29,996,305
   
$
300
   
$
526,027
   
$
(164,651
)
 
$
(15,707
)
 
$
571,071
 
Net income applicable to Common and Class A common stockholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
9,100
     
-
     
9,100
 
Change in unrealized losses on interest rate swap
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
5,734
     
5,734
 
Cash dividends paid :
                                                                                               
Common stock ($0.25per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(2,545
)
   
-
     
(2,545
)
Class A common stock ($0.28 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(8,428
)
   
-
     
(8,428
)
Issuance of shares under dividend reinvestment plan
   
-
     
-
     
-
     
-
     
1,503
     
-
     
2,334
     
-
     
58
     
-
     
-
     
58
 
Shares issued under restricted stock plan
   
-
     
-
     
-
     
-
     
105,850
     
1
     
125,800
     
1
     
(2
)
   
-
     
-
     
-
 
Shares withheld for employee taxes
   
-
     
-
     
-
     
-
     
-
     
-
     
(23,249
)
   
-
     
(319
)
   
-
     
-
     
(319
)
Forfeiture of restricted stock
   
-
     
-
     
-
     
-
     
-
     
-
     
(400
)
   
-
     
-
     
-
             
-
 
Restricted stock compensation and other adjustments
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
1,931
     
-
     
-
     
1,931
 
Adjustments to redeemable noncontrolling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(8,575
)
   
-
     
(8,575
)
Balances - April 30, 2021
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,181,005
   
$
103
     
30,100,790
   
$
301
   
$
527,695
   
$
(175,099
)
 
$
(9,973
)
 
$
568,027
 

The accompanying notes to consolidated financial statements are an integral part of these statements
6


URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
Three Months Ended April 30, 2022 and 2021
(In thousands, except share and per share data)

 
Series H
Preferred
Stock
Issued
   
Series H
Preferred
Stock Amount
   
Series K
Preferred
Stock
Issued
   
Series K
Preferred
Stock
Amount
   
Common
Stock
Issued
   
Common
Stock
Amount
   
Class A
Common
Stock
Issued
   
Class A
Common
Stock
Amount
   
Additional
Paid In
Capital
   
Cumulative
Distributions
In Excess of
Net Income
   
Accumulated
Other
Comprehensive
Income (loss)
   
Total
Stockholders’
Equity
 
                                                                         
Balances - January 31, 2022
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,264,037
   
$
104
     
30,161,094
   
$
302
   
$
528,807
   
$
(174,940
)
 
$
(3,897
)
 
$
575,376
 
Net income applicable to Common and Class A common stockholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
7,109
     
-
     
7,109
 
Change in unrealized losses on interest rate swap
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
11,371
     
11,371
 
Cash dividends paid :
                                                                                               
Common stock ($0.2145 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(2,202
)
   
-
     
(2,202
)
Class A common stock ($0.2375 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(7,163
)
   
-
     
(7,163
)
Issuance of shares under dividend reinvestment plan
   
-
     
-
     
-
     
-
     
931
     
-
     
1,802
     
-
     
49
     
-
     
-
     
49
 
Forfeiture of restricted stock
   
-
     
-
     
-
     
-
     
-
     
-
     
(700
)
   
-
     
-
     
-
     
-
     
-
 
Repurchase of Common and Class A Common stock
                                   
-
     
-
     
-
     
-
     
-
                     
-
 
Restricted stock compensation and other adjustments
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
989
     
-
     
-
     
989
 
Adjustments to redeemable noncontrolling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
2,165
     
-
     
2,165
 
Balances - April 30, 2022
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,264,968
   
$
104
     
30,162,196
   
$
302
   
$
529,845
   
$
(175,031
)
 
$
7,474
   
$
587,694
 

7


 
Series H
Preferred
Stock
Issued
   
Series H
Preferred
Stock Amount
   
Series K
Preferred
Stock
Issued
   
Series K
Preferred
Stock
Amount
   
Common
Stock
Issued
   
Common
Stock
Amount
   
Class A
Common
Stock
Issued
   
Class A
Common
Stock
Amount
   
Additional
Paid In
Capital
   
Cumulative
Distributions
In Excess of
Net Income
   
Accumulated
Other
Comprehensive
Income
   
Total
Stockholders’
Equity
 
                                                                         
Balances - January 31, 2021
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,180,308
   
$
103
     
30,100,161
   
$
301
   
$
526,721
   
$
(170,543
)
 
$
(13,950
)
 
$
567,632
 
Net income applicable to Common and Class A common stockholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
4,621
     
-
     
4,621
 
Change in unrealized losses on interest rate swap
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
3,977
     
3,977
 
Cash dividends paid :
                                                                                               
Common stock ($0.125 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(1,273
)
   
-
     
(1,273
)
Class A common stock ($0.14 per share)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(4,214
)
   
-
     
(4,214
)
Issuance of shares under dividend reinvestment plan
   
-
     
-
     
-
     
-
     
697
     
-
     
1,029
     
-
     
29
     
-
     
-
     
29
 
Shares withheld for employee taxes
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Forfeiture of restricted stock
   
-
     
-
     
-
     
-
     
-
     
-
     
(400
)
   
-
     
-
     
-
     
-
     
-
 
Restricted stock compensation and other adjustments
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
945
     
-
     
-
     
945
 
Adjustments to redeemable noncontrolling interests
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(3,690
)
   
-
     
(3,690
)
Balances - April 30, 2021
   
4,600,000
   
$
115,000
     
4,400,000
   
$
110,000
     
10,181,005
   
$
103
     
30,100,790
   
$
301
   
$
527,695
   
$
(175,099
)
 
$
(9,973
)
 
$
568,027
 

The accompanying notes to consolidated financial statements are an integral part of these statements
8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business
Urstadt Biddle Properties Inc. (“Company”), a Maryland Corporation, is a real estate investment trust ("REIT"), engaged in the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers in the metropolitan tri-state area outside of the City of New York.  The Company's major tenants include supermarket chains and other retailers who sell basic necessities.  At April 30, 2022, the Company owned or had equity interests in 77 properties containing a total of 5.3 million square feet of Gross Leasable Area (“GLA”).

COVID-19 Pandemic
On March 11, 2020, the novel coronavirus disease (“COVID-19”) was declared a pandemic (“COVID-19 pandemic”) by the World Health Organization as the disease spread throughout the world.  During March 2020, measures to prevent the spread of COVID-19 were initiated, with federal, state and local government agencies issuing regulatory orders enforcing social distancing and limiting certain business operations and group gatherings in order to further prevent the spread of COVID-19.  While these regulatory orders vary by state and have changed over time, as of April 30, 2022 all of our tenants’ businesses are operating normally. We have seen foot traffic, retail activity and general business conditions for most of our tenants essentially return to pre-pandemic levels. The pandemic is still ongoing, however, with existing and new variants making the situation difficult to predict.

Principles of Consolidation and Use of Estimates
The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company meets certain criteria in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. The Company has determined that such joint ventures should be consolidated into the consolidated financial statements of the Company. In accordance with ASC Topic 970-323 “Real Estate-General-Equity Method and Joint Ventures,” joint ventures that the Company does not control but otherwise exercises significant influence over, are accounted for under the equity method of accounting. See Note 5 for further discussion of the unconsolidated joint ventures. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Results of operations for the three and six months ended April 30, 2022 are not necessarily indicative of the results that may be expected for the year ending October 31, 2022. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2021.

The preparation of financial statements requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition, fair value estimates, and the collectability of tenant receivables and other assets and liabilities.  Actual results could differ from these estimates.  The consolidated balance sheet at October 31, 2021 has been derived from audited financial statements at that date.

Federal Income Taxes
The Company has elected to be treated as a REIT under Sections 856-860 of the Internal Revenue Code ("Code"). Under those sections, a REIT that, among other things, distributes at least 90% of real estate trust taxable income and meets certain other qualifications prescribed by the Code will not be taxed on that portion of its taxable income that is distributed.  The Company believes it qualifies as a REIT and intends to distribute all of its taxable income for fiscal 2022 in accordance with the provisions of the Code. Accordingly, no provision has been made for Federal income taxes in the accompanying consolidated financial statements.

The Company follows the provisions of ASC Topic 740, “Income Taxes” that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  Based on its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of April 30, 2022. As of April 30, 2022, the fiscal tax years 2018 through and including 2021 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.

Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents with high quality financial institutions and the balances at times could exceed federally insured limits. The Company performs ongoing credit evaluations of its tenants and may require certain tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the terminal value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. The Company has no dependency upon any single tenant.

Marketable Securities
Marketable equity securities are carried at fair value based upon quoted market prices in active markets with changes in fair value recognized in net income.

Derivative Financial Instruments
The Company occasionally utilizes derivative financial instruments, such as interest rate swaps, to manage its exposure to fluctuations in interest rates. The Company has established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. Derivative financial instruments must be effective in reducing the Company’s interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. The Company has not entered into, and does not plan to enter into, derivative financial instruments for trading or speculative purposes. Additionally, the Company has a policy of entering into derivative contracts only with major financial institutions.

As of April 30, 2022, the Company believes it has no significant risk associated with non-performance of the financial institutions that are the counterparties to its derivative contracts.  At April 30, 2022, the Company had approximately $157.3 million in secured mortgage financings subject to interest rate swaps. Such interest rate swaps converted the LIBOR-based variable rates on the mortgage financings to a weighted-average fixed annual rate of 3.74% per annum. As of April 30, 2022 and October 31, 2021, the Company had a deferred liability of $637,000 and $6.7 million, respectively (included in accounts payable and accrued expenses on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages. As of April 30, 2022 and October 31, 2021, the Company had deferred assets of  $8.1 million and $515,000, respectively (included in other assets on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages.

Charges and/or credits relating to the changes in fair values of such interest rate swaps are made to other comprehensive income/(loss) as the swaps are deemed effective and are classified as a cash flow hedge.

Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income applicable to Common and Class A Common stockholders and other comprehensive income (loss). Other comprehensive income (loss) includes items that are otherwise recorded directly in stockholders’ equity, such as unrealized gains and losses on interest rate swaps designated as cash flow hedges, including the Company's share from entities accounted for under the equity method of accounting. At April 30, 2022, accumulated other comprehensive income consisted of net unrealized gains on interest rate swap agreements of $7.4 million, inclusive of the Company's share of accumulated comprehensive income/losses from joint ventures accounted for by the equity method of accounting.  At October 31, 2021, accumulated other comprehensive loss consisted of net unrealized losses on interest rate swap agreements of approximately $7.7 million, inclusive of the Company's share of accumulated comprehensive income/losses from joint ventures accounted for by the equity method of accounting. Unrealized gains and losses included in other comprehensive income/(loss) will be reclassified into earnings as gains and losses are realized.

Asset Impairment
On a periodic basis, management assesses whether there are any indicators that the value of its real estate investments may be impaired.  A property value is considered impaired when management’s estimate of current and projected operating cash flows (undiscounted and without interest) of the property over its remaining useful life is less than the net carrying value of the property.  Such cash flow projections consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors.  To the extent impairment has occurred, the loss is measured as the excess of the net carrying amount of the property over the fair value of the asset.  Changes in estimated future cash flows due to changes in the Company’s plans or market and economic conditions could result in recognition of impairment losses which could be substantial.  As of April 30, 2022, management does not believe that the value of any of its real estate investments is impaired.
9




Acquisitions of Real Estate Investments, Capitalization Policy and Depreciation

Acquisition of Real Estate Investments:
The Company evaluates each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or

The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e. revenue generated before and after the transaction).

An acquired process is considered substantive if:

The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce), that is skilled, knowledgeable, and experienced in performing the process;

The process cannot be replaced without significant cost, effort, or delay; or

The process is considered unique or scarce.

Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Acquisitions of real estate and in-substance real estate that do not meet the definition of a business are accounted for as asset acquisitions. The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. As a result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions as the Company utilizes to determine fair value in a business combination.

The value of tangible assets acquired is based upon our estimation of value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. We assess the fair value of tangible and intangible assets based on numerous factors, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property.

The values of acquired above and below-market leases, which are included in prepaid expenses and other assets and other liabilities, respectively, are amortized over the terms of the related leases and recognized as either an increase (for below-market leases) or a decrease (for above-market leases) to rental revenue. The values of acquired in-place leases are classified in other assets in the accompanying consolidated balance sheets and amortized over the remaining terms of the related leases.

Capitalization Policy:
Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and/or replacements, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.

Depreciation:
The Company is required to make subjective assessments as to the useful life of its properties for purposes of determining the amount of depreciation. These assessments have a direct impact on the Company’s net income.

Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

Buildings
30-40 years
Property Improvements
10-20 years
Furniture/Fixtures
3-10 years
Tenant Improvements
Shorter of lease term or their useful life

Sale of Investment Property and Property Held for Sale
The Company reports properties that are either disposed of or are classified as held for sale in continuing operations in the consolidated statement of income if the removal, or anticipated removal, of the asset(s) from the reporting entity does not represent a strategic shift that has or will have a major effect on an entity's operations and financial results when disposed of.

In September 2021, the Company entered into a purchase and sale agreement to sell its property located in Chester, NJ (the "Chester Property"), to an unrelated third party for a sale price of $1.96 million as that property no longer met its investment objectives.  In accordance with ASC Topic 360-10-45, the property met all the criteria to be classified as held for sale in the fourth quarter of fiscal 2021, and accordingly the Company recorded a loss on property held for sale of $342,000, which loss was included in continuing operations in the consolidated statement of income for the year ended October 31, 2021. The amount of the loss represented the net carrying amount of the property over the fair value of the asset less estimated cost to sell.  The net book value of the Chester Property was insignificant to financial statement presentation and as a result the Company did not include the asset as held for sale on its consolidated balance sheet at October 31, 2021.  In December 2021, the Chester Property sale was completed and the Company realized an additional loss on sale of property of $8,000, which loss is included in operations in the consolidated statement of income for the six months ended April 30, 2022.

In February 2022, the Company sold its property located in Bloomfield, NJ (the "Bloomfield Property") to an unrelated third party for a sale price of $1.8 million, as that property no longer met the Company's investment objectives.  In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $544,000, which gain is included in continuing operations in its consolidated income statements for the three and six month periods ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.

In March 2022, the Company sold its property located in Unionville, CT (the "Unionville Property") to an unrelated third party for a sale price of $950,000, as that property no longer met the Company's investment objectives.  In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $203,000, which gain is included in continuing operations in its consolidated income statements for the three and six month periods ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.

The operating results of the Chester Property, the Bloomfield Property and the Unionville Property, which are included in  operations is as follows (amounts in thousands):

 
Six Months Ended
April 30,
   
Three Months Ended
April 30,
 
   
2022
   
2021
   
2022
   
2021
 
Revenues
 
$
46
   
$
98
   
$
8
   
$
52
 
Property operating expense
   
(27
)
   
(37
)
   
(9
)
   
(21
)
Depreciation and amortization
   
(14
)
   
(53
)
   
(2
)
   
(26
)
Net Income (Loss)
 
$
5
   
$
8
   
$
(3
)
 
$
5
 

10

Lease Income, Revenue Recognition and Tenant Receivables
Lease Income:

The Company accounts for lease income in accordance with ASC Topic 842 "Leases".

The Company's existing leases are generally classified as operating leases. However, certain longer-term leases (both lessee and lessor leases) may be classified as direct financing or sales type leases, which may result in selling profit and an accelerated pattern of earnings recognition.

The Company leases space to tenants under agreements with varying terms that generally provide for fixed payments of base rent, with designated increases over the term of the lease. Some of the lease agreements contain provisions that provide for additional rents based on tenants' sales volume ("percentage rent"). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Additionally, most all lease agreements contain provisions for reimbursement of the tenants' share of actual real estate taxes, insurance and Common Area Maintenance ("CAM") costs (collectively, "Recoverable Costs") incurred.

Lease terms generally range from 1 to 5 years for tenant spaces under 10,000 square feet (“Shop Space”) and in excess of 5 years for spaces greater than 10,000 square feet (“Anchor Spaces”). Many leases also provide the option for the tenants to extend their lease beyond the initial term of the lease. If the tenants do not exercise renewal options and the leases mature, the tenants must relinquish their space so it can be leased to a new tenant, which generally involves some level of cost to prepare the space for re-leasing. These costs are capitalized and depreciated over the shorter of the life of the subsequent lease or the life of the improvement.

CAM is a non-lease component of the lease contract under ASC Topic 842, and therefore would be accounted for under ASC Topic 606, Revenue from Contracts with Customers, and presented separate from lease income in the accompanying consolidated statements of income, based on an allocation of the overall contract price, which is not necessarily the amount that would be billable to the tenants for CAM reimbursements per the terms of the lease contract. As the timing and pattern of providing the CAM service to the tenant is the same as the timing and pattern of the tenants' use of the underlying lease asset, the Company, in accordance with ASC Topic 842, combines CAM with the remaining lease components, along with tenants' reimbursement of real estate taxes and insurance, and recognize them together as lease income in the accompanying consolidated statements of income.

Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases for which collectability is considered probable at the commencement date. At lease commencement, the Company expects that collectability is probable for all of its leases due to the Company’s credit checks on tenants and other creditworthiness analysis undertaken before entering into a new lease; therefore, income from all operating leases is initially recognized on a straight-line basis.  Lease income each period is reduced by amounts considered uncollectable on a lease-by-lease basis, with any changes in collectability assessments recognized as a current period adjustment to lease income. For operating leases in which collectability of lease income is not considered probable, lease income is recognized on a cash basis and all previously recognized uncollected lease income, including straight-line rental income, is reversed in the period in which the lease income is determined not to be probable of collection.

The Company, as a lessor, may only defer as initial direct costs the incremental costs of a tenant operating lease that would not have been incurred if the lease had not been obtained. These costs generally include third party broker payments, which are capitalized to deferred costs in the accompanying consolidated balance sheets and amortized over the expected term of the lease to depreciation and amortization expense in the accompanying consolidated statements of income.

COVID-19 Pandemic

Beginning in March 2020, many of the Company's properties were negatively impacted by the COVID-19 pandemic, as state governments mandated restrictions on the operation of non-essential businesses to prevent the spread of COVID-19, forcing many of our tenants’ businesses to close or reduce operations.  As public health and business conditions in the areas where our properties are located have generally improved, rent relief requests have greatly decreased and our properties have largely returned to normal operations. The primary strategy of the Company with respect to rent concession requests was to defer some portion of rents due for the months of April 2020 through the beginning of fiscal 2021 to be paid over a later part of the lease, preferably within a period of one year or less. In some instances, however, the Company determined that it was more appropriate to abate some portion of base rents. Most of the base rent deferrals or abatements entered into with tenants in the second half of fiscal 2021 and the first quarter of fiscal 2022 are additional deferrals or abatements for tenants who received prior rent concessions.

From the onset of COVID-19 through April 30, 2022, the Company completed 290 lease modifications, consisting of base rent deferrals totaling $4.0 million and rent abatements totaling $4.7 million. Included in the aforementioned amounts were 1 and 11 rent deferrals and 2 and 29 rent abatements, which deferred $87,000 and $426,000 and abated $156,000 and $2.3 million of base rents in the six months ended April 30, 2022 and 2021, respectively.

Included in the aforementioned amounts were  1 and 2 rent deferrals and 1 and 6 rent abatements, which deferred $37,000 and $26,000 and abated $33,000 and $287,000 of base rents in the three months ended April 30, 2022 and 2021, respectively.

In April 2020,  in response to the COVID-19 pandemic, the FASB staff issued guidance that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842, as if enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the lease contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each lease contract to determine whether enforceable rights and obligations for concessions exist in the lease contract and may elect to apply or not apply the lease modification guidance in Topic 842 to those contracts.

This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. For example, this election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. The FASB staff expects that reasonable judgment will be exercised in making those determinations.

Most concessions will provide a deferral of payments with no substantive changes to the consideration in the original lease contract. A deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original lease contract. The FASB staff expects that there will be multiple ways to account for those deferrals, none of which the staff believes are preferable over others. The Company has made the election not to analyze each lease contract, and believes that, based on FASB guidance, the appropriate way to account for the concessions as described above is to account for such concessions as if no changes to the lease contracts were made. Under that accounting, a lessor would increase its lease receivable (straight-line rents receivable) and would continue to recognize income during the deferral period, assuming that the collectability of the future rents under the lease contract are considered collectable.  If it is determined that the future rents of any lease contract are not collectable, the Company would treat that lease contract on a cash basis as defined in ASC Topic 842.

When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by numerous factors, including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in lease income.

Revenue Recognition

In those instances, in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition on operating leases will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin.

Lease termination amounts are recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with the Company. There is no way of predicting or forecasting the timing or amounts of future lease termination fees. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses under U.S. GAAP have been met.

Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved.

Tenant Receivables

During the early days of the pandemic, the actions taken by federal, state and local governments to mitigate the spread of COVID-19, initially by ordering closures of non-essential businesses and ordering residents to generally stay at home, and subsequent phased re-openings resulted in many of our tenants temporarily or even permanently closing their businesses, and for some, it has impacted their ability to pay rent.

As a result, in accordance with ASC Topic 842, we revised our collectability assumptions for many of our tenants that were most significantly impacted by COVID-19. This amount includes changes in our collectability assessments for certain tenants in our portfolio from probable to not probable, which requires that revenue recognition for those tenants be converted to cash-basis accounting, with previously uncollected billed rents reversed in the current period.  From the beginning of the COVID-19 pandemic through the end of our 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 second half of fiscal 2021 or the three and six months ended April 30, 2022.  As of April 30, 2022, 32 of the 89 tenants are no longer tenants in the Company's properties.  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. In the six and three month periods ended April 30, 2021, the Company reversed straight-line rent revenue in the amount of $1.3 million and $814,000, respectively, related to tenants converted to cash-basis revenue recognition.

During the six and three month periods ended April 30, 2022, we restored 8 and 5 of the original 89 tenants, respectively, 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 April 30, 2022.  When a tenant is restored to accrual-basis revenue recognition, the Company records revenue on the straight-line basis.  As such the Company restored straight-line rent revenue in the six and three month periods ended April 30, 2022 in the amounts of $50,098 and $26,000, respectively, for these tenants.  The Company did not restore any tenants to accrual basis accounting in the six and three month periods ended April 30, 2021.

As of April 30, 2022, the Company is recording lease income on a cash basis for approximately 4.0% of our tenants in accordance with ASC Topic 842.

During the six and three month periods ended April 30, 2022, we recognized collectability adjustments totaling $160,000 and $(40,000), respectively.  During the six and three month periods ended April 30, 2021, we recognized collectability adjustments totaling $4.5 million and $2.4 million, respectively.

At April 30, 2022 and October 31, 2021, $19,570,000 and $19,670,000, respectively, have been recognized as straight-line rents receivable (representing the current cumulative rents recognized prior to when billed and collectable as provided by the terms of the leases), all of which is included in tenant receivables in the accompanying consolidated financial statements.

The Company provides an allowance for doubtful accounts against the portion of tenant receivables that is estimated to be uncollectable. Such allowances are reviewed periodically. At April 30, 2022 and October 31, 2021, tenant receivables in the accompanying consolidated balance sheets are shown net of allowances for doubtful accounts of $6,886,000 and $7,469,000, respectively. Included in the aforementioned allowance for doubtful accounts is an amount for future tenant credit losses of approximately 10% of the deferred straight-line rents receivable which is estimated to be uncollectable.
11



Earnings Per Share
The Company calculates basic and diluted earnings per share in accordance with the provisions of ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income applicable to Common and Class A Common stockholders by the weighted average number of Common shares and Class A Common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue Common shares or Class A Common shares were exercised or converted into Common shares or Class A Common shares and then shared in the earnings of the Company. Since the cash dividends declared on the Company’s Class A Common stock are higher than the dividends declared on the Common Stock, basic and diluted EPS have been calculated using the “two-class” method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to the weighted average of the dividends declared, outstanding shares per class and participation rights in undistributed earnings.

The following table sets forth the reconciliation between basic and diluted EPS (in thousands):

 
Six Months Ended
April 30,
   
Three Months Ended
April 30,
 
   
2022
   
2021
   
2022
   
2021
 
Numerator
                       
Net income applicable to common stockholders – basic
 
$
2,768
   
$
1,986
   
$
1,574
   
$
1,009
 
Effect of dilutive securities:
                               
Restricted stock awards
   
85
     
37
     
52
     
25
 
Net income applicable to common stockholders – diluted
 
$
2,853
   
$
2,023
   
$
1,626
   
$
1,034
 
                                 
Denominator
                               
Denominator for basic EPS – weighted average common shares
   
9,327
     
9,250
     
9,328
     
9,250
 
Effect of dilutive securities:
                               
Restricted stock awards
   
424
     
248
     
465
     
353
 
Denominator for diluted EPS – weighted average common equivalent shares
   
9,751
     
9,498
     
9,793
     
9,603
 
                                 
Numerator
                               
Net income applicable to Class A common stockholders-basic
 
$
9,738
   
$
7,114
   
$
5,535
   
$
3,612
 
Effect of dilutive securities:
                               
Restricted stock awards
   
(85
)
   
(37
)
   
(52
)
   
(25
)
Net income applicable to Class A common stockholders – diluted
 
$
9,653
   
$
7,077
   
$
5,483
   
$
3,587
 
                                 
Denominator
                               
Denominator for basic EPS – weighted average Class A common shares
   
29,637
     
29,583
     
29,614
     
29,576
 
Effect of dilutive securities:
                               
Restricted stock awards
   
163
     
84
     
217
     
188
 
Denominator for diluted EPS – weighted average Class A common equivalent shares
   
29,800
     
29,667
     
29,831
     
29,764
 

Segment Reporting
The Company's primary business is the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers, anchored by supermarkets, pharmacy/drug-stores and wholesale clubs, with a concentration in the metropolitan tri-state area of the City of New York. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, which consists of base rental income and tenant reimbursement income, less rental expenses and real estate taxes. Only one of the Company’s properties, located in Stamford, CT (“Ridgeway”), is considered significant as its revenue is in excess of 10% (in fiscal 2021) of the Company’s consolidated total revenues and accordingly is a reportable segment. The Company has aggregated the remainder of its properties as they share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in the same major metropolitan area, and have similar tenant mixes.

Ridgeway is located in Stamford, Connecticut and was developed in the 1950’s and redeveloped in the mid-1990’s. The property contains approximately 374,000 square feet of GLA.  It is the dominant grocery-anchored center and the largest non-mall shopping center located in the City of Stamford, Fairfield County, Connecticut.

Segment information about Ridgeway as required by ASC Topic 280 is included below:

 
Six Months Ended
April 30,
   
Three Months Ended
April 30,
 
   
2022
   
2021
   
2022
   
2021
 
Ridgeway Revenues
   
9.8
%
   
10.4
%
   
9.7
%
   
10.7
%
All Other Property Revenues
   
90.2
%
   
89.6
%
   
90.3
%
   
89.3
%
Consolidated Revenue
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%

 
April 30,
2022
   
October 31,
2021
 
Ridgeway Assets
   
6.3
%
   
6.3
%
All Other Property Assets
   
93.7
%
   
93.7
%
Consolidated Assets (Note 1)
   
100.0
%
   
100.0
%

Note 1 - Ridgeway did not have any significant expenditures for additions to long lived assets in the three and six months ended April 30, 2022 or the year ended October 31, 2021.

 
April 30,
2022
   
October 31,
2021
 
Ridgeway Percent Leased
   
92
%
   
92
%

12



Ridgeway Significant Tenants (Percentage of Base Rent Billed):

 
Six Months Ended
April 30,
   
Three Months Ended
April 30,
 
   
2022
   
2021
   
2022
   
2021
 
The Stop & Shop Supermarket Company 
   
21
%
   
21
%
   
21
%
   
21
%
Bed, Bath & Beyond
   
15
%
   
15
%
   
15
%
   
15
%
Marshall’s Inc.
   
11
%
   
11
%
   
11
%
   
11
%
All Other Tenants at Ridgeway (Note 2)
   
53
%
   
53
%
   
53
%
   
53
%
Total
   
100
%
   
100
%
   
100
%
   
100
%

Note 2 - No other tenant accounts for more than 10% of Ridgeway’s annual base rents in any of the periods presented. Percentages are calculated as a ratio of the tenants' base rent divided by total base rent of Ridgeway.


Income Statements (In Thousands):
 
Six Months Ended
April 30, 2022
   
Three Months Ended
April 30, 2022
 
   
Ridgeway
   
All Other
Operating Segments
   
Total Consolidated
   
Ridgeway
   
All Other
Operating Segments
   
Total Consolidated
 
Revenues
 
$
7,114
   
$
64,441
   
$
71,555
   
$
3,475
   
$
32,525
   
$
36,000
 
Property Operating Expenses
 
$
2,269
   
$
22,991
   
$
25,260
   
$
1,126
   
$
11,209
   
$
12,335
 
Interest Expense
 
$
800
   
$
5,764
   
$
6,564
   
$
382
   
$
2,880
   
$
3,262
 
Depreciation and Amortization
 
$
1,145
   
$
13,571
   
$
14,716
   
$
624
   
$
6,948
   
$
7,572
 
Net Income
 
$
2,900
   
$
18,245
   
$
21,145
   
$
1,343
   
$
10,081
   
$
11,424
 

Income Statements (In Thousands):
 
Six Months Ended
April 30, 2021
   
Three Months Ended
April 30, 2021
 
   
Ridgeway
   
All Other
Operating Segments
   
Total Consolidated
   
Ridgeway
   
All Other
Operating Segments
   
Total Consolidated
 
Revenues
 
$
6,989
   
$
60,214
   
$
67,203
   
$
3,528
   
$
29,398
   
$
32,926
 
Property Operating Expenses
 
$
2,301
   
$
21,924
   
$
24,225
   
$
1,147
   
$
10,903
   
$
12,050
 
Interest Expense
 
$
819
   
$
5,914
   
$
6,733
   
$
391
   
$
2,950
   
$
3,341
 
Depreciation and Amortization
 
$
1,172
   
$
13,538
   
$
14,710
   
$
592
   
$
6,600
   
$
7,192
 
Net Income
 
$
2,697
   
$
15,065
   
$
17,762
   
$
1,398
   
$
7,560
   
$
8,958
 

13


Stock-Based Compensation
The Company accounts for its stock-based compensation plans under the provisions of ASC Topic 718, “Stock Compensation”, which requires that compensation expense be recognized, based on the fair value of the stock awards less estimated forfeitures. The fair value of stock awards is equal to the fair value of the Company’s stock on the grant date.  The Company recognizes compensation expense for its stock awards by amortizing the fair value of stock awards over the requisite service periods of such awards.  In certain cases, as defined in the participant agreements, the vesting of stock awards can be accelerated, which will result in the Company charging to compensation expense the remaining unamortized restricted stock compensation related to those stock awards.

Reclassifications
Certain prior period amounts have been reclassified to conform to the current period’s presentation.

New Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).” ASU No. 2020-04 contains practical expedients for reference rate-reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended April 30, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

The Company has evaluated all other new ASUs issued by FASB, and has concluded that these updates do not have a material effect on the Company's consolidated financial statements as of April 30, 2022.

14



(2) REAL ESTATE INVESTMENTS

In February 2022, the Company purchased the Shelton Square Shopping Center ("Shelton") for $33.6 million (exclusive of closing costs).  Shelton is a 186,000 square foot grocery-anchored Shopping Center located in Shelton, CT. The Company funded the purchase with available cash, borrowings on our unsecured revolving credit facility (the "Facility") and proceeds from mortgage borrowings.

The Company accounted for the purchase of Shelton as an asset acquisition and allocated the total consideration transferred for the acquisition, including transaction costs, to the individual assets and liabilities acquired on a relative fair value basis.

The financial information set forth below summarizes the Company’s purchase price allocation for the property acquired during the six months ended April 30, 2022 (in thousands).

 
 
Shelton
 
Assets:
     
Land
 
$
9,568
 
Building and improv