UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 31, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission File No. 1-12803
URSTADT BIDDLE PROPERTIES INC.
(Exact name of registrant as specified in its charter)
MARYLAND 04-2458042
-------- ------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
321 RAILROAD AVENUE
GREENWICH, CONNECTICUT 06830
---------------------- ---------
(Address of Principal Executive Offices) (Zip code)
registrant's telephone number, including area code: (203) 863-8200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, par value $.01 per share New York Stock Exchange
Class A Common Stock, par value $.01 per share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of January 15, 2000: Common Shares, par value $.01 per
share - $23,594,207; Class A Common Shares, par value $.01 per share -
$32,976,183.
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock and Class A Common Stock, as of January 15, 2000 (latest
date practicable): 5,578,745 Common Shares, par value $.01 per share, and
5,831,392 Class A Common Shares, par value $.01 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Stockholders to be held on March 15,
2000 (certain parts as indicated herein) (Part III).
1
TABLE OF CONTENTS
Form 10-K
Item No. Report Page
PART I
1. Business 3
2. Properties 8
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 10
PART II
5. Market for the Registrant's Common Equity and Related
Shareholder Matters 10
6. Selected Financial Data 13
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
8. Financial Statements and Supplementary Data 18
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 18
PART III
10. Directors and Executive Officers of the Registrant 18
11. Executive Compensation 19
12. Security Ownership of Certain Beneficial Owners and Management 19
13. Certain Relationships and Related Transactions 19
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K 19
2
PART I
Item I. Business.
Organization
Urstadt Biddle Properties Inc. (formerly HRE Properties, Inc.), a Maryland
Corporation, as successor by merger to HRE Properties, an unincorporated
business trust under the laws of the Commonwealth of Massachusetts was organized
on July 7, 1969. On March 12, 1997, the shareholders of HRE Properties ("the
trust") approved a plan of reorganization of the Trust from a Massachusetts
business trust to a corporation organized in Maryland. The plan of
reorganization was effected by means of a merger of the Trust into Urstadt
Biddle Properties Inc. (the "Company"). As a result of the plan of
reorganization, the Trust was merged with and into the Company, the separate
existence of the Trust ceased, the Company was the surviving entity in the
merger and each issued and outstanding common share of beneficial interest of
the Trust was converted into one share of Common Stock, par value $.01 per
share, of the Company. Prior to the merger, the Company had no assets or
liabilities and conducted no operations other than those incident to its
organization and the merger. Pursuant to the merger, all properties, assets,
liabilities and obligations of the Trust became the properties, assets,
liabilities and obligations of the Company. In 1998, the shareholders of the
Company approved an amendment to the Company's articles of incorporation to
change the name of the Company to Urstadt Biddle Properties Inc.
The Company has qualified and has elected to be taxed as a real estate
investment trust ("REIT") under Sections 856-860 of the Internal Revenue Code of
1986, as amended (the "Code"). Pursuant to such provisions of the Code, a REIT
which distributes at least 95% (90% for years after 2001) of its real estate
investment trust taxable income to its shareholders each year and which meets
certain other conditions will not be taxed on that portion of its taxable income
which is distributed to its shareholders. The Company intends to continue to
qualify as a real estate investment trust for federal income tax purposes.
Description of Business
The Company's sole business is the ownership of real estate investments which
consist principally of equity investments in income-producing properties, with
primary emphasis on properties in the northeastern part of the United States.
The Company's core properties consist principally of neighborhood and community
shopping centers in the northeastern part of the United States. The remaining
properties include office and retail buildings and industrial properties. The
Company seeks to identify desirable properties for acquisitions which it
acquires in the normal course of business. In addition, the Company regularly
reviews its portfolio and from time to time considers and effects the sale of
certain properties.
At October 31, 1999, the Company owned or had an equity interest in twenty six
properties comprised of neighborhood and community shopping centers, single
tenant retail stores, office buildings and service and distribution facilities
and undeveloped land located in twelve states throughout the United States,
containing a total of 3,342,200 square feet of gross leasable area. For a
description of the Company's individual investments, see Item 2.
The Company intends to continue to invest substantially all of its assets in
income producing real estate, with a primary emphasis on neighborhood and
community shopping centers, although the Company will retain the flexibility to
invest in other types of real property. While the Company is not limited to any
geographical location, the Company's current strategy is to invest primarily in
properties located in the northeastern region of the United States.
3
Investment and Operating Strategy
The Company's investment objective is to increase cash flow, current income and
consequently the value of its existing portfolio of properties, and to seek
continued growth through (i) the strategic re-tenanting, renovation and
expansion of its existing properties, and (ii) the selective acquisitions of
income-producing real estate properties, primarily neighborhood and community
shopping centers, in the geographic regions where the Company presently
operates.
The Company seeks to increase operating results through the strategic renovation
and expansion of certain of its properties. Retail properties are typically
adaptable for varied tenant layouts and can be reconfigured to accommodate new
tenants or the changing space needs of existing tenants. In determining whether
to proceed with a renovation or expansion, the Company considers both the cost
of such expansion or renovation and the increase in rent attributable to such
expansion or renovation. The Company believes that its retail properties will
provide opportunities for renovation and expansion.
When evaluating potential acquisitions, the Company will consider such factors
as (i) economic, demographic, and regulatory conditions in the property's local
and regional market; (ii) the location, construction quality, and design of the
property; (iii) the current and projected cash flow of the property and the
potential to increase cash flow; (iv) the potential for capital appreciation of
the property; (v) the terms of tenant leases, including the relationship between
the property's current rents and market rents and the ability to increase rents
upon lease rollover; (vi) the occupancy and demand by tenants for properties of
a similar type in the market area; (vii) the potential to complete a strategic
renovation, expansion or re-tenanting of the property; (viii) the property's
current expense structure and the potential to increase operating margins; and
(ix) competition from comparable retail properties in the market area.
Core Properties
The Company considers those properties which are directly managed by the
Company, located close to the Company's headquarters and concentrated in the
shopping center sector to be core properties. Of the twenty six properties in
the Company's portfolio, seventeen properties are considered core properties
consisting of eleven community shopping centers, two mixed-use (retail/office)
properties, one retail building and three office buildings (including the
Company's executive headquarters). At October 31, 1999, the properties contained
in the aggregate 1,738,000 square feet of gross leasable area. The Company's
core retail properties collectively had 302 tenants providing a wide range of
retail products and services. Tenants include national and regional
supermarkets, discount department stores, a regional electronic store and local
retailers. At October 31, 1999, the core properties were more than 96% leased.
Two of UBP's interests in the core properties are held directly by operating
partnerships. Units of partnership interests may be exchanged by the limited
partners for cash or an equivalent number of Class A Common or Common Shares of
UBP. UBP controls the partnerships as the sole general partner in each
partnership.
A substantial portion of the Company's operating lease income from retail
tenants consists of rent received under short- and intermediate-term leases.
Most of the leases provide for the payment of fixed base rentals monthly in
advance and for the payment by tenants of a pro-rata share of the real estate
taxes, insurance, utilities and common area maintenance expenses incurred in
operating the shopping centers.
4
Non-Core Properties
In fiscal 1995, the Board of Directors expanded and refined the strategic
objectives of the Company to refocus the real estate portfolio into one of
self-managed retail properties located in the Northeast and authorized a plan to
sell the non-core properties of the Company in the normal course of business
over a period of several years. At October 31, 1999, the non-core properties,
including the Company's investment in unconsolidated joint venture and
undeveloped land, totaled nine properties, having an aggregate net book value of
$26,855,000 ($29,820,000 at October 31, 1998) and comprising certain of the
Company's office and retail properties located outside of the northeast region
of the United States and all of its distribution and service facilities. In
fiscal 1999, the Company sold one non-core retail property for gross sales
proceeds of $2,825,000 realizing a gain on the sale of the property of
$1,364,000. The Company expects that the ultimate sales of the remaining
non-core properties over the next several years will result in net gains to the
Company.
At October 31, 1999, the Company's non-core properties consisted of one office
building, containing 202,000 square feet of gross leasable area (GLA), three
retail properties totaling 474,500 square feet, four distribution and service
facilities with a total of 928,000 square feet of GLA and 4.2 acres of
undeveloped land. The non-core properties were 98% leased at October 31, 1999.
The office property has four tenants which offer a range of services, including
engineering, management and administrative.
The three retail properties consist of a 231,000 square foot shopping center
located in Clearwater, Florida containing 46 tenants and two single tenant
properties leased under long term "triple net" leases whereby the tenants pay
all taxes, insurance, maintenance and other operating costs of the property
during the term of the lease. The Clearwater, Florida property, is owned by an
unconsolidated joint venture in which the Company is the general partner.
The four service and distribution facilities are 100% occupied and consist of
two automobile and truck parts distribution warehouses, one truck sales and
service center and one automobile tire distribution facility. The distribution
and service facilities are net leased under long-term lease arrangements whereby
the tenants pay all taxes, insurance, maintenance and other operating costs of
the property during the term of the lease.
At October 31, 1999, the Company also holds two fixed rate mortgages totaling
$2,500,000. The fixed rate mortgages are secured by retail properties sold by
the Company in prior years.
During the five year period ended October 31, 1999, the Company acquired twelve
properties totaling 971,700 square feet of GLA at an aggregate cost of
approximately $91 million. In the same period, the Company spent nearly $17.2
million to expand, renovate, lease and improve its existing properties.
In fiscal 1999, the Company spent $3,985,000 for leasing costs and capital
improvements to properties. Capital expenditures were incurred in connection
with the Company's leasing activities, renovation and improvement of its
existing properties.
Recent Developments
In November 1999, the Company obtained a commitment from a bank for a $6.5
million nonrecourse first mortgage loan secured by one of its retail properties
having a net book value of $9.2 million at October 31, 1999. The mortgage loan
will have a term of 10 years, earn interest at a fixed rate of 7.78% and is
expected to close in the second quarter of the Company's fiscal year 2000.
5
Matters Relating to the Real Estate Business
The Company is subject to certain business risks arising in connection with
owning real estate which include, among others, (1) the bankruptcy or insolvency
of, or a downturn in the business of, any of its major tenants, (2) the
possibility that such tenants will not renew their leases as they expire, (3)
vacated anchor space affecting the entire shopping center because of the loss of
the departed anchor tenant 's customer drawing power, (4) risks relating to
leverage, including uncertainty that the Company will be able to refinance its
indebtedness, and the risk of higher interest rates, (5) potential liability for
unknown or future environmental matters, and (6) the risk of uninsured losses.
Unfavorable economic conditions could also result in the inability of tenants in
certain retail sectors to meet their lease obligations and otherwise could
adversely affect the Company's ability to attract and retain desirable tenants.
The Company believes that its shopping centers are relatively well positioned to
withstand adverse economic conditions since they typically are anchored by
grocery stores, drug stores and discount department stores that offer day-to-day
necessities rather than luxury goods.
Compliance with Governmental Regulations
The Company, like others in the commercial real estate industry, is subject to
numerous environmental laws and regulations. Although potential liability could
exist for unknown or future environmental matters, the Company believes that its
tenants are operating in accordance with current laws and regulations and has
established procedures to monitor these operations.
Competition
The real estate investment business is highly competitive. The Company competes
for real estate investments with investors of all types, including domestic and
foreign corporations, financial institutions, other real estate investment
trusts and individuals. In addition, the Company's properties are subject to
local competitors from the surrounding areas. The Company does not consider its
real estate business to be seasonal in nature.
The Company's shopping centers compete for tenants with other regional,
community or neighborhood shopping centers in the respective areas where Company
retail properties are located. The Company's office buildings compete for
tenants principally with office buildings throughout the respective areas in
which they are located. In most areas where the Company's office buildings are
located, competition for tenants is intense. Leasing space to prospective
tenants is generally determined on the basis of, among other things, rental
rates, location, physical quality of the property and availability of space.
Since the Company's industrial properties are all net leased under long-term
lease arrangements which are not due to expire in the near future, the Company
does not currently face any competitive pressures with respect to such
properties.
Property Management
The Company actively manages and supervises the operations and leasing at all of
its core properties. Seven of the Company's non-core properties are net leased
to single tenants under long-term lease arrangements, in which case, property
management is provided by the tenants. The Company's two remaining non-core
properties are managed by property management companies retained by the Company.
The Company closely supervises the property management firms it engages to
manage its properties.
6
Employees
The Company's executive offices are located at 321 Railroad Avenue, Greenwich,
Connecticut. It occupies approximately 5,000 square feet in a two story office
building owned by the Company.
The Company has 18 employees, ten of whom oversee the management of the
Company's real estate portfolio, or analyze potential acquisition properties and
determine which properties, if any, to sell. The Company's remaining employees
serve in various professional, executive and administrative capacities. The
Company believes that its relationship with its employees is good.
7
Item II Properties.
Core Properties
The following table sets forth information concerning each core property at
October 31, 1999. Except as otherwise noted, all core properties are 100% owned
by the Company.
Gross
Year Year Leasable Number of
Location Completed Acquired Square Feet Acres Tenants Leased Principal Tenant
-------- --------- -------- ----------- ----- ------- ------ ----------------
Springfield, MA 1970 1970 309,000 26.0 21 98% Great Atlantic & Pacific Tea Co.
Meriden, Ct 1989 1993 300,000 29.2 17 91% ShopRite Supermarket
Danbury, Ct 1989 1995 193,000 19.3 21 100% Barnes & Noble
Briarcliff, NY (1)(2) 1978 1998 188,000 11.4 30 99% Stop & Shop
Carmel, NY 1983 1995 126,000 19.0 14 94% ShopRite Supermarket
Newington, NH 1975 1979 102,000 14.3 9 93% JoAnn Fabrics
Wayne, NJ 1959 1992 102,000 9.0 45 98% Great Atlantic & Pacific Tea Co.
Darien, CT 1955 1998 95,000 9.5 19 94% Grand Union
Somers, NY 1991 1999 78,000 10.8 32 95% Gristede's Supermarket
Farmingdale, NY 1981 1993 70,000 5.6 13 97% King Kullen Supermarket
Eastchester, NY (1) 1978 1997 68,000 4.0 10 100% Food Emporium (Division of A&P)
Ridgefield, CT 1930 1998 48,000 2.1 50 95% Chico's
Greenwich, CT 1977 1998 20,000 1.0 2 100% Greenwich Hospital
Somers, NY 1989 1992 19,000 4.9 12 100% Putnam County Savings Bank
Greenwich, CT 1983 1993 10,000 .2 3 100% Urstadt Biddle Properties Inc.
Greenwich, CT 1983 1994 10,000 .2 4 100% Prescott Investors
(1) The Company has a general partnership interest in this property.
(2) Includes a 28,000 square foot retail building which is 100% owned by
the Company.
8
Non-Core Properties
The following table sets forth information concerning each non-core property in
which the Company owned an equity interest at October 31, 1999. Except as
otherwise noted, non-core properties are 100% owned by the Company.
Year Year Rentable Number of
Location Completed Acquired Square Feet Acres Tenants Leased Principal Tenant
-------- --------- -------- ----------- ----- ------- ------ ----------------
Southfield, MI (1) 1973 1983 202,000 7.8 5 100% Giffels Associates
Clearwater, FL (1) 1983 1985 231,000 21.5 46 91% Albertson's Supermarket
Tempe, AZ 1970 1970 126,000 8.6 2 90% Mervyn's
Jonesboro, GA 1973 1997 117,500 9.0 1 100% Value City Stores, Inc.
Albany, GA 1972 1972 476,000 51.3 1 100% Firestone
Dallas, TX 1970 1970 253,000 14.5 1 100% Daimler Chrysler Corporation
St. Louis, MO 1970 1970 170,000 16.0 1 100% Daimler Chrysler Corporation
Syracuse, NY 1973 1973 29,000 10.0 1 100% Navistar International
Denver, CO - 1972 - 4.2 - - Undeveloped Land
(1) The Company has a general partnership interest in this property.
9
Item III Legal Proceedings.
In the ordinary course of business, the Company is involved in legal
proceedings. However, there are no material legal proceedings presently pending
against the Company.
Item IV Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year ended October 31, 1999.
Item Pursuant to Instruction 3 of Item 401 (b) of Regulation S-K: Executive
Officers of the Company.
For information regarding Executive Officers of the Company--See Item X.
PART II
Item V Market for the Registrant's Common Equity and Related Shareholder
Matters.
(a) Price Range of Common Shares
The Common shares and Class A Common shares of the Company are traded
on the New York Stock Exchange under the symbols "UBP" and "UBP.A",
respectively. The following table sets forth the high and low closing sales
prices for the Company's Common shares and Class A Common shares during the
fiscal years ended October 31, 1999 and October 31, 1998 as reported on the New
York Stock Exchange:
Fiscal Year Ended Fiscal Year Ended
Common shares: October 31, 1999 October 31, 1998
- -------------- ---------------- ----------------
Low High Low High
--- ---- --- ----
First Quarter $7-1/16 $8-5/8 $17-3/4 $20-1/4
Second Quarter 7-1/2 8-1/4 17-7/16 19-1/2
Third Quarter 7-7/16 8 17-1/2 18-1/2
Fourth Quarter 6-11/16 7-11/16 7-5/8 * 18
*On August 14, 1998 the Company paid a special stock dividend on the Company's
Common Shares consisting of one share of a new class of Class A Common Stock for
each Common Stock outstanding:
Fiscal Year Ended Fiscal Year Ended
Class A Common shares**: October 31, 1999 October 31, 1998
- ------------------------ ---------------- ----------------
Low High Low High
--- ---- --- ----
First Quarter $7-3/8 $8-11/16 - -
Second Quarter 8 8-9/16 - -
Third Quarter 7-3/4 8-5/8 - -
Fourth Quarter 7-1/2 8-1/16 $7-7/8 $9-11/16
** Commenced trading on 8/17/98
(b) Approximate Number of Equity Security Holders:
At December 31, 1999 (latest date available), there were 1,850 shareholders of
record of the Company's Common Shares and 1,831 shareholders of record of the
Class A Common shares.
10
(c) Dividends Declared on Common shares and Class A Common shares and Tax
Status
The following table sets forth the dividends declared per Common share and Class
A Common share and tax status for Federal income tax purposes of the dividends
paid during the fiscal years ended October 31, 1999 and 1998:
Dividends Paid Per:
Fiscal Year Ended Common Class A Common
October 31, 1999: share share
----- -----
First Quarter $ .17 $ 19
Second Quarter $ .17 $ .19
Third Quarter $ .17 $. 19
Fourth Quarter $ .17 $ .19
----- -----
$ .68 $ .76
===== =====
Dividends paid in fiscal 1999 were all considered ordinary income for Federal
Tax purposes.
Fiscal Year Ended Common Class A Common
October 31, 1998: share share
----- -----
Fourth Quarter $ .32 $ .-
Third Quarter $ .32 $ .-
Second Quarter $ .32 $ .-
First Quarter $ .17 $ .19
----- -----
$1.13 $ .19
===== =====
Dividends paid in fiscal 1998 were all considered ordinary income for Federal
Tax purposes.
The Company has paid uninterrupted quarterly dividends since it commenced
operations as a real estate investment trust in 1969. During the fiscal year
ended October 31, 1999, the Company made distributions to stockholders
aggregating $.68 per Common share and $.76 per Class A Common share.
On June 16, 1998, the Board of Directors declared a special stock dividend on
the Company's Common stock consisting of one share of a newly created class of
Class A Common stock, par value $.01 per share for each share of the Company's
Common stock. The Class A Common stock entitles the holder to 1/20 of one vote
per share. Each share of Common stock and Class A Common stock have identical
rights with respect to dividends except that each share of Class A Common stock
will receive not less than 110% of the regular quarterly dividends paid on each
share of Common stock. The stock dividend was paid on August 14, 1998.
Although the Company intends to continue to declare quarterly dividends on its
Common shares and Class A Common shares, no assurances can be made as to the
amounts of any future dividends. The declaration of any future dividends by the
Company is within the discretion of the Board of Directors, and will be
dependent upon, among other things, the earnings, financial condition and
capital requirements of the Company, as well as any other factors deemed
relevant by the Board of Directors. Two principal factors in determining the
amounts of dividends are (i) the requirement of the Internal Revenue Code that a
real estate investment trust distribute to shareholders at least 95% (90% for
years after 2001) of its real estate investment trust taxable income, and (ii)
the amount of the Company's funds from operations.
The Company has a Dividend Reinvestment and Share Purchase Plan which allows
shareholders to acquire additional Common shares and Class A Common shares by
automatically reinvesting dividends. Shares are acquired pursuant to the Plan at
a price equal to the higher of 95% of the market price of such shares on the
dividend payment date or 100% of the average of the daily high and low sales
prices for the five trading days ending on the day of purchase without payment
of any brokerage commission or service charge. Approximately 20% of the
Company's eligible holders of Class A Common shares and Common shares currently
participate in the Plan.
11
(d) Recent Sales of Unregistered Securities
On December 11, 1998, the Company entered into a Stock Purchase Agreement with
Lee M. Comfort and Comfort Employee Profit Sharing Plan ("CEPSP") pursuant to
which Ms. Comfort and CEPSP purchased, by way of private placement under Section
4(2) of the Securities Act of 1933, as amended, 162,500 and 37,500 shares
respectively of Class A Common Stock of the Company at a price of $8.00 per
share. The Company received $1,600,000.00 in cash proceeds.
On April 16, 1999, the Company entered into Subscripton Agreements with Charles
J. Urstadt and George H.C. Lawrence by way of private placement under Section
4(2) of the Securities Act of 1933, as amended: Mr. Urstadt purchased 30,000
shares of Common Stock of the Company at a price of $7.7228 per share and the
Company received $231,684.00 in cash proceeds; Mr. Lawrence purchased 2,000
shares of Common Stock and 2,000 shares of Class A Common Stock of the Company
at a price of $7.7228 per share and $8.2989 per share respectively and the
Company received $32,043.40 in cash proceeds.
On June 8, 1999, the Company entered into a Stock Purchase Agreement with
Douglas P. Dominianni pursuant to which Mr. Dominianni purchased, by way of
private placement under Section 4(2) of the Securities Act of 1933, as amended,
10,000 shares of Class A Common Stock of the Company at a price of $7.875 per
share. The Company received $78,750.00 in cash proceeds.
12
Item VI Selected Financial Data.
(In thousands, except per share data)
Year Ended October 31, 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Balance Sheet Data:
Real Estate Investments $173,877 $ 155,402 $129,341 $124,972 $136,115
======== ========= ======== ======== ========
Total Assets $183,774 $ 165,039 $137,430 $132,160 $149,099
======== ========= ======== ======== ========
Mortgage Notes Payable and Preferred Stock $84,725 $ 66,362 $43,687 $39,798 $57,212
======= ======== ======= ======= =======
Operating Data:
Total Revenues $29,814 $ 25,595 $24,827 $24,432 $22,853
======= ======== ======= ======= =======
Net Income Applicable to Common and Class A
Common Stockholders $ 6,043 $ 5,615 $ 8,589 $10,271 $ 3,864
======= ======= ======= ======= =======
Funds from Operations (Note 1) $11,878 $ 11,213 $ 10,189 $ 9,525 $ 8,510
======= ======== ======== ======= =======
Other Data :
Net Cash Provided by Operating Activities $14,423 $ 13,901 $ 14,755 $ 9,801 $ 9,035
======= ======== ======== ======= =======
Net Cash Provided by (Used in) Investing Activities $(10,556) $(31,130) $(7,460) $11,722 $(13,239)
========= ========= ======== ======= =========
Net Cash Provided by (Used in) Financing Activities $ (5,009) $ 19,207 $(7,192) $(26,801) $ 2,563
========= ======== ======== ========= =======
Per Share Data:
Net Income - Diluted:
Common Stock $.54 $.52 $.79 $.90 $.34
Class A Common Stock $.61 $.57 $.86 $.99 $.38
Cash Dividends on:
Common Stock $.68 $1.13 $1.26 $1.22 $1.14
Class A Common Stock $.76 $0.19 --- --- ---
---- ----- --- --- ---
Total Cash Dividends $1.44 $1.32 $1.26 $1.22 $1.14
===== ===== ===== ===== =====
Note 1: The Company has adopted the definition of Funds from Operations (FFO)
suggested by the National Association of Real Estate Investment Trusts (NAREIT)
and defines FFO as net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from debt restructuring and
sales of properties, plus depreciation, amortization, the elimination of
significant non-recurring charges and credits and after adjustments for
unconsolidated joint ventures. FFO does not represent net cash from operating
activities in accordance with generally accepted accounting principles (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 indicator of the Company's operating performance, or for
cash flows as a measure of liquidity or ability to make distributions. The
Company considers FFO an appropriate supplemental measure of operating
performance because it primarily excludes the assumption that the value of real
estate assets diminishes predictably over time, and because industry analysts
recognize it as a performance measure. Comparison of the Company's presentation
of FFO, using the NAREIT definition, to similarly titled measures for other
REITs may not necessarily be meaningful due to possible differences in the
application of the NAREIT definition used by such REITs. For a further
discussion of FFO, see Management's Discussion and Analysis on page 14.
Note 2: Per share data for all periods prior to 1999 have been restated to
reflect the effect of the one-for-one stock split effected in the form of a new
issue of Class A Common Stock distributed in August 1998, however, the cash
dividends are presented based on actual amounts paid.
13
ITEM VII. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The Company's liquidity and capital resources include its cash and cash
equivalents, proceeds from bank borrowings and long-term mortgage debt, capital
financings and sales of real estate investments. The Company expects to meet its
short-term liquidity requirements primarily by generating net cash from the
operations of its properties. Payments of expenses related to real estate
operations, debt service, management and professional fees, and dividend
requirements place demands on the Company's short-term liquidity. The Company
believes that its net cash provided by operations is sufficient to fund its
short-term liquidity needs in the near term. The Company expects to meet its
long-term liquidity requirements such as property acquisitions, debt maturities
and capital improvements through long-term secured indebtedness, proceeds from
the sale of real estate investments and/or the issuance of additional equity
securities.
At October 31, 1999, the Company had cash and cash equivalents of $2.8 million
compared to $3.9 million in 1998. The Company also has a $20 million secured
revolving credit facility with a bank which expires in 2005. Borrowings can be
repaid and borrowed again during the term of the facility. The secured credit
line is available to finance the acquisition, management or development of
commercial real estate and for working capital purposes. Additionally, the
Company has agreed in principle with two banks for a $25 million unsecured
revolving credit facility for a term of two years. At October 31, 1999, the
Company had outstanding short-term borrowings of $2 million under a line of
credit which expired in December 1999. The Company intends to repay this amount
from the proceeds of a $6.5 million mortgage loan expected to close in the
Company's second quarter of fiscal 2000. In May 1999, the Company obtained a $15
million non-recourse mortgage loan secured by one of its core retail properties
having a net book amount of $21.3 million. Proceeds from the mortgage loan were
used to repay borrowings outstanding under its lines of credit. At October 31,
1999, long-term debt consists of mortgage notes payable totaling $38.4 million
and outstanding borrowings of $12.9 million under the secured revolving credit
facility.
In fiscal 1998, the Company sold $35 million of senior cumulative preferred
stock in a private placement with institutional investors. Net proceeds of $33.5
million (after deducting expenses of the sale) were used to repay approximately
$24 million of mortgage debt and to complete the acquisitions of two properties.
In June 1998, the Board of Directors declared a special stock dividend on the
Company's Common Shares consisting of one share of a newly created class of
Class A Common Shares. The establishment and issuance of the Class A Common
Shares is intended to provide the Company with the flexibility to raise equity
capital to finance acquisition of properties and further the growth of the
Company. Such securities may be utilized as consideration in connection with the
acquisition of properties by the Company and for employee compensation purposes,
in each case without diluting the voting power of the Company's existing
stockholders. The Company utilized securities in this manner to facilitate the
acquisition of the Arcadian Shopping Center in Briarcliff, New York. In addition
during fiscal 1999, the Company sold $2 million in Common and Class A Common
Shares in private placements.
The Company expects to make real estate investments periodically. During the
five years ended October 31, 1999, the Company acquired twelve properties at an
aggregate purchase cost of $91 million. During fiscal 1999, the Company
purchased or acquired interests in three properties including the general
partner interest in the Arcadian Shopping Center in Briarcliff, New York. The
limited partners contributed the property subject to a $6.3 million non-recourse
first mortgage on the property in exchange for operating partnership units
(OPU's). After a period of time, the limited partners OPU's are exchangeable, at
the Company's option, into an equivalent number of Class A Common Shares or
14
cash. During 1999, two limited partners exchanged their OPU's for cash totaling
$2,025,000. In August 1999, the Company purchased the Towne Centre at Somers
Shopping Center in Somers, New York for $9,500,000. The Company funded this
purchase from funds available under its existing bank credit lines, proceeds
from the sale of a non-core property and the assumption of a first mortgage loan
of $4.1 million. The Company also invests in its existing properties and, during
fiscal 1999, spent approximately $4.0 million on its properties for capital
improvement and leasing costs.
In a prior year, the Board of Directors expanded and refined the strategic
objectives of the Company to refocus its real estate portfolio into one of
self-managed retail properties located in the Northeast and authorized a plan to
sell the non-core properties of the Company in the normal course of business
over a period of several years. The non-core properties comprise all of the
Company's distribution and service facilities, and certain of its office and
retail properties and undeveloped land located outside of the Northeast region
of the United States. In 1999, the Company sold one property for gross proceeds
of $2,825,000 realizing a gain on the sale of $1,364,000. The Company expects
future sales of the non-core properties over the next several years to result in
net gains to the Company. At October 31, 1999, the non-core properties,
(including the Company's investment in unconsolidated joint venture) total nine
properties having an aggregate net book value of $26,855,000.
The Company's Board of Directors has authorized the purchase of up to one
million of the Company's Common and Class A Common shares over the next two to
three years. The Company may discontinue purchases of its shares for any reason
including, prevailing market prices, availability of cash resources and
alternative investment opportunities. In fiscal 1999, the Company repurchased
58,800 Common shares and 14,000 Class A Common shares at an aggregate cost of
$584,000. The Company utilized available cash resources to fund the repurchases.
The Company expects to fund the cost of future share purchases, if any, from
available cash.
Funds from Operations
The Company considers Funds from Operations (FFO) to be an appropriate
supplemental financial measure of an equity REIT's operating performance since
such measure does not recognize depreciation and amortization of real estate
assets as reductions of income from operations.
The National Association of Real Estate Investment Trusts (NAREIT) defines FFO
as net income computed in accordance with generally accepted accounting
principles (GAAP) plus depreciation and amortization of assets uniquely
significant to the real estate industry, excluding gains or losses on debt
restructuring and sales of property, the elimination of significant
non-recurring charges and credits and after preferred stock distributions and
adjustments for unconsolidated joint ventures. The Company considers recoveries
of investments in properties subject to finance leases to be analogous to
amortization for purposes of calculating FFO. FFO does not represent cash flows
from operations as defined by GAAP and should not be considered a substitute for
net income as an indicator of the Company's operating performance, or for cash
flows as a measure of liquidity. Furthermore, FFO as disclosed by other REITs
may not be comparable to the Company's calculation of FFO. The table below
provides a reconciliation of net income in accordance with GAAP to FFO as
calculated under the NAREIT guidelines for the years ended October 31, 1999,
1998 and 1997 (amounts in thousands):
15
1999 1998 1997
---- ---- ----
Net Income Applicable to Common and Class A Common
Stockholders $6,043 $5,615 $8,589
Plus: Real property depreciation, amortization of
tenant improvement and lease acquisition
costs and recoveries of investments in
properties subject to finance leases 6,545 5,442 4,798
Adjustments for unconsolidated joint venture 654 692 616
Less: Gains on sales of real estate investments (1,364) --- ---
Non-recurring items - net --- (536) (3,814)*
--- ----- --------
Funds from Operations $11,878 $11,213 $10,189
======= ======= =======
* Includes a one-time $3.25 million payment received in settlement of unpaid
percentage rents from a tenant - see Results of Operations below
Results of Operations
Fiscal 1999 vs. Fiscal 1998
Revenues
Operating lease revenue increased 20.6% from the comparable period in fiscal
1998. The increase in operating lease revenues results principally from
additional rent income earned from the addition of properties acquired during
fiscal 1999 and 1998. Such new properties increased operating rent by $5.9
million in fiscal 1999. Operating lease revenues for properties owned in both
fiscal 1999 and 1998 were generally unchanged in fiscal 1999 when compared to
the same period a year ago.
Overall, the Company's properties were 96% leased at October 31, 1999. During
fiscal 1999 the Company leased or renewed 293,000 square feet of space or 13% of
the Company's total retail and office portfolio. The Company's industrial
portfolio are leased to single tenants under long term leases.
Interest income decreased in fiscal 1999. In fiscal 1998, the Company sold a $35
million preferred stock issue and proceeds of the offering were invested in
short-term cash investments until such time as they were used to make real
estate investments and repay outstanding mortgage indebtedness later in the
year. Also, the Company earned additional interest income of $278,000 from the
repayment of a mortgage note receivable last year.
Expenses
Total expenses amounted to $21,596,000 in fiscal 1999 compared to $17,252,000
last year. The largest expense category is property expenses of the real estate
operating properties. The increase in property expenses reflects the effect of
the addition of properties acquired in fiscal 1999 and 1998. Property expenses
of new properties increased operating expenses by $1.8 million. Property
expenses for properties owned during both fiscal 1999 and 1998 increased by 5%
compared to fiscal 1998.
16
Interest expense increased from borrowings on the Company's unsecured and
secured revolving credit facilities utilized to complete the acquisition of
certain properties in fiscal 1999 and 1998 and the addition of $25.4 million in
first mortgage loans in fiscal 1999.
Depreciation expense increased principally from the acquisition of the
properties referred to above.
General and administrative expenses increased in fiscal 1999 from higher legal
and other professional costs and compensation expense related to restricted
stock issued to key employees of the Company.
Fiscal 1998 vs. Fiscal 1997
Revenues
Operating lease revenue increased 18.4% from the comparable period in fiscal
1997 (before the one-time amount of $3,250,000 discussed below). The increase in
lease revenues resulting from, among other things, rental income from four
properties acquired in 1998 and new leasing of space at certain of the Company's
properties. Operating lease revenue for properties owned during both fiscal 1998
and 1997 increased 7.8% compared to the same period in the prior year. Fiscal
1997 lease revenues included a one-time settlement amount of $3,250,000
representing additional percentage rent received from a tenant.
The Company leased or renewed more than 170,000 square feet of space during the
year comprising more than 10% of the Company's gross leasable area of its core
properties.
Interest income increased in fiscal 1998 from the reinvestment into short-term
cash investments of the net proceeds from a $35 million preferred stock issue
sold in January, 1998 and additional interest of $278,000 received from the
repayment of a mortgage note receivable in the face amount of $1,176,000 with a
net carrying amount of $898,000.
Expenses
Total expenses amounted to $17,252,000 in fiscal 1998 compared to $16,238,000
the previous year. The increase in property expenses in 1998 reflect the effect
of the acquisition of four properties during fiscal 1998. Property expenses
related to properties acquired in 1998 totaled $569,000. Property expenses in
fiscal 1998 for properties owned during both fiscal 1998 and 1997 increased by
less than 2% compared to the same period in fiscal 1997.
Interest expense decreased by $828,000 principally from the repayment of $24.1
million of mortgage notes payable in fiscal 1998.
Depreciation and amortization expense increased principally from the acquisition
of four operating properties during fiscal 1998 and capital expenditures for
tenant improvements.
General and administrative expenses increased to $2,077,000 from $1,550,000 in
fiscal 1997 from higher legal and other professional costs and compensation
expense related to the issuance of restricted stock to key employees.
Impact of Year 2000
The Company completed a review of its software and hardware systems used
internally to operate its business in order to assess the Year 2000 issue to
determine the impact, if any, on its operations. As a result of this review, the
Company did not have to significantly modify or replace its computer hardware or
software programs so that its business systems are able to process information
beyond 1999.
17
The Company also surveyed its key tenants, vendors, banks and other parties to
determine the extent to which the Company may be vulnerable in the event those
parties fail to remediate their own Year 2000 issue. Based on responses from
such third parties, the Company is not aware of any such third parties who may
be non-compliant and, as a result of such non-compliance, have a material
adverse effect on the operations of the Company's properties. The costs
attributable to the purchase of new computer equipment and software, third party
modification plans, consulting fees, etc. were not significant in fiscal 1999.
Item VIII. Financial Statements and Supplementary Data.
The consolidated financial statements required by this Item, together with the
report of the Company's independent public accountants thereon and
the supplementary financial information required by this Item are included
under Item XIV of this Annual Report.
Item IX. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
No information is required to be reported under this Item.
PART III
Item X. Directors and Executive Officers of the Registrant.
The Company has filed with the Securities and Exchange Commission its
definitive Proxy Statement for its Annual Meeting of Stockholders to be held on
March 15, 2000. The additional information required by this Item is included
under the caption "ELECTION OF DIRECTORS" of such Proxy Statement and is
incorporated herein by reference.
Executive Officers of the Registrant.
------------------------------------
The following sets forth certain information regarding the executive officers of
the Company:
Name Age Offices Held
Charles J. Urstadt 71 Chairman and Chief Executive Officer (since September 1989)
Willing L. Biddle 38 President and Chief Operating Officer (since December, 1996); Executive Vice
President and Chief Operating Officer (March, 1996 to December 1996); Senior
Vice President - Management (June, 1995 to March 1996); Vice President - Retail
(June, 1994 to June, 1995); Vice President - Asset Management (April 1993 to
June 1994); Vice President, Levites Realty Management Corp (1989 to 1993); prior
to 1989, Second Vice President, Chase Manhattan Bank
James R. Moore 51 Executive Vice President and Chief Financial Officer (since March, 1996); Senior
Vice President and Chief Financial Officer (September 1989 to March 1996);
Secretary (since April 1987) and Treasurer (since December 1987); Vice
President-Finance and Administration (April 1987 to September 1989); prior to
1987, Senior Manager, Ernst & Young
18
Raymond P. Argila 51 Senior Vice President and Chief Legal Officer (since June 1990); formerly Senior
Counsel, Cushman & Wakefield, Inc. (September 1987 to May 1990); Vice President
and Chief Legal Officer, Pearce, Urstadt, Mayer & Greer Realty Corp. from
(January 1984 to March 1987).
Officers of the Company are elected annually by the Directors.
Mr. Urstadt has been the Chairman of the Board of Directors since 1986, and a
Director since 1975. Mr. Urstadt also serves as the Chairman of Urstadt
Property Company, Inc. (formerly Pearce, Urstadt, Mayer & Greer Inc.) and
has served in such capacity for more than five years.
Item XI. Executive Compensation.
The Company has filed with the Securities and Exchange Commission its definitive
Proxy Statement for its Annual Meeting of Stockholders to be held on March 15,
2000. The information required by this Item is included under the caption
"ELECTION OF DIRECTORS - Compensation and Transactions with Management and
Others of such Proxy Statement and is incorporated herein by reference.
Item XII. Security Ownership of Certain Beneficial Owners and Management.
The Company has filed with the Securities and Exchange Commission its definitive
Proxy Statement for its Annual Meeting of Stockholders to be held on March 15,
2000. The information required by this Item is included under the caption
ELECTION OF DIRECTORS - Security Ownership of Certain Beneficial Owners and
Management of such Proxy Statement and is incorporated herein by reference.
Item XIII. Certain Relationships and Related Transactions.
The Company has filed with the Securities and Exchange Commission its definitive
Proxy Statement for its Annual Meeting of Stockholders to be held on March 15,
2000. The information required by this Item is included under the caption
ELECTION OF DIRECTORS - Compensation and Transactions with Management and Others
of such Proxy Statement and is incorporated herein by reference.
PART IV
Item XIV. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
A. Financial Statements and Financial Statement Schedules
1. Financial Statements --
The consolidated financial statements listed in the
accompanying index to financial statements on Page 23 are
filed as part of this Annual Report.
2. Financial Statement Schedules --
The financial statement schedules required by this Item are
filed with this report and are listed in the accompanying
index to financial statements on Page 23. All other financial
statement schedules are inapplicable.
19
B. Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant
during the fourth quarter of the fiscal year ended October 31,
1999.
C. Exhibits.
Listed below are all Exhibits filed as part of this report.
Certain Exhibits are incorporated by reference from documents
previously filed by the Company with the Securities and
Exchange Commission pursuant to Rule 12b-32 under the
Securities Exchange Act of 1934, as amended.
Exhibit
(3) Articles of Incorporation and By-laws.
-------------------------------------
3.1 (a) Amended Articles of Incorporation of the Company,
(incorporated by reference to Exhibit C of Amendment No.1 to
Registrant's Statement on Form S-4 (No. 333-19113)
(b) Articles Supplementary of the Company (incorporated by
reference to Annex A of Exhibit 4.1 of the Registrant's
Current Report on Form 8-K dated August 3, 1998).
(c) Articles Supplementary of the Company (incorporated by
reference to Exhibit 4.1 of the Registrant's Current Report on
Form 8-K dated January 8, 1998).
(d) Articles Supplementary of the Company (incorporated by
reference to Exhibit A of Exhibit 4.1 of the Registrant's
Current Report on Form 8-K dated March 12, 1997).
3.2 By-laws of the Company, (incorporated by reference to
Exhibit D of Amendment No. 1 to Registrant's Registration
Statement on Form S-4 (No. 333-19113).
(4) Instruments Defining the Rights of
Security Holders, Including Indentures.
4.1 Common Stock: See Exhibits 3.1 (a)-(d) hereto.
4.2 Series B Preferred Shares: See Exhibits 3.1 (a)-(d), 10.12
and 10.13 hereto.
4.3 Series A Preferred Share Purchase Rights: See Exhibits 3.1
(a)-(d) and 10.3 hereto.
(10) Material Contracts.
------------------
10.1 Form of Indemnification Agreement entered into between the
Registrant and each of its Directors and for future use with
Directors and officers of the Company (incorporated herein by
reference to Exhibit 10.1 of the Registrant's Annual Report on
Form 10-K for the year ended October 31, 1989).*
10.2 Amended and Restated Change of Control Agreement between the
Registrant and James R. Moore dated November 15, 1990
(incorporated herein by reference to Exhibit 10.3 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1990).*
10.3 Amended and Restated Rights Agreement between the Company and
The Bank of New York, as Rights Agent, dated as of July 31,
1998 (incorporated herein by reference to Exhibit 10-1 of the
Registrant's Current Report on Form 8-K dated November 5,
1998).
20
10.4 Change of Control Agreement dated as of June 12, 1990 between
the Registrant and Raymond P. Argila (incorporated herein by
reference to Exhibit 10.7 of the Registrant's Annual Report on
Form 10-K for the year ended October 31, 1990).*
10.4.1 Agreement dated December 19, 1991 between the Registrant and
Raymond P. Argila amending the Change of Control Agreement
dated as of June 12, 1990 between the Registrant and Raymond
P. Argila (incorporated herein by reference to Exhibit 10.6.1
of the Registrant's Annual Report on Form 10-K for the year
ended October 31, 1991).*
10.5 Change of Control Agreement dated as of December 20, 1990
between the Registrant and Charles J. Urstadt (incorporated
herein by reference to Exhibit 10.8 of the Registrant's Annual
Report on Form 10-K for the year ended October 31, 1990).*
10.6 Amended and Restated HRE Properties Stock Option Plan
(incorporated herein by reference to Exhibit 10.8 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1991).*
10.6.1 Amendments to HRE Properties Stock Option Plan dated June 9,
1993 (incorporated by reference to Exhibit 10.6.1 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1995).*
10.6.2 Form of Supplemental Agreement with Stock Option Plan
Participants (non-statutory options). (incorporated by
reference to Exhibit 10.6.2 of the Registrant's Annual Report
on Form 10-K for the year ended October 31, 1998)*
10.6.3 Form of Supplemental Agreement with Stock Option Plan
Participants (statutory options). (incorporated by reference
to Exhibit 10.6.2 of the Registrant's Annual Report on Form
10-K for the year ended October 31, 1998)*
10.7 Amended and Restated Dividend Reinvestment and Share
Purchase Plan (incorporated herein by reference to the
Registrant's Registration Statement on Form S-3 (No. 333-
64381).
10.8 Amended and Restated Change of Control Agreement dated as of
November 6, 1996 between the Registrant and Willing L. Biddle
(incorporated by reference to Exhibit 10.7 of the Registrant's
Annual Report on Form 10-K for the year ended October 31,
1996).*
10.9 Countryside Square Limited Partnership Agreement of Limited
Partnership dated as of November 22, 1996 between HRE
Properties, as General Partner and the persons whose names are
set forth on Exhibit A of the Agreement, as Limited Partners
(incorporated by reference to Exhibit I of the Registrant's
Current Report on Form 8-K dated November 22, 1996).
10.10 Restricted Stock Plan (incorporated by reference to
Exhibit B of Amendment No. 1 to Registrant's Registration
Statement on Form S-4 (No. 333-19113)*).
10.10.1 Form of Supplemental Agreement with Restricted Stockholders
(incorporated by reference to Exhibit 10.6.2 of the
Registrant's Annual Report on Form 10-K for the year
ended October 31, 1998)*
10.11 Excess Benefit and Deferred Compensation Plan (incorporated
by reference to Exhibit 10.10 of the Registrant's Annual
Report on Form 10-K for the year ended October 31, 1997).*
21
10.12 Purchase and Sale Agreement, dated September 9, 1998 by and
between Goodwives Center Limited Partnership, as seller, and
UB Darien, Inc., a wholly owned subsidiary of the Registrant,
as purchaser (incorporated by reference to Exhibit 10 of the
Registrant's Current Report on Form 8-K dated September 23,
1998).
10.13 Subscription Agreement, dated January 8, 1998, by and among
the Company and the Initial Purchasers (incorporated by
reference to Exhibit 4.2 of the Registrant's Current Report on
Form 8-K dated January 8, 1998).
10.14 Registration Rights Agreement, dated January 8, 1998, by and
among the Company and the Initial Purchasers (incorporated by
reference to Exhibit 4.3 of the Registrant's Current Report on
Form 8-K dated January 8, 1998).
10.15 Waiver and Amendment of Registration Rights Agreement dated as
of April 16, 1999, by and among the Company and the Initial
Purchasers.
10.16 Director's Deferred Fees Plan. (1)
10.17 Shareholder Rights Agreement dated as of July 31, 1998
between the Company and The Bank of New York, Rights Agent
(incorporated herein by reference to Exhibit 10.1 of the
Registrant's Report on Form 8-A dated November 5, 1998).
10.18 Amendment to Shareholder Rights Agreement dated as of
September 22, 1999 between the Company and the Rights Agent.
10.19 Stock Purchase Agreement between the Company and Lee M.
Comfort and Comfort Employee Profit Sharing Plan dated
December 11, 1998.
(1) The Director's Deferred Fees Plan was terminated effective April 13, 1999.
(21) Subsidiaries.
------------
21.1 List of Company's subsidiaries (incorporated by reference
to Exhibit 21.1 of the Registrant's Annual Report on Form
10-K for the year ended October 31, 1998)
(23) Consents of Experts and Counsel.
-------------------------------
23.1 The consent of Arthur Andersen LLP to the incorporation
by reference of their reports included herein or
incorporated by reference in the Registrant's Registration
Statements on Form S-3 (No.33-57119), Form S-3 (No.
333-64381), Form S-4 (No. 333-19113), Form S-8 (No.2-93146),
Form S-8 (No. 333-61765) and Form S-8 (No. 33-41408) is
filed herewith as part of this report.
(27) Financial Data Schedule.
-----------------------
27.1 Financial Data Schedule
*Management contract, compensatory plan or arrangement required to be filed as
an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c).
22
URSTADT BIDDLE PROPERTIES INC.
Item XIVa. INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page
Consolidated Balance Sheets at October 31, 1999 and 1998 24
Consolidated Statements of Income for each of the
three years ended October 31, 1999 25
Consolidated Statements of Cash Flows for each of the
three years ended October 31, 1999 26
Consolidated Statements of Stockholders' Equity
for each of the three years ended October 31, 1999 27
Notes to Consolidated Financial Statements 28-38
Report of Independent Public Accountants 39
Schedule.
- --------
The following consolidated financial statement schedules of Urstadt Biddle
Properties Inc. are included in Item XIV(d):
III Real Estate and Accumulated Depreciation - October 31, 1999 40
IV Mortgage Loans on Real Estate - October 31, 1999 43
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
23
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 31
---------------- -----------------
ASSETS 1999 1998
---- ----
Real Estate Investments:
Properties owned-- at cost, net of accumulated depreciation $144,522 $122,975
Properties available for sale - at cost, net of accumulated
depreciation and recoveries 16,966 20,350
Investment in unconsolidated joint venture 9,889 9,470
Mortgage notes receivable 2,500 2,607
----- -----
173,877 155,402
Cash and cash equivalents 2,758 3,900
Interest and rent receivable 3,370 2,445
Deferred charges, net of accumulated amortization 2,418 2,320
Other assets 1,351 972
----- ---
$183,774 $165,039
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank loans $ 2,000 $ 6,000
Mortgage notes payable 51,263 32,900
Accounts payable and accrued expenses 1,907 1,127
Deferred directors' fees and officers' compensation 155 646
Other liabilities 1,810 1,450
----- -----
57,135 42,123
------ ------
Minority Interest 5,140 2,125
----- -----
Preferred Stock, par value $.01 per share; 20,000,000 shares authorized; 8.99%
Series B Senior Cumulative Preferred stock, (liquidation preference of
$100 per share); 350,000 shares issued and outstanding in 1999 and 1998 33,462 33,462
------ ------
Stockholders' Equity:
Excess stock, par value $.01 per share; 10,000,000 shares authorized;
none issued and outstanding - -
Common stock, par value $.01 per share; 30,000,000 shares authorized;
5,531,845 and 5,221,602 issued and outstanding shares in 1999 and 1998, respectively 55 52
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
5,184,039 and 5,193,650 issued and outstanding shares in 1999 and 1998 respectively 52 52
Additional paid in capital 120,964 118,558
Cumulative distributions in excess of net income (31,127) (29,699)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (1,907) (1,634)
------- -------
88,037 87,329
------ ------
$183,774 $165,039
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
24
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended October 31,
---------------- --------------- -----------------
1999 1998 1997
---- ---- ----
Revenues:
Operating leases $28,666 $23,772 $23,336
Financing leases 232 353 451
Interest and other 532 1,260 932
Equity income of unconsolidated joint venture 384 210 108
--- --- ---
29,814 25,595 24,827
------ ------ ------
Operating Expenses:
Property expenses 9,460 7,696 7,024
Interest 3,913 2,522 3,350
Depreciation and amortization 5,896 4,747 4,132
General and administrative expenses 2,150 2,077 1,550
Directors' fees and expenses 177 210 182
----- ----- -----
21,596 17,252 16,238
------ ------ ------
Operating Income before Minority Interests 8,218 8,343 8,589
Minority Interests in Results of Consolidated Joint Ventures (392) (167) -
----- ----- -----
Operating Income 7,826 8,176 8,589
Gain on Sale of Real Estate Investment 1,364 - -
----- ----- ------
Net Income 9,190 8,176 8,589
Preferred Stock Dividends (3,147) (2,561) -
------- ------- ------
Net Income Applicable to Common and Class A Common Stockholders $6,043 $5,615 $8,589
====== ====== ======
Basic Earnings per Share:
Common $.55 $.52 $.80
==== ==== ====
Class A Common $.62 $.57 $.87
==== ==== ====
Weighted Average Number of Shares Outstanding:
Common 5,236 5,125 5,115
===== ===== =====
Class A Common 5,101 5,121 5,115
===== ===== =====
Diluted Earnings Per Share:
Common $.54 $.52 $.79
==== ===== ====
Class A Common $.61 $.57 $.86
==== ==== ====
Weighted Average Number of Shares Outstanding:
Common and Common Equivalent 5,317 5,283 5,194
===== ===== =====
Class A Common and Class A Common Equivalent 5,545 5,279 5,194
===== ===== =====
The accompanying notes to consolidated financial statements are an
integral part of these statements.
25
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended October 31,
1999 1998 1997
---- ---- ----
Operating Activities:
Net income $9,190 $8,176 $8,589
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 5,896 4,747 4,132
Compensation recognized relating to restricted stock 488 331 111
Recovery of investment in properties owned
subject to financing leases 1,249 1,115 1,021
Equity in income of unconsolidated joint venture (384) (210) (108)
Gain on sale of real estate investment (1,364) -- --
(Increase) decrease in interest and rent receivable (925) 204 146
Increase (decrease) in accounts payable and accrued expenses 780 (380) 909
(Increase) in other assets and other liabilities, net (507) (82) (45)
----- ------ -----
Net Cash Provided by Operating Activities 14,423 13,901 14,755
------ ------- ------
Investing Activities:
Acquisitions of properties (9,717) (29,592) (3,226)
Improvements to properties and deferred charges (3,985) (2,196) (3,951)
Net proceeds from sale of property 2,765 -- --
Investment in unconsolidated joint venture (635) (340) (384)
Distributions received from unconsolidated joint venture 600 -- --
Payments received on mortgage notes receivable 107 998 101
Miscellaneous 309 -- --
--- -- --
Net Cash (Used in) Investing Activities (10,556) (31,130) (7,460)
-------- -------- -------
Financing Activities:
Proceeds from sale of preferred stock -- 33,462 --
Proceeds from bank loans 4,000 19,500 --
Proceeds from mortgage notes 15,000 13,528 5,000
Payments on mortgage notes payable and bank loans (15,039) (37,815) (6,111)
Dividends paid - Common and Class A Common shares (7,471) (6,784) (6,451)
Dividends paid - Preferred Stock (3,147) (2,561) --
Sales of additional Common and Class A Common shares 2,232 351 385
Purchases of Common and Class A Common shares (584) (474) (15)
----- ----- ----
Net Cash Provided by (Used in) Financing Activities (5,009) 19,207 (7,192)
------- ------ -------
Net (Decrease) Increase In Cash and Cash Equivalents (1,142) 1,978 103
Cash and Cash Equivalents at Beginning of Year 3,900 1,922 1,819
----- ----- -----
Cash and Cash Equivalents at End of Year $2,758 $3,900 $1,922
====== ====== ======
The accompanying notes to consolidated financial statements are an
integral part of these statements.
26
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share data)
Unamortized
Restricted
Common Stock Class A Common Stock (Cumulative Stock
Outstanding Outstanding Additional Treasury DistributionsCompensation
Number of Par Number of Par Paid In Shares at In Excess of and Notes
Shares Value Shares Value Capital Cost Net Income) Receivable Total
------ ----- ------ ----- ------- ---- ----------- ------------ ------
Balances - October 31, 1996 5,346,081 $53 $- $- $124,073 ($3,492) $(30,668) $- $89,966
Net Income Applicable to Common
Class A Common Stockholders - - - - - - 8,589 - 8,589
Cash dividends paid ($1.26 per
share) - - - - - - (6,451) - (6,451)
Sale of additional shares under
dividend reinvestment plan 16,621 - - - 299 - - - 299
Exercise of stock options 29,520 - - - 353 - - - 353
Shares issued under restricted
stock plan 49,000 - - - 838 - - - 838
Deemed purchase of common
stock in connection with
organization of
unconsolidated
joint venture (272,727) (2) - - (4,293) - - - (4,295)
Purchases of shares (1,000) - - - - (15) - - (15)
Reduction in treasury shares - - - - (3,507) 3,507 - - -
Amortization of restricted stock
compensation and notes from
officers for purchases of
common stock - - - - (994) (994)
---------------- - ---- - ---- - -------------- - ------------------- -----
Balances - October 31, 1997 5,167,495 51 - - 117,763 - (28,530) (994) 88,290
Net Income Applicable to
Common and Class A Common
Stockholders 5,615 5,615
One-for-one stock split
effected in the form of a
dividend of a new issue of
Class A Common Stock - 5,226,991 52 (52) - - - -
Cash dividends paid :
Common Stock ($1.13 per - - - - - - (5,848) - (5,848)
share)
Class A Common Stock ($.19
per share) - - - - - - (936) - (936)
Sale of additional shares
under dividend reinvestment 14,983 4,359 270 270
plan
Exercise of stock options 5,874 - 5,000 - 81 - - - 81
Shares issued under
restricted stock plan - net 47,750 1 - - 970 - - (971) -
Amortization of restricted stock
compensation - - - - - - - 331 331
Purchases of shares (14,500) - (42,700) - (474) - - - (474)
-------- -- -------- -- ------- -- -------- ----- ------
Balances - October 31, 1998 5,221,602 52 5,193,650 52 118,558 - (29,699) (1,634) 87,329
Net Income Applicable to Common
and Class A Common
Stockholders - - - - - - 6,043 - 6,043
Cash dividends paid :
Common Stock ($.68 per share) - - - - - - (3,511) - (3,511)
Class A Common Stock ($.76
per share) - - - - - - (3,960) - (3,960)
Deemed repurchase of Class A
Common Stock and reissuance
of Common Stock 272,727 3 (272,727) (3) - - - - -
Sale of additional shares 32,000 - 212,000 2 1,943 - - - 1,945
Sale of additional shares under
dividend reinvestment plan 17,816 - 18,616 - 287 - - - 287
Shares issued under restricted
stock Plan 46,500 1 46,500 1 759 - - (761) -
Amortization of restricted stock
compensation - - - - - - - 488 488
Purchases of shares (58,800) (1) (14,000) - (583) (584)
-------- --- -------- ---- - ----- ------- ----------------------------
Balances - October 31, 1999 5,531,845 $55 5,184,039 $52 $120,964 $ - $(31,127) $(1,907) $88,037
========= === ========= === ======== === ========= ======== =======
The accompanying notes to consolidated financial statements are an integral part
of these statements.
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The accompanying consolidated financial statements include the accounts of
Urstadt Biddle Properties Inc., a Maryland corporation (the "Company"), as
successor by merger to HRE Properties, a Massachusetts business trust (the
"Trust"). In fiscal 1997, the stockholders approved a plan of reorganization of
the Trust from a Massachusetts business trust to a corporation organized in
Maryland. The plan of reorganization was effected by means of a merger of the
Trust into the Company. As a result of the merger, the separate existence of the
Trust ceased and each issued and outstanding common share of beneficial interest
of the Trust was converted into one share of Common Stock, par value $.01 per
share, of the Company. All properties, assets, liabilities and obligations of
the Trust became the properties, assets, liabilities and obligations of the
Company.
Business
Urstadt Biddle Properties Inc., a real estate investment trust, is engaged in
the acquisition, ownership and management of commercial real estate, primarily
neighborhood and community shopping centers in the northeastern part of the
United States. Other assets include office and retail buildings and industrial
properties. The Company's major tenants include supermarket chains, other
retailers who sell basic necessities and multi-national industrial corporations.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its
wholly owned subsidiaries, and joint ventures in which the Company has the
ability to control the affairs of the venture. The unconsolidated joint venture
is accounted for by the equity method of accounting. Under the equity method,
only the Company's net investment and proportionate share of income or loss of
the unconsolidated joint venture is reflected in the financial statements. All
significant intercompany transactions and balances have been eliminated in
consolidation.
Accounting for Leases
The Company accounts for its leases of real property in accordance with the
provisions of Financial Accounting Standards Statement No. 13, "Accounting for
Leases," as amended. This Statement sets forth specific criteria for determining
whether a lease should be accounted for as an operating lease or a direct
financing lease. In general, the financing lease method applies where property
is under long-term lease to a creditworthy tenant and the present value of the
minimum required lease payments at the inception of a lease is at least 90% of
the market value of the property leased. Other leases are accounted for as
operating leases.
Federal Income Taxes
The Company believes it qualifies and intends to continue to qualify as a real
estate investment trust (REIT) under Sections 856-860 of the Internal Revenue
Code (IRC). Under those sections, a REIT, among other things, that distributes
at least 95% (90% for tax years after 2001) of its real estate trust taxable
income will not be taxed on that portion of its taxable income which is
distributed. The Company intends to distribute all of its taxable income for the
fiscal years through 1999 in accordance with the provisions of Section 858 of
the IRC. Accordingly, no provision has been made for Federal income taxes in the
accompanying consolidated financial statements.
Taxable income of the Company prior to the dividends paid deduction for the
years ended October 31, 1999, 1998 and 1997 was approximately $8,600,000,
$9,800,000 and $9,500,000 respectively. The difference between net income for
financial reporting purposes and taxable income results from, among other
things, differences in adjusted bases for capital gains and losses and different
methods of accounting for leases, depreciable lives related to the properties
owned and investments in joint ventures.
Depreciation and Amortization
The Company uses the straight-line method for depreciation and amortization.
Properties owned and properties available for sale are depreciated over the
estimated useful lives of the properties, which range from 30 to 45 years.
Tenant improvements and deferred leasing costs are amortized over the life of
the related leases. All other deferred charges are amortized over the terms of
the agreements to which they relate.
Properties Available for Sale
A property is classified as available for sale upon determination by the Board
of Directors that the property is to be marketed for sale in the normal course
of business over the next several years.
28
Real Estate Investment Impairment
The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to future net cash flows,
undiscounted and without interest, expected to be generated by the asset. If
such assets are considered impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceed the fair value
of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. It is the Company's policy to
reclassify properties available for sale as assets to be disposed of upon
determination that such properties will be sold within one year.
Capitalization
The Company capitalizes all external direct costs relating to the acquisition of
real estate investments and costs relating to improvements to properties. The
Company also capitalizes all external direct costs relating to its successful
leasing activities.
Income Recognition
Revenues from operating and finance leases include revenues from properties
owned and properties available for sale. Rental income is generally recognized
based on the terms of leases entered into with tenants. Rental income from
leases with scheduled rent increases is recognized on a straight-line basis over
the lease term. Additional rents which are provided for in leases, are
recognized as income when earned and their amounts can be reasonably estimated.
Interest income is recognized as it is earned. Gains and losses on sales of
properties are recorded when the criteria for recognizing such gains or losses
under generally accepted accounting principles have been met.
Statements of Cash Flows
The Company considers short-term investments with original maturities of 90 days
or less to be cash equivalents.
Use of Estimates
The preparation of financial statements requires management to make use of
estimates and assumptions that affect amounts reported in the financial
statements as well as certain disclosures. Actual results could differ from
those estimates.
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 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):
1999 1998 1997
---- ---- ----
Numerator
Net income applicable to Common Stockholders - basic $2,893 $2,674 $4,090
Effect of dilutive securities:
Operating partnership units - 80 -
------ ------ ------
Net income applicable to Common Stockholders - diluted $2,893 $2,754 $4,090
====== ====== ======
Denominator
Denominator for basic EPS-weighted average Common shares 5,236 5,125 5,115
Effect of dilutive securities:
Stock options and awards 81 103 79
Operating partnership units --- 55 ---
--- -- ---
Denominator for diluted EPS - weighted average Common
equivalent shares 5,317 5,283 5,194
===== ===== =====
29
Numerator
Net income applicable to Class A Common Stockholders-basic $3,150 $2,941 $4,499
Effect of dilutive securities
Operating partnership units 218 87 ---
--- -- ---
Net income applicable to Class A Common Stockholders - diluted $3,368 $3,028 $4,499
====== ====== ======
Denominator
Denominator for basic EPS - weighted average Class A Common shares 5,101 5,121 5,115
Effect of dilutive securities:
Stock options and awards 104 103 79
Operating partnership units 340 55 ---
----- ------ -----
Denominator for diluted EPS - weighted average Class A
Common equivalent shares 5,545 5,279 5,194
===== ===== =====
The weighted average Common equivalent shares and Class A Common equivalent
shares for the year ended October 31, 1999 each exclude 54,553 shares. These
shares were not included in the calculation of diluted EPS because the effect
would be anti-dilutive.
(2) REAL ESTATE INVESTMENTS
The Company's investments in real estate were composed of the following at
October 31, 1999 and 1998 (in thousands):
Properties Investment in Mortgage
Properties Available for Unconsolidated Notes 1999 1998
Owned Sale Joint Venture Receivable Totals Totals
- ------------------------ ------------ --------------- ---------------- ------------ ------------ -----------
Retail $139,791 $4,486 $9,889 $2,500 $156,666 $136,253
Office 4,427 7,348 --- --- 11,775 12,451
Industrial --- 4,332 --- --- 4,332 5,594
Undeveloped Land 304 800 --- --- 1,104 1,104
-------- ------- ------- ------- ----- -----------
$144,522 $16,966 $9,889 $2,500 $173,877 $155,402
======== ======= ====== ====== ======== ========
The Company's investments at October 31, 1999, consisted of equity interests in
26 properties, which are located in various regions throughout the United States
and mortgage notes. The following is a summary of the geographic locations of
the Company's investments at October 31, 1999 and 1998 (in thousands):
1999 1998
---- ----
- -------------------------------------------------------------------- ------------------- ------------------
Northeast $145,886 $124,371
Southeast 12,777 12,771
Midwest 9,743 10,782
Southwest 5,471 7,478
------ ------
$173,877 $155,402
======== ========
(3) PROPERTIES OWNED
The components of properties owned were as follows (in thousands):
1999 1998
---- ----
- ---------------------------------------------------------- ----------------------------- -----------------
Land $29,104 $24,590
Buildings and improvements 138,152 117,325
------- - -------
167,256 141,915
Accumulated depreciation (22,734) (18,940)
-------- --------
$144,522 $122,975
======== =======
Space at properties owned by the Company is generally leased to various
individual tenants under short and intermediate term leases which are accounted
for as operating leases.
Minimum rental payments on noncancellable operating leases become due as
follows: 2000 - $22,534,000; 2001 - $19,884,000; 2002 - $17,410,000; 2003 -
$15,381,000; 2004 - $13,860,000 and thereafter - $73,690,000.
30
In addition to minimum rental payments, certain tenants are required to pay
additional rental amounts based on increases in property operating expenses
and/or their share of the costs of maintaining common areas. Certain of the
Company's leases provide for the payment of additional rent based on a
percentage of the tenant's revenues. Such additional percentage rents are
included in rental income and aggregated approximately $165,000, $422,000, and
$3,778,000, in 1999, 1998, and 1997 respectively.
The Company is the general partner in a consolidated limited partnership formed
in 1997 to acquire and manage the Eastchester Mall, in Eastchester, New York.
The limited partner is entitled to preferential distributions of cash flow from
the property and, after a period of three years from the formation of the
partnership, may put its interest to the Company for an equivalent value of
Common stock and Class A Common stock of the Company, or at its option, the
Company may redeem the interest for cash. The Company has the option to purchase
the limited partner's interest after a certain period. The partnership
agreement, among other things, restricts the sale or refinancing of the property
without the limited partner's consent.
The Company is also the general partner in a consolidated limited partnership
formed in 1998 to acquire and manage the Arcadian Shopping Center in Briarcliff,
New York. The limited partners contributed the property subject to a $6.3
million first mortgage in exchange for operating partnership units (OPU's). The
OPU's are exchangeable into an equivalent number of shares of Class A Common
Stock or cash, at the option of the general partner. The limited partners are
entitled to preferential distributions of cash flow from the property. On
January 9, 1999, two limited partners exchanged their units for cash. The
limited Partners, after a period of three years from the formation of the
partnership may put the remainder of their partnership interests of the Company,
for, at the option of the general partner, either cash or units of Class A
Common Stock of the Company at a unit price as defined in the partnership
agreement. The Company has the option to purchase the limited partners interest
after a certain period. The partnership agreement, among other things, places
certain restrictions on the sale or refinancing of the property without the
limited partners' consent for a specified period; thereafter the partnership
agreement imposes no such restrictions.
The limited partners interests in both partnerships are reflected in the
accompanying consolidated financial statements as minority interest. The
acquisition of the interests in the properties and the assumption of the first
mortgages by the partnerships represent noncash investing and financing
activities and therefore are not included in the accompanying 1999 and 1997
consolidated statements of cash flows.
In fiscal 1999, the Company acquired three properties for total consideration of
$23 million, including the Towne Centre Shopping Center in which the Company
assumed a first mortgage of $4.1 million. The assumption of the first mortgage
represents a noncash financing activity and is therefore not included in the
accompanying 1999 Consolidated Statement of Cash Flows.
(4) PROPERTIES AVAILABLE FOR SALE
The Board of Directors has authorized a plan to sell all of the non-core
properties of the Company over a period of several years. The non-core
properties, which have been classified as Properties Available for Sale, consist
of all of the Company's distribution and service properties and certain of its
office and retail properties located outside of the Northeast region of the
United States.
At October 31, 1999 and 1998, properties available for sale consisted of the
following (in thousands):
1999 1998
------------------------------------------------------- -------------------------- ----------------------
Properties available for sale subject to:
Operating leases $13,210 $15,345
Direct financing leases 3,756 5,005
------ -----
$16,966 $20,350
======== =======
Operating Leases
The components of properties available for sale subject to operating leases
were as follows (in thousands):
1999 1998
- --------------------------------------------------------------- ---------------------- ---------------------
Land $2,545 $2,985
Buildings and improvements 18,666 21,183
------ ------
21,211 24,168
Accumulated depreciation (8,001) (8,823)
------- -------
$13,210 $15,345
======= =======
31
Direct Financing Leases
The components of properties available for sale subject to direct financing
leases were as follows (in thousands):
1999 1998
- -------------------------------------------------------------------- -------------------- --------------------
Total minimum lease payments to be received $1,752 $3,233
Assumed residual values of leased property 2,107 2,107
Unearned income (103) (335)
----- -----
Investment in property subject to direct financing leases $3,756 $5,005
====== ======
Original cost of property subject to direct financing leases $16,276 $16,276
======= =======
Assumed residual values are based upon a depreciated cost concept using
estimated useful lives and thus do not contain an element of appreciation which
may result by reason of inflation or other factors.
Minimum lease payments receivable on direct financing leases become due as
follows: $1,299,000 in 2000, and $453,000 in 2001.
Sale of Properties
In fiscal 1999, the Company sold a retail property and realized a net gain on
the sale of the property of $1,364,000.
(5) INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
The Company is the sole general partner in Countryside Square Limited
Partnership (the "Partnership"), which owns the Countryside Square Shopping
Center in Clearwater, Florida. In 1997, the Company contributed the shopping
center at its net carrying amount, and the limited partners contributed 600,000
Common shares of the Company. The Partnership received 600,000 Class A Common
Shares pursuant to the stock dividend declared in August 1998 (see Note 9) and
in 1999 exchanged 600,000 Common Shares that it held with an affiliate for an
equivalent number of Class A Common Shares (the "Exchange"). The partnership
agreement provides for the limited partners to receive an annual cash preference
from available cash of the Partnership, as defined. Upon liquidation, proceeds
from the sale of the partnership assets are to be distributed to the partners in
accordance with the terms of the partnership agreement. The property may be sold
at any time after the third year of operation and the Company has a right of
first refusal on the sale of the property. The partners are not obligated to
make any additional capital contributions.
The Company has accounted for its proportionate interest in the Class A Common
shares owned by the Partnership as a deemed purchase and, has reduced its
investment in unconsolidated joint venture and stockholders' equity by
$4,295,000. As a result of the Exchange, the consolidated statement of
stockholders' equity for the year ended October 31, 1999 reflects a deemed
reissuance of the Company's proportionate share of the Common shares formerly
held by the Partnership and a deemed retirement of its proportionate share of
the additional Class A Common shares which the Partnership received. The
Company's equity in earnings of the Partnership is reflected after eliminating
its proportionate share of dividend income in the Common and Class A Common
Shares of the Company recorded by the Partnership. The initial contribution of
the property into the Partnership and deemed purchase of shares represented
noncash investing and financing activities and therefore were not included in
the 1997 consolidated statement of cash flows.
(6) MORTGAGE NOTES RECEIVABLE
Mortgage notes receivable consist of fixed rate mortgages. The components of the
mortgage notes receivable at October 31, 1999 and 1998 were as follows (in
thousands):
1999 1998
- -------------------------------------------------------------------------------------- ----------- -----------
Remaining principal balance $3,059 $3,206
Unamortized discounts to reflect market interest rates
at time of acceptance of notes (559) (599)
----- -----
$2,500 $2,607
====== ======
At October 31, 1999, principal payments on mortgage notes receivable become due
as follows: 2000 - $162,000; 2001 - $111,000; 2002 - $100,000; 2003 - $109,000;
2004 - $119,000, thereafter - $2,458,000.
32
At October 31, 1999, the remaining principal balance consists of mortgage notes
from two borrowers. The amount due from the largest individual borrower was
$2,038,000. The contractual interest rate on mortgage notes receivable is 9%.
(7) MORTGAGE NOTES PAYABLE AND LINES OF CREDIT
At October 31, 1999, the Company has seven nonrecourse mortgage notes payable
totaling $38,394,000 ($13,503,000 at October 31, 1998) due in installments over
various terms extending to the year 2009 and which bear interest at rates
ranging from 7.38% to 9.75%. The mortgage notes payable are collateralized by
real estate investments having a net carrying value of $61.9 million as of
October 31, 1999.
Scheduled principal payments during the next five years are as follows: 2000 -
$4,774,000; 2001 - $6,737,000; 2002 - $2,379,000; 2003 - $563,000; 2004 -
$608,000 and thereafter $23,333,000.
The Company has a $20 million secured revolving credit loan agreement (the
"Agreement") with a bank. The Agreement which expires in October 2005 is secured
by first mortgage liens on two properties. Interest on outstanding borrowings
are at the prime + .5% or LIBOR + 1.5%. However, the Company can elect a
fixed rate option at any time prior to the last year of the Agreement. The
Agreement requires the Company to maintain certain debt service coverage ratios
during the term of the agreement and provides for a permanent reduction in the
revolving credit loan amount of $625,000 annually, commencing in 2001. At
October 31, 1999, the Company had outstanding borrowings of $12,869,000
($19,397,000 at October 31, 1998) under the Agreement. Outstanding borrowings
are included in mortgage notes payable in the accompanying consolidated balance
sheets.
The Company has agreed in principle with two banks for a $25 million unsecured
revolving credit facility. The credit facility will have a term of two years and
will bear interest at a prime rate + 1/4% or LIBOR + 2.25%. The credit facility
is subject to agreement on final terms and will contain covenants, the most
restrictive requires the Company to maintain certain debt service coverage
ratios, limits the amount of dividends paid and amount of indebtedness. The
credit facility is expected to be finalized in the Company's second quarter of
fiscal 2000.
Interest paid for the years ended October 31, 1999, 1998, and 1997 was
$4,038,000, $2,397,000 and $3,350,000 respectively.
(8) PREFERRED STOCK
In fiscal 1998, the Company completed a private placement of 350,000 shares of
8.99% Series B Senior Cumulative Preferred Stock, par value $.01 per share, with
a liquidation preference of $100 per share ("Series B Preferred Stock"). Holders
of the Series B Preferred Stock are entitled to receive cumulative preferential
cash dividends equal to 8.99% per annum, payable quarterly in arrears and
subject to adjustment under certain circumstances.
The Series B Preferred Stock has no stated maturity, will not be subject to any
sinking fund or mandatory redemption and will not be convertible into other
securities or property of the Company. On or after January 8, 2008, the Series B
Preferred Stock may be redeemed by the Company at its option, in whole or in
part, at a redemption price of $100 per share, plus all accrued dividends. Upon
a Change in Control of the Company (as defined), (i) each holder of Series B
Preferred Stock shall have the right, at such holder's option, to require the
Company to repurchase all or any part of such holder's Series B Preferred Stock
for cash at a repurchase price of $100 per share, plus all accrued and unpaid
dividends, and (ii) the Company shall have the right, at the Company's option,
to redeem all or any part of the Series B Preferred Stock at (a) prior to
January 8, 2008, the Make-Whole Price (as defined) and (b) on or subsequent to
January 8, 2008, the redemption price of $100 per share, plus all accrued and
unpaid dividends.
The Series B Preferred Stock also contains covenants which require the Company
to maintain certain financial coverages relating to fixed charge and
capitalization ratios. Shares of the Series B Preferred Stock are non-voting;
however, under certain circumstances (relating to non-payment of dividends or
failure to comply with the financial covenants) the preferred stockholders will
be entitled to elect two directors.
33
(9) STOCKHOLDERS' EQUITY
On June 16, 1998, the Board of Directors declared a special stock dividend on
the Company's Common Stock consisting of one share of a newly created class of
Class A Common Stock, par value $.01 per share for each share of the Company's
Common Stock. The Class A Common Stock entitles the holder to 1/20 of one vote
per share. Each share of Common Stock and Class A Common Stock have identical
rights with respect to dividends except that each share of Class A Common Stock
will receive not less than 110% of the regular quarterly dividends paid on each
share of Common Stock. The stock dividend was paid on August 14, 1998. An amount
equal to the par value of the Class A Common shares issued was transferred from
additional paid in capital to Class A Common Stock. All references to the number
of common shares, except authorized shares, and per share amounts elsewhere in
the consolidated financial statements have been adjusted to reflect the effect
of the stock dividend for all periods presented.
The Board of Directors adopted a new Shareholders Rights Plan in 1998 and
declared a dividend distribution of one purchase right for each outstanding
original share of Common Stock and Class A Common Stock (collectively the
"Common Shares"). The rights, which expire on November 12, 2008, are not
currently exercisable. When they are exercisable, the holder will be entitled to
purchase from the Company one one-hundredth of a share of a newly-established
Series A Participating Preferred Stock at a price of $65 per one one-hundredth
of a preferred share, subject to certain adjustments. The distribution date for
the rights will occur 10 days after a person or group either acquires or obtains
the right to acquire 10% ("Acquiring Person") or more of the combined voting
power of the Company's Common Shares, or announces an offer the consummation of
which would result in such person or group owning 30% or more of the then
outstanding Common Shares. Thereafter, shareholders other than the Acquiring
Person will be entitled to purchase original common shares of the Company having
a value equal to two times the exercise price of the right.
If the Company is involved in a merger or other business combination at any time
after the rights become exercisable, and the Company is not the surviving
corporation or 50% or more of the Company assets are sold or transferred, the
rights agreement provides that the holder other than the Acquiring Person will
be entitled to purchase a number of shares of common stock of the acquiring
company having a value equal to two times the exercise price of each right.
The Company's articles of incorporation provide that if, any person acquires
more than 7.5% of the outstanding shares of any class of stock, except, among
other reasons, as approved by the Board of Directors. Such shares in excess of
this limit shall automatically be exchanged for an equal number of shares of
Excess Stock. Excess Stock have limited rights, may not be voted and are not
entitled to any dividends.
The Company has a Restricted Stock Plan (Plan) which provides for the grant of
restricted stock awards to key employees of the Company. The Plan allows for
restricted stock awards of up to an aggregate of 250,000 Class A Common shares
or Common shares. During 1999, the Company awarded 46,500 Common shares (51,250
Common Shares in 1998) and 46,500 Class A Common Shares (none in 1998) to
participants in the Plan as an incentive for future services. The shares vest
after five years. Dividends on vested and non-vested shares are paid as
declared. The market value of shares awarded has been recorded as unamortized
restricted stock compensation and is shown as a separate component of
stockholder's equity. Unamortized restricted stock compensation is being
amortized to expense over the five year vesting period. For the years ended
October 31, 1999, 1998 and 1997, $488,000, $331,000 and $111,000 respectively
was charged to expense.
The Company's Board of Directors has authorized a program to purchase up to one
million of the Company's Class A Common and Common shares periodically. As of
October 31, 1999, the Company has purchased and retired 115,000 Common shares
and 56,700 Class A Common shares under this program.
(10) STOCK OPTION PLAN
The Company has a stock option plan under which 418,271 Common shares and Class
A Common shares are reserved for issuance to key employees and non-employee
Directors of the Company. Options are granted at fair market value on the date
of the grant, have a duration of ten years from the date of grant and are
generally exercisable in installments over a maximum period of four years from
the date of grant.
34
A summary of stock option transactions during the periods covered by these
financial statements is as follows:
Year ended October 31 1999 1998 1997
- --------------------- ------------------------- ------------------------ ----------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise Of Exercise
Common Stock: Shares Prices Shares Prices Shares Prices
- ------------- ------ ------ ------ ------ ------ ------
Balance at beginning of period 410,750 $7.09 416,562 $6.98 440,082 $7.18
Granted 6,000 $7.69 7,000 $9.03 6,000 $8.34
Exercised --- --- (5,874) $6.93 (29,520) $5.96
Canceled (4,000) $12.70 (6,938) $8.86 ---
------- ------ -- ------- ----- -------- ------ ---
---
Balance at end of period 412,750 $7.04 410,750 $7.07 416,562 $6.95
Exercisable 387,062 347,375 298,000
Class A Common Stock:
Balance at beginning of period 410,750 $7.09 416,562 $6.98 440,082 $7.18
Granted 6,000 $8.18 7,000 $9.03 6,000 $8.40
Exercised --- --- (5,874) $6.97 (29,520) $6.00
Canceled (4,000) $12.79 (6,938) $8.92 ---
------- ------ -- ------- ----- -------- ------ ---
---
Balance at end of period 412,750 $7.10 410,750 $7.11 416,562 $7.00
Exercisable 387,062 347,375 298,000
Weighted average fair value of
options granted during the year
- Common Stock $0.55 $1.16 $1.20
- Class A Common Stock $0.59 $1.16 $1.20
In connection with the Class A Common stock dividend each outstanding incentive
stock option to purchase Common Stock was modified to permit the optionee to
purchase an equal number of Class A Common Stock. Each outstanding non-qualified
stock option was modified to permit the optionee to purchase a number of shares
of either Common Stock, Class A Common Stock or a combination of both based on
the fair market values of the respective shares determined at the stock dividend
distribution date.
At October 31, 1999, exercise prices of Common Shares and Class A Common Shares
under option ranged from $5.67 to $11.71, for the Common Shares and $5.70 to
$11.79, for the Class A Common Shares. Option expiration dates range for both
classes of stock from November 1999 through April 2009 and the weighted average
remaining contractual life of these options is 4.9 years.
The fair value for these options was estimated as of the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions for the years ended October 31, 1999, 1998 and 1997:
Year ended October 31,
----------------------
1999 1998 1997
---- ---- ----
Risk-free interest rate 5.65% 5.88% 7.09%
Expected dividend yield 9.1% 7.1% 7.6%
Expected volatility 23.6% 24.3% 26.5%
Weighted average option life 10 Years 10 Years 10 Years
The Black-Scholes option pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock volatility. Because the
Company's stock option plan has characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of the above stock option plan.
Stock appreciation rights may be issued in tandem with the stock options, in
which case, either the option or the right can be exercised. Such rights entitle
the grantee to payment in cash or a combination of common shares and cash equal
to the increase in the value of the shares covered by the option to which the
stock appreciation right is related. The plan limits the value of the stock
appreciation rights to 150% of the option price for the related shares. The
35
excess of the market price of the shares over the exercise price of vested
options is charged to expense. For the three years ended October 31, 1999, 1998
and 1997 there were no amounts charged to expense.
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("SFAS
123"). Accordingly, no compensation expense has been recognized for the options
described above. Had compensation cost for these options been determined based
on the fair value on the grant date consistent with the provisions of SFAS 123,
the effect on the Company's net income and earnings per share for the three
years ended October 31, 1999, 1998 and 1997 would have been immaterial.
Certain officers have exercised stock options and provided full recourse
promissory notes to the Company in the amount of $267,000. The notes bear
interest at the prime rate +1/2% and are collateralized by the stock issued upon
exercise of the stock options. Interest is payable semi-annually and the
principal is due in 2002. Such notes are shown in Stockholders Equity in the
accompanying balance sheet as notes receivable from officers/stockholders.
(11) DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgement is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash and cash equivalents, rents and interest receivable, accounts payable,
accrued expenses, other liabilities and certain borrowings except as noted below
are carried at amounts which reasonably approximate their fair values.
The estimated fair value of mortgage notes receivable collateralized by real
property is based on discounting the future cash flows at a year-end risk
adjusted lending rate that the Company would utilize for loans of similar risk
and duration. At October 31, 1999 and 1998, the estimated aggregate fair value
of the mortgage notes receivable was $2,703,000 and $2,312,000 respectively.
Mortgage notes payable with aggregate carrying values of $38,391,000 and
$13,503,000 have estimated aggregate fair values of $38,407,000 and $13,055,000
at October 31, 1999 and 1998 respectively. Estimated fair value is based on
discounting the future cash flows at a year-end risk adjusted lending rate
currently available to the Company for issuance of debt with similar terms and
remaining maturities.
Although management is not aware of any factors that would significantly affect
the estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements and current estimates of
fair value may differ significantly from the amounts presented herein.
36
(12) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited quarterly results of operations for the years ended October 31,
1999 and 1998 are as follows (in thousands, except per share data):
Year Ended October 31, 1999 Year Ended October 31, 1998
--------------------------- ---------------------------
Quarter Ended Quarter Ended
------------- -------------
Jan 31 Apr 30 July 31 Oct 31 Jan 31 Apr 30 July 31 Oct 31
------ ------ ------- ------ ------ ------ ------- ------
Revenues $6,933 $7,651 $7,266 $7,964 $5,869 $6,450 $6,189 $7,087
====== ====== ====== ====== ====== ====== ====== ======
Net Income (1) $1,747 $2,036 $1,809 $3,598 $1,249 $2,509 $2,099 $2,319
Preferred Stock Dividends 786 787 787 787 210 778 787 786
---- ---- ---- ---- ---- ---- ---- ----
Net Income Applicable to
Common and Class A
Common Stockholders $961 $1,249 $1,022 $2,811 $1,039 $1,731 $1,312 $1,533
==== ====== ====== ====== ====== ====== ====== ======
Basic Earnings per Share:
Common $.09 $.12 $.09 $.25 $.10 $.16 $.12 $.14
Class A Common $.10 $.12 $.11 $.29 $.10 $.18 $.13 $.16
Diluted Earnings per Share:
Common $.09 $.12 $.09 $.24 $.10 $.16 $.12 $.14
Class A Common $.10 $.12 $.11 $.28 $.10 $.18 $.13 $.16
(1) Quarter ended October 31, 1999 includes gain on sale of real estate
investment of $1,364,000.
(13) SEGMENT REPORTING
For financial reporting purposes, the Company has grouped its real estate
investments into two segments: equity investments and mortgage loans. Equity
investments are managed separately from mortgage loans as they require a
different operating strategy and management approach. The Company assesses and
measures operating results for each of its segments, based on net operating
income. For equity investments, net operating income is calculated as rental
revenues of the property less its rental expenses (such as common area expenses,
property taxes, insurance, etc.) and, for mortgage loans, net operating income
consists of interest income less direct expenses, if any.
The revenues, net operating income and assets for each of the reportable
segments are summarized in the following tables for the years ended October 31,
1999, 1998 and 1997. Non-segment assets include cash and cash equivalents,
interest receivable, and other assets. The non-segment revenues consist
principally of interest income on temporary investments. The accounting policies
of the segments are the same as those described in Note 1.(in thousands)
Equity Mortgage Non
Year Ended October 31, Investments Loans Segment Total
1999
<Total Revenues $ 29,282 $ 302 $ 230 $ 29,814
========= ======= ======= ======
Net Operating Income $ 19,430 $ 302 $ 230 $ 19,962
========= ======= ======= ========
Total Assets $179,370 $2,500 $1,904 $183,774
========= ======= ======= ========
1998
Total Revenues $ 24,335 $ 684 $ 576 $ 25,595
========= ======= ======= =========
Net Operating Income $ 16,472 $ 684 $ 576 $ 17,732
========= ======= ======= =========
Total Assets $158,455 $2,607 $3,977 $165,039
========= ======= ======= ========
1997
Total Revenues $ 23,829 $ 473 $ 525 $ 24,827
========= ======= ======= =========
Net Operating Income $ 16,805 $ 473 $ 525 $ 17,803
========= ======= ======= =========
Total Assets $131,855 $3,605 $1,970 $137,430
========= ======= ======= ========
37
The reconciliation to net income for the combined reportable segments and for
the Company is as follows:
Year Ended October 31, 1999 1998 1997
---- ---- ----
Net Operating Income from Reportable Segments $19,962 $ 17,732 $17,803
-------- --------- -------
Addition:
Gain on sale of real estate 1,364 - -
------ ---- -----
Deductions:
Interest expense 3,913 2,522 3,350
Depreciation and amortization 5,896 4,747 4,132
General, administrative and
other expenses 2,327 2,287 1,732
------ ----- ------
Total Deductions 12,136 9,556 9,214
------- ------ ------
Net Income 9,190 8,176 8,589
Preferred stock dividends (3,147) (2,561) -
------- ------- ------
Net Income Applicable to
Common and Class A Common Stockholders $ 6,043 $ 5,615 $ 8,589
======== ======== =======
(14) SUBSEQUENT EVENT
The Company obtained a commitment from a bank for a $6.5 million nonrecourse
first mortgage loan secured by one of its retail properties having a net book
value of $9.2 million at October 31, 1999. The mortgage will have a term of 10
years and bear interest at a fixed rate of 7.78%
38
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of Urstadt Biddle
Properties Inc.:
We have audited the accompanying consolidated balance sheets of Urstadt Biddle
Properties Inc. and subsidiaries (the "Company") as of October 31, 1999 and
1998, and the related consolidated statements of income, cash flows and
stockholders' equity for each of the three years in the period ended October 31,
1999. These financial statements and schedules referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Urstadt Biddle Properties Inc.
and subsidiaries as of October 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 1999 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the accompanying
index to financial statements are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not a required part of the
basic financial statements. These schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
December 9, 1999
39
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 1999
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- ----------------------------------------------------------------------------------------------------------------------------------
Initial Cost to Company Cost Capitalized
Subsequent to Acquisition
Depreciation and Building & Carrying Building &
Location Encumbrances Land Improvements Costs Improvements Land
- ----------------------------------------------------------------------------------------------------------------------------------
Real Estate Subject to Operating Leases (Note (a)):
Office Buildings:
Greenwich, CT $ 0 $ 199 $ 795 $ 0 $ 106 $ 199
Greenwich, CT 0 111 444 0 22 111
Greenwich, CT 0 570 2,359 0 180 570
Southfield, MI 0 1,000 10,280 0 2,079 1,000
-- -- -- -- -- --
0 1,880 13,878 0 2,387
Shopping Centers: -- -- -- -- -- --
Springfield, MA 0 1,372 3,656 0 14,884 1,372
Farmingdale, NY 2,125 1,027 4,174 0 242 1,027
Somers, NY 1,925 821 2,600 0 2 821
Somers, NY 4,091 1,834 7,383 0 0 1,834
Briarcliff, NY 6,185 2,300 9,708 0 952 2,300
Wayne, NJ * 2,492 9,966 0 398 2,492
Eastchester, NY 4,859 1,500 6,128 0 0 1,500
Jonesboro, GA 0 0 2,430 0 0 0
Meriden, CT 0 5,000 20,309 0 284 5,000
Danbury, CT * 3,850 15,811 0 1,094 3,850
Tempe, AZ 0 114 766 0 0 114
Carmel, NY 0 1,763 5,973 0 565 1,763
Ridgefield, CT 0 900 3,793 0 590 900
Darien, CT 14,912 4,260 17,192 0 347 4,260
------ ----- ------ -- ---- ------
34,097 27,233 109,889 0 19,358 27,233
Department Stores: ------ ------ ------- -- ------ ------
Tempe, AZ 0 378 1,518 0 1,062 378
-- -- -- -- -- --
0 378 1,518 0 1,062
Industrial Service Center:- -- -- -- -- -- --
Syracuse, NY 0 253 530 0 0 253
-- -- -- -- -- --
0 253 530 0 0
Mixed Use Facility: Retail/Office: --- -- -- -- -- -- --
Briarcliff, NY 0 380 1,531 0 0 380
Newington, NH 4,297 421 1,997 0 4,668 421
-- -- -- -- -- --
4,297 801 3,528 0 4,668
Land: -- -- -- -- -- --
Newington, NH 0 305 0 0 0 305
Denver, CO 0 799 0 0 0 799
-------- ------- -------- ------- -------- ------
0 1,104 0 0 0 1,104
-------- ------- -------- ------- -------- ------
$ 38,394 $31,649 $129,343 $ 0 $ 27,475 $31,649
-------- ------- -------- ------- -------- -------
- ---------------------------------------------------------------------------------------------------------------------------------
COL. A COL. E COL. F COL. G/H COL. I
- ---------------------------------------------------------------------------------------------------------------------------------
Life on which
depreciation for
Amount at which Carried at Close of Period building and
Accumulated Date improvements in latest
Depreciation and Building & Depreciation Constructed income statement is
Location Improvements TOTAL (Note (b)) Acquired computed (Note(d))
- ----------------------------------------------------------------------------------------------------------------------------------
Real Estate Subject to Operating Leases (Note (a)):
Office Buildings:
Greenwich, CT $ 901 $ 1,100 $ 182 1993 31.5
Greenwich, CT 466 $ 577 76 1994 31.5
Greenwich, CT 2,539 $ 3,109 101 1998 31.5
Southfield, MI 12,359 $ 13,359 6,012 1983 35.0
------ ------ -----
16,265 18,145 6,371
Shopping Centers: ------ ------ ------
Springfield, MA 18,540 $ 19,912 7,311 1970 40.0
Farmingdale, NY 4,416 $ 5,443 936 1993 31.5
Somers, NY 2,602 $ 3,423 500 1992 31.5
Somers, NY 7,383 $ 9,217 39 1999 31.5
Briarcliff, NY 10,660 $ 12,960 233 1998 40.0
Wayne, NJ 10,364 $ 12,856 1,904 1992 31.0
Eastchester, NY 6,128 $ 7,628 306 1997 31.0
Jonesboro, GA 2,430 $ 2,430 122 1997 31.0
Meriden, CT 20,593 $ 25,593 3,993 1993 31.5
Danbury, CT 16,905 $ 20,755 2,322 1994 31.5
Tempe, AZ 766 $ 880 82 1996 40.0
Carmel, NY 6,538 $ 8,301 712 1995 31.5
Ridgefield, CT 4,383 $ 5,283 187 1998 40.0
Darien, CT 17,539 $ 21,799 544 1998 40.0
------ -------- -------
129,247 156,480 19,191
Department Stores: ------ ------- -------
Tempe, AZ 2,580 $ 2,958 1,578 1970 40.0
----- ------ -----
2,580 2,958 1,578
Industrial Service Center: ----- ----- -----
Syracuse, NY 530 $ 783 208 1973 40.0
--- --- ---
530 783 208
Mixed Use Facility: Retail/Office: --- --- ---
Briarcliff, NY 1,531 $ 1,911 29 1999 40.0
Newington, NH 6,665 $ 7,086 3,358 1979 40.0
----- ----- -----
8,196 8,997 3,387
Land: ----- ----- -----
Newington, NH 0 $ 305 0 1981
Denver, CO 0 $ 799 0 1988
-------- -------- --------
0 1,104 0
-------- -------- --------
$156,818 $188,467 $30,735
-------- -------- --------
* Properties are used to secure a secured revolving credit line in the amount
of $12,869
40
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31, 1999
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(In thousands)
- --------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- --------------------------------------------------------------------------------------------------------------
--------------------------------- --------------------
Description Building & Carrying Building &
and Location Encumbrances Land Improvements Costs Improvements
- ---------------------------------------------------------------------------------------------------------------
Real Estate Subject to Financing Leases (Note (c)):
Industrial Distribution Centers:
(Leased to Chrysler Corporation)
St. Louis, MO $ 0 $ 523 $2,253 $ 0 $2,363
Dallas, TX 0 193 2,266 0 4,195
Deferred Lease
Renewal Rights 0 0 0 0 0
- - - - -
0 716 4,519 0 6,558
- --- ----- - -----
Industrial Distribution Center:
(Leased to Firestone Tire and Rubber Company)
Albany, GA 0 835 3,343 0 0
- --- ----- - -
0 835 3,343 0 0
- --- ----- - -
TOTAL REAL ESTATE SUBJECT
TO FINANCING LEASES (Note(c)): 0 $1,551 $7,862 0 $6,558
- ----- ----- - -----
- --------------------------------------------------------------------------------------------------------------
COL. A COL. E COL. F COL. G COL. H/I
- --------------------------------------------------------------------------------------------------------------
-------------------------------- Net Investment
Remaining in Properties Date
Description Minimum Lease Residual Unearned subject to Constructed
and Location Payments Value Income Financing Leases or Acquired
- ---------------------------------------------------------------------------------------------------------------
Real Estate Subject to Financing Leases (Note (c)):
Industrial Distribution Centers:
(Leased to Chrysler Corporation)
St. Louis, MO $ 466 $ 1,166 $ (36) $1,596 1970
Dallas, TX 509 841 (27) 1,324 1970
Deferred Lease
Renewal Rights 257 0 0 257 1981
------ ------ ------ ------
1,232 2,007 (63) 3,177
------ ------ ------ ------
Industrial Distribution Center:
(Leased to Firestone Tire and Rubber Company)
Albany, GA 520 100 (40) 579 1972
--- --- ---- ---
520 100 (40) 579
--- --- ---- ---
TOTAL REAL ESTATE SUBJECT
TO FINANCING LEASES (Note(c)): $1,752 $ 2,107 $ (103) $3,756
===== ===== === =====
41
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31, 1999
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(In thousands)
- ---------------------------------------------------------------------- ------------ ------------ ------------
NOTES: 1999 1998 1997
---- ---- ----
(a) RECONCILIATION OF REAL ESTATE
OWNED SUBJECT TO OPERATING LEASES
Balance at beginning of year $166,083 $134,336 140,648
Property improvements during the year 2,726 2,155 2,673
Property acquired during the year 23,134 29,592 10,057
Property contributed to unconsolidated joint venture --- --- (19,042)
Property sold during the year (3,060)
--- ---
Property assets fully written off (416)
-------- ------- --------
Balance at end of year $188,467 $166,083 $134,336
======== ======== ========
(b) RECONCILIATION OF ACCUMULATED DEPRECIATION
Balance at beginning of year $27,763 $23,653 $26,536
Provision during the year charged to income 5,070 4,110 3,555
Property contributed to unconsolidated joint venture --- --- (6,438)
Property sold during the year (1,659)
--- ---
Property assets fully written off (439)
----- ------- --------
Balance at end of year $30,735 $27,763 $23,653
======= ======= =======
(c) RECONCILIATION OF REAL ESTATE OWNED SUBJECT TO FINANCING LEASES
Balance at beginning of year $5,005 $6,133 $7,154
Recovery of investment in properties owned subject to financing
leases and amortization of deferred renewal rights (1,249) (1,128) (1,021)
------- ------- -------
Balance at end of year $3,756 $5,005 $6,133
====== ====== ======
(d) Tenant improvement costs are depreciated over the life of the related
leases, which range from 3 to 25 years.
(e) The difference between the initial costs to the Company and costs
capitalized subsequent to acquisition and the amount at which carried at
close of period represents accumulated depreciation for the period prior to
classification of these assets as financing leases and accumulated
recoveries for the period thereafter.
(f) The aggregate cost basis for Federal income tax purposes at October 31, 1999
is $192,624,000.
42
URSTADT BIDDLE PROPERTIES INC
OCTOBER 31 1999
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
(In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ------------------------------------------------------------------------------------------------------------------------------------
Remaining Face Carrying
Amount of Amount of
Interest Rate Final Maturity Mortgage(Note(b)) Mortgage(Note(a))
Description Coupon Effective Date Periodic Payment Terms (In Thousands) In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
I. FIRST MORTGAGE LOANS ON BUSINESS PROPERTIES (Notes (c) and (d)):
- --------------------------------------------------------------------
Retail Store:
Erie, PA 9% 14% 1-Jul-13 Payable in monthly installments of $10,787. $1,021 $789
Retail Store:
Riverside, CA 9% 12% 15-Jan-13 Payable in quarterly installments of $54,313. $1,939 $1,614
------ ------
Total First Mortgage Loans $2,960 $2,403
II. SECOND MORTGAGE LOAN ON BUSINESS PROPERTY (Notes (c) and (d)):
- -------------------------------------------------------------------
Retail Store:
Riverside, CA 9% 12% 15-Jan-01 Payable in quarterly installments of $21,135 $ 99 $ 97
---- ----
TOTAL MORTGAGE LOANS ON REAL ESTATE $3,059 $2,500
====== ======
43
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 1999
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE (Continued)
(In thousands)
NOTES TO SCHEDULE IV Year Ended October 31
---------------------
Reconciliation of Mortgage Loans on Real Estate
1999 1998 1997
---- ---- ----
(a) Balance at beginning of period: $2,607 $3,605 $3,706
Deductions during current period:
Prepayment of Mortgage Loan 0 (893) ___
Collections of principal and amortization of discounts (107) (105) (101)
------ ------ ------
Balance at close of period: $2,500 $2,607 $3,605
====== ====== ======
(b) The aggregate cost basis for Federal income tax purposes is equal to the
face amount of the mortgages
(c) At October 31, 1999 no mortgage loans were
delinquent in payment of currently due principal or interest.
(d) There are no prior liens for any of the Mortgage Loans on Real Estate.
(e) The first mortgage loan on this property is held by the Company.
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
URSTADT BIDDLE PROPERTIES INC.
By: /S/ Charles J Urstadt
-------------------------
Charles J. Urstadt
Chairman and Chief Executive Officer
Dated: January 28, 2000
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.
/S/ Charles J. Urstadt January 25, 2000
- ------------------------------
Charles J. Urstadt
Chairman and Director
(Principal Executive Officer)
/S/ Willing L. Biddle January 25, 2000
- ---------------------------
Willing L. Biddle
President and Director
/S/ James R. Moore January 25, 2000
- --------------------------
James R. Moore
Executive Vice President - Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
/S/ E. Virgil Conway January 25, 2000
- ---------------------------
E. Virgil Conway
Director
/S/ Robert R. Douglass January 25, 2000
- --------------------------
Robert R. Douglass
Director
/S/ Peter Herrick January 25, 2000
- -------------------------------
Peter Herrick
Director
/S/ George H.C. Lawrence January 25,2000
- ------------------------
George H. C. Lawrence
Director
/S/ Paul D. Paganucci January 25, 2000
- ----------------------------
Paul D. Paganucci
Director
/S/ Charles D. Urstadt January 25, 2000
- -----------------------------
Charles D. Urstadt
Director
/S/ George J. Vojta January 25, 2000
- --------------------------------
George J. Vojta
Director
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated December 9, 1999 included in this Annual Report on Form 10-K for
the year ended October 31, 1999 of Urstadt Biddle Properties Inc. into its
previously filed Registration Statements on Form S-3 (No.33-57119), Form S-4
(No. 333-19113) and Form S-8 (No.2-93146 and No. 33-41408), and to the reference
to our Firm under the caption "Experts" in said Registration Statements.
ARTHUR ANDERSEN LLP
New York, New York
January 25, 2000