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 For the fiscal year
ended October 31, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
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(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. x
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of January 9, 2001: Common Shares, par value $.01 per share
- - $23,765,973; Class A Common Shares, par value $.01 per share - $33,474,248.
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock and Class A Common Stock, as of January 9, 2001 (latest
date practicable): 6,225,387 Common Shares, par value $.01 per share, and
5,973,703 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 14,
2001 (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
7A. Quantitative and Qualitative Disclosures about Market Risk 18
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 20
11. Executive Compensation 20
12. Security Ownership of Certain Beneficial Owners
and Management 20
13. Certain Relationships and Related Transactions 21
PART IV
14. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K 21
2
PART I
Item 1. Business.
Organization
Urstadt Biddle Properties Inc. (formerly HRE Properties, Inc.), a Maryland
Corporation, (the "Company"), is a real estate investment trust engaged in the
acquisition, ownership and management of commercial real estate. The Company was
organized as an unincorporated business trust under the laws of the Commonwealth
of Massachusetts on July 7, 1969. In 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 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. In 1998, the stockholders of the
Company approved an amendment to the Company's articles of incorporation to
change the name of the Company from HRE Properties, Inc. to Urstadt Biddle
Properties Inc.
Tax Status - Qualification as a Real Estate Investment Trust
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.
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.
At October 31, 2000, the Company owned or had an equity interest in twenty five
properties comprised of neighborhood and community shopping centers, single
tenant retail stores, office buildings, service and distribution facilities and
undeveloped land located in eleven states throughout the United States,
containing a total of 3,206,000 square feet of gross leasable area ("GLA"). For
a description of the Company's individual investments, see Item 2.
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 properties 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 properties in the market area.
In fiscal 2000, the Company spent $6,642,000 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.
During the five year period ended October 31, 2000, the Company acquired twelve
properties totaling 662,700 square feet of GLA at an aggregate cost of
approximately $65 million. In the same period, the Company spent nearly $20.8
million to expand, renovate, lease and improve its existing properties.
Core Properties
The Company considers those properties which are directly managed by the
Company, concentrated in the retail sector and located close to the Company's
headquarters in Fairfield County, Connecticut, to be core properties. Of the
twenty five properties in the Company's portfolio, eighteen properties are
considered core properties consisting of eleven community shopping centers,
three mixed-use (retail/office) properties, and four office buildings (including
the Company's executive headquarters). At October 31, 2000, these properties
contained in the aggregate 1,748,000 square feet of GLA. The Company's core
properties collectively had 317 tenants providing a wide range of products and
services. Tenants include national and regional supermarkets and discount
department stores, a regional electronic store and other local retailers and
office tenants. At October 31, 2000, the core properties were 97% leased.
Two of the core properties in the Company's portfolio are owned by operating
partnerships in which the Company is the sole general partner.
A substantial portion of the Company's operating lease income derived from
retail tenants consists of rent received under short- and intermediate-term
leases. 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
The Board of Directors of the Company has expanded and refined the strategic
objectives of the Company to focus the real estate portfolio into one of
primarily 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, 2000, the non-core
properties totaled seven properties and were comprised of the Company's office
and retail properties located outside of the northeast region of the United
States, [all of its distribution and service facilities] and undeveloped land.
The Company's non-core properties consists of one office building, containing
202,000 square feet of GLA, two retail properties totaling 357,000 square feet,
three distribution and service facilities with a total of 899,000 square feet of
GLA and 4.2 acres of undeveloped land. The non-core properties were 98% leased
at October 31, 2000.
The office property has four tenants which offer a range of services, including
engineering, management and administrative.
One of the non-core retail properties is a 231,000 square foot shopping center
located in Clearwater, Florida containing 51 tenants. The shopping center is
owned by a joint venture in which the Company is the general partner. The other
non-core retail property, located in Tempe, Arizona, is leased to a single
tenant under a long term "triple net" lease whereby the tenant pays all taxes,
insurance, maintenance and other operating costs of the property during the term
of the lease.
The three distribution and service facilities are 100% occupied and consist of
two automobile and truck parts distribution warehouses, and one automobile tire
distribution facility. The two automobile and truck parts facilities are net
leased to Daimler Chrysler Corporation under long-term lease arrangements
whereby the tenant pays all taxes, insurance, maintenance and other operating
costs of the property during the term of the lease. During fiscal 2000, the
leases on both properties were renewed for terms of seven and ten year periods.
The automobile tire distribution facility containing 476,000 square feet of GLA
is net leased to Bridgestone/Firestone, Inc. under a lease that expires on
February 28, 2001. The lease contains an option for the tenant to purchase the
property for $100,000 upon expiration of the lease. (See "Recent Developments").
At October 31, 2000, the Company also holds two fixed rate mortgages totaling
$2,379,000. The fixed rate mortgages are secured by retail properties sold by
the Company in prior years.
Recent Developments
In fiscal 2000, the Company sold two non-core properties for gross sales
proceeds of approximately $4,000,000, realizing net gains on the sales of the
properties of $1,067,000.
In November 2000, the Company entered into a contract to purchase an office
building property in Greenwich, Connecticut at a purchase price of $2,375,000. A
closing is expected during the second quarter of fiscal 2001.
In December 2000, Bridgestone/Firestone, Inc. notified the Company of its
intent to exercise its option to purchase the Company's automobile tire
distribution property at a purchase price of $100,000 on February 28, 2001.
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 (except the
property leased to Bridgestone/Firestone, Inc.), 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. Several 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 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 2. Properties.
Core Properties
The following table sets forth information concerning each core property at
October 31, 2000. Except as otherwise noted, all core properties are 100% owned
by the Company.
Gross Number of
Year Year Leasable Tenants
-------
Location Completed Acquired Square Feet Acres 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 21 96% ShopRite
Danbury, Ct 1989 1995 193,000 19.3 20 100% Barnes & Noble
Briarcliff, NY (1) 1978 1998 160,000 11.4 29 99% Stop & Shop
Carmel, NY 1983 1995 126,000 19.0 16 97% ShopRite
Newington, NH 1975 1979 102,000 14.3 10 100% 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 22 100% Grand Union
Somers, NY 1991 1999 78,000 10.8 32 95% Gristede's
Farmingdale, NY 1981 1993 70,000 5.6 14 97% King Kullen
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 96% Chico's
Briarcliff, NY 1981 1999 28,000 4 2 57% Westchester Community College
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 1978 2000 10,000 1 4 100% Insurance Center of Greenwich
Greenwich, CT 1983 1994 10,000 .2 4 100% Prescott Investors
(1) The Company has a general partnership interest in this property.
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, 2000. 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
Clearwater, FL (1) 1983 1985 231,000 21.5 51 98% Albertson's
Tempe, AZ 1970 1970 126,000 8.6 2 90% Mervyn's
Albany, GA 1972 1972 476,000 51.3 1 100% Bridgestone/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
Denver, CO - 1972 - 4.2 - - Undeveloped Land
(1) The Company has a general partnership interest in this property.
9
Item 3. 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 4. 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, 2000.
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 10.
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters.
(a) Price Range of Common Shares
Shares of Common stock and Class A Common stock 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 Stock and Class A Common Stock during the fiscal years ended
October 31, 2000 and 1999 as reported on the New York Stock Exchange:
Fiscal Year Ended Fiscal Year Ended
Common shares: October 31, 2000 October 31, 1999
- -------------- ---------------- ----------------
Low High Low High
--- ---- --- ----
First Quarter $6.75 $7.438 $7.063 $8.625
Second Quarter 6.75 7.375 7.500 8.250
Third Quarter 6.75 7.313 7.438 8.000
Fourth Quarter 6.75 7.188 6.688 7.688
Fiscal Year Ended Fiscal Year Ended
Class A Common shares: October 31, 2000 October 31, 1999
- ---------------------- ---------------- ----------------
Low High Low High
--- ---- --- ----
First Quarter $7.125 $7.688 $7.375 $8.688
Second Quarter 7.250 7.688 8.000 8.563
Third Quarter 6.750 7.563 7.750 8.625
Fourth Quarter 7.125 7.563 7.500 8.063
(b) Approximate Number of Equity Security Holders
At January 5, 2001 (latest date available), there were 1,733 shareholders of
record of the Company's Common stock and 1,726 shareholders of record of the
Class A Common stock.
(c) Dividends Declared on Common stock and Class A Common stock and Tax Status
10
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, 2000 and 1999:
Dividends Paid Per:
Common Share Class A Common Share
Ordinary Ordinary
Dividend Payment Gross Dividend Income Capital Gain Gross Dividend Income Capital Gain
Date Paid Per share Distribution Disribution Paid Per Share Distribution Distribution
- ----------------------- -------------- ------------ ------------ -------------- ------------ ------------
January 21,2000 $0.175 $0.159 $0.016 $0.195 $0.177 $0.018
April 21, 2000 $0.175 $0.159 $0.016 $0.195 $0.177 $0.018
July 21, 2000 $0.175 $0.159 $0.016 $0.195 $0.177 $0.018
October 20,2000 $0.175 $0.159 $0.016 $0.195 $0.177 $0.018
------- ------- ------- ------- ------- ------
$0.700 $0.636 $0.064 $0.780 $0.708 $0.072
======= ======= ======= ======= ======= ======
Common Share Class A Common Share
Ordinary Ordinary
Dividend Payment Gross Dividend Income Capital Gain Gross Dividend Income Capital Gain
Date Paid Per share Distribution Disribution Paid Per Share Distribution Distribution
- ----------------------- -------------- ------------ ------------ -------------- ------------ ------------
January 22, 1999 $0.17 $0.17 $0.0 $0.19 $0.19 $0.0
April 23, 1999 $0.17 $0.17 $0.0 $0.19 $0.19 $0.0
July 14, 1999 $0.17 $0.17 $0.0 $0.19 $0.19 $0.0
October 22, 1999 $0.17 $0.17 $0.0 $0.19 $0.19 $0.0
------ ------ ----- ------ ------ ----
$0.68 $0.68 $0.0 $0.76 $0.76 $0.0
====== ====== ===== ====== ====== ====
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, 2000, the Company made distributions to stockholders
aggregating $.70 per Common share and $.78 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 shares 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 shares of Common Stock and Class A Common
Stock 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 January 4, 2000, the Company entered into a Stock Purchase Agreement with a
third party not affiliated with the Company pursuant to which such third party
purchased, by way of private placement under Section 4(2) of the Securities Act
of 1933, as amended, 75,000 shares of Class A Common Stock of the Company at a
price of $7.631 per share. The Company received $572,325 in cash proceeds.
On January 4, 2000, the Company entered into Stock Purchase Agreements with
certain directors of the Company pursuant to which such directors purchased, by
way of private placement under Section 4(2) of the Securities Act of 1933, as
amended, 22,600 shares of Common Stock of the Company at a price of $7.375 per
share and 22,200 shares of Class A Common Stock of the Company at a price of
$7.631 per share. The Company received $336,083 in cash proceeds.
On January 4, 2000, the Company entered into Stock Purchase Agreements with
certain officers of the Company and the Trust established under the Company's
Excess Benefits and Deferred Compensation Plan for the benefit of certain
officers pursuant to which such officers and the Trust purchased, by way of
private placement under Section 4(2) of the Securities Act of 1933, as amended,
6,800 shares of Common Stock of the Company at a price of $7.375 per share and
6,200 shares of Class A Common Stock of the Company at a price of $7.631 per
share. The Company received cash proceeds of $97,462.
On January 4, 2000, the Company entered into Stock Purchase Agreements with two
parties affiliated with officers or directors of the Company pursuant to which
such parties purchased, by way of private placement under Section 4(2) of the
Securities Act of 1933, as amended, 20,000 shares of Class A Common Stock of the
Company at a price of $7.631 per share. The Company received cash proceeds of
$152,620.
On August 30, 2000, the Company entered into Stock Purchase Agreements with two
persons not affiliated with the Company pursuant to which such persons
purchased, by way of private placement under Section 4(2) of the Securities Act
of 1933, as amended, 75,000 shares of Class A Common Stock of the Company at a
price of $7.50 per share. The Company received $562,500 in cash proceeds.
On September 22, 2000, the Company entered into Stock Purchase Agreements with
certain directors of the Company, the Trust established under the Company's
Excess Benefits and Deferred Compensation Plan and a third party affiliated with
an officer of the Company pursuant to which such persons purchased, by way of
private placement under Section 4(2) of the Securities Act of 1933, as amended,
58,000 shares of Class A Common Stock of the Company at a price of $7.494 per
share and 35,000 shares of Common Stock of the Company at a price of $7.169 per
share. The Company received $685,567 in cash proceeds.
12
Item 6. Selected Financial Data.
(In thousands, except per share data)
Year Ended October 31, 2000 1999 1998 1998 1996
---- ---- ---- ---- ----
Balance Sheet Data:
Real Estate Investments $170,555 $173,877 $ 155,402 $129,341 $124,972
======== ======== ========= ======== ========
Total Assets $181,100 $183,774 $ 165,039 $137,430 $132,160
======== ======== ========= ======== ========
Mortgage Notes Payable and Preferred Stock $85,365 $84,725 $ 66,362 $43,687 $39,798
======= ======= ======== ======= =======
Operating Data:
Total Revenues $31,254 $29,814 $ 25,595 $24,827 $24,432
======= ======= ======== ======= =======
Net Income Applicable to Common and Class A
Common Stockholders $5,442 $ 6,043 $ 5,615 $ 8,589 $10,271
====== ======= ======= ======= =======
Funds from Operations (Note 1) $11,914 $11,878 $ 11,782 $ 10,189 $ 9,525
======= ======= ======== ======== =======
Other Data :
Net Cash Provided by Operating Activities $13,892 $14,423 $ 13,901 $ 14,755 $ 9,801
======= ======= ======== ======== =======
Net Cash (Used in) Provided by Investing Activities $(3,262) $(10,556) $(31,130) $(7,460) $11,722
======== ========= ========= ======== =======
Net Cash (Used in) Provided by Financing Activities $(11,436) $ (5,009) $ 19,207 $(7,192) $(26,801)
========= ========= ======== ======== =========
Per Share Data (Note 2):
Net Income - Diluted:
Common Stock $.49 $.54 $.52 $.79 $.90
Class A Common Stock $.55 $.61 $.57 $.86 $.99
Cash Dividends on:
Common Stock $.70 $.68 $1.13 $1.26 $1.22
Class A Common Stock $.78 $.76 $0.19 --- ---
---- ---- ----- --- ---
Total Cash Dividends $1.48 $1.44 $1.32 $1.26 $1.22
===== ===== ===== ===== =====
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 sales of properties,
plus depreciation, amortization 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. Effective January 1, 2000, NAREIT
clarified the definition of FFO to include non-recurring items. Accordingly,
amounts prior to 2000 have been restated to conform to the new definition. 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 dividend 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 7. 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, 2000, the Company had cash and cash equivalents of $1.9 million
compared to $2.8 million in 1999. The Company also has a $20 million secured
revolving credit facility with a bank which expires in 2005 and a $15 million
unsecured line of credit which expires in fiscal 2002. The unsecured line of
credit was increased from $10 million to $15 million in December 2000. The
credit lines are available to finance the acquisition, management or development
of commercial real estate, refinance indebtedness and for working capital
purposes. Extensions of credit under the unsecured credit line are at the bank's
discretion and subject to the bank's satisfaction of certain conditions. There
were no borrowings outstanding under the unsecured credit line at October 31,
2000. At October 31, 2000, long-term debt consisted of mortgage notes payable
totaling $40 million and outstanding borrowings of $11.9 million under the
secured revolving credit facility.
In February 2000, the Company obtained a mortgage note payable in the amount of
$6.5 million secured by one of its core retail properties having a net book
value of $9 million. Proceeds from the financing were used to repay a $4.1
million mortgage note payable and outstanding short-term bank loans.
In fiscal 1998, the Company's 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 was intended to provide the Company with the flexibility
to raise equity capital to finance the acquisition of properties, employee
compensation purposes and further the growth of the Company, in each case
without diluting the voting power of the Company's existing stockholders. In
fiscal 2000, the Company sold 256,400 shares of Class A Common Shares and 64,400
Common Shares in two private placement transactions for aggregate cash proceeds
of $2.4 million.
The Company expects to make real estate investments periodically. In fiscal
2000, the Company purchased an office building in Greenwich, Connecticut for
$1,650,000. The Company also invests in its existing properties and, during
fiscal 2000, spent approximately $6.6 million on its properties for capital
improvements and leasing costs. The Company expects to incur approximately $6
million in fiscal 2001 for tenant improvement obligations. The Company may use
bank borrowings or available cash to fund the capital costs.
14
In a prior year, the Company's 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 fiscal 2000, the Company sold two non-core properties
for proceeds of approximately $4,000,000 realizing net gains on the sales of
$1,067,000. It is the Company's intent to sell additional non-core properties in
fiscal 2001 and expects such property sales to result in net gains to the
Company. At October 31, 2000, the non-core properties, (including the Company's
investment in unconsolidated joint venture) totaled seven properties having an
aggregate net book value of $21,325,000.
The Company's Board of Directors has authorized the purchase of up to one
million shares of the Company's Common Stock and Class A Common Stock 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 2000, the Company
repurchased 108,600 Common Shares and 154,600 Class A Common Shares at an
aggregate cost of $1,929,000. The Company utilized available cash resources to
fund the repurchases. To date, the Company has repurchased 223,600 Common Shares
and 211,300 Class A Common Shares under this program. 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)), excluding gains or losses from sales of property, plus
depreciation and amortization and after 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 or
its dividend paying capacity. Furthermore, FFO as disclosed by other REITs may
not be comparable to the Company's calculation of FFO. Effective January 1,
2000, NAREIT clarified the definition of FFO to include non-recurring items
except for those that are treated as extraordinary under GAAP. The table below
provides a reconciliation of net income in accordance with GAAP to FFO as
calculated under the current NAREIT guidelines for the years ended October 31,
2000, 1999 and 1998 (amounts in thousands). Certain 1998 amounts have been
restated to conform to the current guidelines:
15
2000 1999 1998
---- ---- ----
Net Income Applicable to Common and Class A Common
Stockholders $5,442 $6,043 $5,615
Plus: Real property depreciation, amortization of
tenant improvement and lease acquisition
costs and recoveries of investments in
properties subject to finance leases 7,005 6,545 5,475
Adjustments for unconsolidated joint venture 534 654 692
Less: Gains on sales of real estate investments (1,067) (1,364) ---
------- ------- -------
Funds from Operations $11,914 $11,878 $11,782
======= ======= =======
Results of Operations
Fiscal 2000 vs. Fiscal 1999
Revenues
Revenues from operating leases increased $1,576,000 or 5.5% to $30,242,000 in
Fiscal 2000 compared to $28,666,000 in Fiscal 1999. The increase in operating
lease revenues reflects $1,867,000 of additional rental income from properties
acquired by the Company in Fiscal 1999. Operating lease revenue for properties
owned during Fiscal 2000 and 1999 reflect the loss of $700,000 in rental income
from several tenants at two rental properties who filed for bankruptcy
protection and vacated the premises. The Company subsequently signed leases with
new tenants to re-lease the vacant spaces.
The Company's core properties, consisting of 1.7 million square feet of GLA,
were 97% leased at October 31, 2000, an increase of 1% from the end of the last
fiscal year. During Fiscal 2000, the Company leased or renewed 353,000 square
feet of GLA compared to 293,000 square feet of GLA in the comparable period a
year ago.
Expenses
Total expenses amounted to $23,281,000 in Fiscal 2000 compared to $21,596,000
last year. The largest expense category is property expenses of the real estate
operating properties. The increases in property expenses in Fiscal 2000 result
principally from the additional property expenses for properties acquired during
Fiscal 1999, which increased property expenses by $669,000.
16
Property expenses for all other properties increased by 3.3% from higher repair
and maintenance expenses and real estate taxes at certain of the Company's core
properties.
Interest expense increased as a result of a full year's interest expense on
incremental borrowings of $18.3 million in fiscal 1999.
Depreciation and amortization expense increased principally from the write off
of unamortized tenant improvement costs and other allowances for tenants that
vacated during the year.
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. 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
properties 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.
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.
17
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to interest rate risk primarily through its borrowing
activities. There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Company's future financing requirements.
As of October 31, 2000 and 1999, the Company had approximately $11.9
million and $12.9 million respectively of variable rate debt outstanding under
its secured line of credit agreement. During fiscal 2000 and 1999, variable
rate indebtedness had a weighted average interest rate of 7.8% and 6.8%,
respectively. Had the weighted average interest rate been 100 basis points
higher, the Company's net income would have been lower by $119,000 and
$129,000 in fiscal 2000 and 1999, respectively. The interest rate risk of
such debt can be mitigated by electing a fixed rate interest option at any
time prior to the last year of the agreement.
The Company has not, and does not plan to, enter into any
derivative financial instruments for trading or speculative purposes. As of
October 31, 2000 the Company does not believe it has any other material
exposure to market risk.
Item 8. 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 14 of this Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
No information is required to be reported under this Item.
18
PART III
Item 10. 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 14, 2001. 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 72 Chairman and Chief Executive Officer (since September 1989)
Willing L. Biddle 39 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
(April 1993 to June, 1995); Vice President - Asset Management (April 1993 to
June 1994); Vice President, Levites Realty Management Corp. (1989 to 1993)
James R. Moore 52 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
Raymond P. Argila 52 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 11. 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 14,
2001. 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 12. 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 14,
2001. 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.
20
Item 13. 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 14,
2001. 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 14. 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 25 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 25. All other financial
statement schedules are inapplicable.
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,
2000.
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, 1998).
21
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).(1)
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).(1)
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).
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). (1)
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). (1)
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). (1)
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). (1)
22
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). (1)
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). (1)
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). (1)
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). (1)
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)). (1)
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). (1)
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, 1998). (1)
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).
23
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 (incorporated by reference to Exhibit 10.15 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1999).
10.16 Amendment to Shareholder Rights Agreement dated as of
September 22, 1999 between the Company and the Rights Agent
(incorporated by reference to Exhibit 10.18 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1999).
10.17 Waiver and Amendment of Registration Rights Agreement dated as
of December 6, 1999 by and among the Company and the Initial
Purchasers.
10.18 Amended and Restated Restricted Stock Award Plan effective
December 9, 1999 as approved by the Registrant's stockholders
on March 15, 2000.
10.19 Amended and Restated Stock Option Plan adopted June 28, 2000.
10.20 Promissory Note and Stock Pledge Agreement dated January 5,
2001 by Willing L. Biddle in favor of the Registrant.(1)
(1) 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).
(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, 2000)
(23) Consents of Experts and Counsel.
-------------------------------
23.1 The consent of Arthur Andersen LLP to the incorporation by
reference of its 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, Form S-8 (No. 333-61767 and Form S-8
(No. 33-41408) is filed herewith as part of this report.
(27) Financial Data Schedule.
-----------------------
27.1 Financial Data Schedule
24
URSTADT BIDDLE PROPERTIES INC.
Item 14a. INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page
Consolidated Balance Sheets at October 31, 2000 and 1999 26
Consolidated Statements of Income for each of the
three years ended October 31, 2000 27
Consolidated Statements of Cash Flows for each of the
three years ended October 31, 2000 28
Consolidated Statements of Stockholders' Equity
for each of the three years ended October 31, 2000 29
Notes to Consolidated Financial Statements 30-40
Report of Independent Public Accountants 41
Schedule.
- --------
The following consolidated financial statement schedules of Urstadt Biddle
Properties Inc. are included in Item 14(d):
III Real Estate and Accumulated Depreciation - October 31, 2000 42
IV Mortgage Loans on Real Estate - October 31, 2000 44
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.
25
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 31
----------- ----------
ASSETS 2000 1999
- ---- ----
Real Estate Investments:
Properties owned-- at cost, net of accumulated depreciation $146,851 $144,522
Properties available for sale - at cost, net of accumulated
depreciation and recoveries 12,158 16,966
Investment in unconsolidated joint venture 9,167 9,889
Mortgage notes receivable 2,379 2,500
----- -----
170,555 173,877
Cash and cash equivalents 1,952 2,758
Interest and rent receivable 3,853 3,370
Deferred charges, net of accumulated amortization 2,824 2,418
Other assets 1,916 1,351
----- -----
$181,100 $183,774
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank loans $ - $ 2,000
Mortgage notes payable 51,903 51,263
Accounts payable and accrued expenses 1,222 1,907
Deferred officers' compensation 102 155
Other liabilities 2,090 1,810
----- -----
55,317 57,135
------ ------
Minority Interest 5,140 5,140
----- -----
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 2000 and 1999 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;
5,557,387 and 5,531,845 issued and outstanding shares in 2000 and 1999, respectively 55 55
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
5,356,249 and 5,184,039 issued and outstanding shares in 2000 and 1999 respectively 54 52
Additional paid in capital 122,448 120,964
Cumulative distributions in excess of net income (33,397) (31,127)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (1,979) (1,907)
------- -------
87,181 88,037
------ ------
$181,100 $183,774
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
26
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended October 31,
---------------- --------------- -----------------
2000 1999 1998
---- ---- ----
Revenues:
Operating leases $30,242 $28,666 $23,772
Financing leases 97 232 353
Interest and other 670 532 1,260
Equity income of unconsolidated joint venture 245 384 210
--- --- ---
31,254 29,814 25,595
------ ------ ------
Operating Expenses:
Property expenses 10,413 9,460 7,696
Interest 4,245 3,913 2,522
Depreciation and amortization 6,307 5,896 4,747
General and administrative expenses 2,152 2,150 2,077
Directors' fees and expenses 164 177 210
--- --- ---
23,281 21,596 17,252
------ ------ ------
Operating Income before Minority Interests 7,973 8,218 8,343
Minority Interests in Results of Consolidated Joint Ventures (451) (392) (167)
----- ----- -----
Operating Income 7,522 7,826 8,176
Gains on Sales of Real Estate Investments 1,067 1,364 -
----- ----- ---
Net Income 8,589 9,190 8,176
Preferred Stock Dividends (3,147) (3,147) (2,561)
------- ------- -------
Net Income Applicable to Common and Class A Common Stockholders
$5,442 $6,043 $5,615
====== ====== ======
Basic Earnings per Share:
Common $.50 $.55 $.52
==== ==== ====
Class A Common $.55 $.62 $.57
==== ==== ====
Weighted Average Number of Shares Outstanding:
Common 5,351 5,236 5,125
===== ===== =====
Class A Common 5,059 5,101 5,121
===== ===== =====
Diluted Earnings Per Share:
Common $.49 $.54 $.52
==== ==== ====
Class A Common $.55 $.61 $.57
==== ==== ====
Weighted Average Number of Shares Outstanding:
Common and Common Equivalent 5,433 5,317 5,283
===== ===== =====
Class A Common and Class A Common Equivalent 5,532 5,545 5,279
===== ===== =====
The accompanying notes to consolidated financial statements are an
integral part of these statements.
27
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended October 31,
---------------- ---------------- ----------------
2000 1999 1998
---- ---- ----
Operating Activities:
Net income $8,589 $9,190 $8,176
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 6,307 5,896 4,747
Compensation recognized relating to restricted stock 630 488 331
Recovery of investment in properties owned
subject to financing leases 1,214 1,249 1,115
Equity in income of unconsolidated joint venture (245) (384) (210)
Gains on sales of real estate investments (1,067) (1,364) --
(Increase) decrease in interest and rent receivable (481) (925) 204
(Decrease) increase in accounts payable and accrued expenses (684) 780 (380)
(Increase) in other assets and other liabilities, net (371) (507) (82)
----- ----- ----
Net Cash Provided by Operating Activities 13,892 14,423 13,901
------ ------ ------
Investing Activities:
Acquisitions of properties (1,627) (9,717) (29,592)
Improvements to properties and deferred charges (6,642) (3,985) (2,196)
Net proceeds from sales of properties 3,921 2,765 --
Investment in unconsolidated joint venture (535) (635) (340)
Distributions received from unconsolidated joint venture 1,500 600 --
Payments received on mortgage notes receivable 121 107 998
Miscellaneous -- 309 --
------- -------- --------
Net Cash (Used in) Investing Activities (3,262) (10,556) (31,130)
------- -------- --------
Financing Activities:
Proceeds from sale of preferred stock -- -- 33,462
Proceeds from mortgage notes payable and bank loans 6,500 19,000 33,028
Payments on mortgage notes payable and bank loans (7,861) (15,039) (37,815)
Dividends paid - Common and Class A Common shares (7,712) (7,471) (6,784)
Dividends paid - Preferred Stock (3,147) (3,147) (2,561)
Sales of additional Common and Class A Common shares 2,713 2,232 351
Purchases of Common and Class A Common shares (1,929) (584) (474)
------- ----- -----
Net Cash (Used in) Provided by Financing Activities (11,436) (5,009) 19,207
-------- ------- ------
Net (Decrease) Increase In Cash and Cash Equivalents (806) (1,142) 1,978
Cash and Cash Equivalents at Beginning of Year 2,758 3,900 1,922
----- ----- -----
Cash and Cash Equivalents at End of Year $1,952 $2,758 $3,900
====== ====== ======
The accompanying notes to consolidated financial statements are an
integral part of these statements.
28
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 DistributionsCompensation
Number of Par Number of Par Paid In In Excess of and Notes
Shares Value Shares Value Capital Net Income) Receivable Total
---------- ----- ---------- ----- --------- ---------- ---------- -----
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 ($1.13 per share) - - - - - (5,848) - (5,848)
Class A Common Stock ($.19
per share) - - - - - (936) - (936)
Sale of additional shares
under dividend reinvestment plan 14,983 - 4,359 - 270 - - 270
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
Net Income Applicable to Common
and Class A Common Stockholders - - - - - 5,442 - 5,442
Cash dividends paid :
Common Stock ($.70 per share) - - - - - (3,748) - (3,748)
Class A Common Stock ($.78
per share) - - - - - (3,964) - (3,964)
Sale of additional shares 64,400 - 256,400 3 2,406 - - 2,409
Sale of additional shares under
dividend reinvestment plan 21,367 - 22,035 - 304 - - 304
Shares issued under restricted
stock plan 48,375 1 48,375 1 700 - (702) -
Amortization of restricted stock
compensation - - - - - - 630 630
Purchases of shares (108,600) (1) (154,600) (2) (1,926) - - (1,929)
--------- --- --------- --- ------- ---------- ------- -------
Balances - October 31, 2000 5,557,387 $55 5,356,249 $54 $122,448 $(33,397) $(1,979) $87,181
========= === ========= === ======== ========= ======== =======
The accompanying notes to consolidated financial statements are an integral part
of these statements.
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Urstadt Biddle Properties Inc., (Company), 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. At October 31, 2000, the Company owned or had interests in 25
properties. The Company was organized in 1969 as a Massachusetts business trust
(Trust) and, in 1997, pursuant to a plan of reorganization, reorganized from a
Massachusetts business trust to a Maryland corporation. 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.
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 2000 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, 2000, 1999 and 1998 was approximately $11,936,000,
$8,600,000 and $9,800,000 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 40 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.
30
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):
2000 1999 1998
---- ---- ----
Numerator
Net income applicable to Common Stockholders - basic $2,650 $2,893 $2,674
Effect of dilutive securities:
Operating partnership units 28 - 80
------ ------ ------
Net income applicable to Common Stockholders - diluted $2,678 $2,893 $2,754
====== ====== ======
Denominator
Denominator for basic EPS-weighted average Common shares 5,351 5,236 5,125
Effect of dilutive securities:
Stock options and awards 82 81 103
Operating partnership units --- --- 55
----- ----- -----
Denominator for diluted EPS - weighted average Common
equivalent shares 5,433 5,317 5,283
===== ===== =====
31
Numerator
Net income applicable to Class A Common Stockholders-basic $2,792 $3,150 $2,941
Effect of dilutive securities
Operating partnership units 246 218 87
------ ------ ------
Net income applicable to Class A Common Stockholders - diluted $3,038 $3,368 $3,028
====== ====== ======
Denominator
Denominator for basic EPS - weighted average Class A Common shares 5,059 5,101 5,121
Effect of dilutive securities:
Stock options and awards 90 104 103
Operating partnership units 383 340 55
----- ----- -----
Denominator for diluted EPS - weighted average Class Common equivalent shares 5,532 5,545 5,279
===== ===== =====
The weighted average Common equivalent shares and Class A Common equivalent
shares for the year ended October 31, 2000 and 1999 each exclude 54,553 shares.
These shares were not included in the calculation of diluted EPS because the
effect would be anti-dilutive.
New Accounting Standard
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which generally
requires that all derivative instruments be reflected in the financial
statements at their estimated fair value. The Company does not generally enter
into derivative contracts for either investment or hedging purposes. The Company
expects to adopt the provisions of this Statement No. 133 in the first quarter
of its fiscal 2001, and is reviewing its long term contracts to determine if any
terms may be deemed to be embedded derivatives requiring such valuation.
(2) REAL ESTATE INVESTMENTS
The Company's investments in real estate were composed of the following at
October 31, 2000 and 1999 (in thousands):
Properties Investment in Mortgage
Properties Available for Unconsolidated Notes 2000 1999
Owned Sale Joint Venture Receivable Totals Totals
- ------------------------ ------------ --------------- ---------------- ------------ ------------ -----------
Retail $130,039 $2,090 $9,167 $2,379 $143,675 $145,653
Office/Mixed Use 16,508 6,725 - - 23,233 22,788
Industrial - 2,543 - - 2,543 4,332
Undeveloped Land 304 800 - - 1,104 1,104
-------- ------- ------- ------ -------- --------
$146,851 $12,158 $9,167 $2,379 $170,555 $173,877
======== ======= ====== ====== ======== ========
The Company's investments at October 31, 2000, consisted of equity interests in
25 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, 2000 and 1999 (in thousands):
2000 1999
- -------------------------------------------------------------------- ------------------- ------------------
Northeast $148,461 $145,886
Southeast 9,368 12,777
Midwest 8,782 9,743
Southwest 3,944 5,471
-------- --------
$170,555 $173,877
======== ========
(3) PROPERTIES OWNED
The components of properties owned were as follows (in thousands):
2000 1999
- ---------------------------------------------------------- ----------------------------- -----------------
Land $29,592 $29,104
Buildings and improvements 144,644 138,152
------- -------
174,236 167,256
Accumulated depreciation (27,385) (22,734)
-------- --------
$146,851 $144,522
======== ========
32
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: 2001 - $19,648,000; 2002 - $18,422,000; 2003 - $17,054,000; 2004 -
$15,404,000; 2005 - $13,884,000 and thereafter - $67,083,000.
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 $148,000, $165,000, and
$422,000, in 2000, 1999, and 1998 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 a fixed number of shares 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. 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 interest in the Arcadian Shopping Center and the assumption
of the first mortgage by the partnership represent noncash investing and
financing activities and therefore are not included in the accompanying 1999
Consolidated Statement of Cash Flows.
In fiscal 2000, the Company purchased an office property in Greenwich,
Connecticut for $1.65 million.
In fiscal 1999, the Company acquired interests in 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 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, 2000 and 1999, properties available for sale consisted of the
following (in thousands):
2000 1999
- ---------------------------------------------------------- -------------------------- ----------------------
Properties available for sale subject to:
Operating leases $9,615 $13,210
Direct financing leases 2,543 3,756
----- -----
$12,158 $16,966
======= =======
33
Operating Leases
The components of properties available for sale subject to operating leases
were as follows (in thousands):
2000 1999
- --------------------------------------------------------------- ---------------------- ---------------------
Land $2,292 $2,545
Buildings and improvements 15,706 18,666
------ ------
17,998 21,211
Accumulated depreciation (8,383) (8,001)
------- -------
$9,615 $13,210
======= =======
Minimum rental payments on non-cancelable operating leases become due as
follows: 2001 - $5,442,000, 2002 - $4,602,000; 2003 - $3,985,000; 2004 -
$4,100,000; 2005 - $4,288,000 and thereafter $7,009,000.
Direct Financing Leases
The components of properties available for sale subject to direct financing
leases were as follows (in thousands):
2000 1999
- -------------------------------------------------------------------- -------------------- --------------------
Total minimum lease payments to be received $ 442 $1,752
Assumed residual values of leased property 2,107 2,107
Unearned income (6) (103)
------ ------
Investment in property subject to direct financing leases $2,543 $3,756
====== ======
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.
The remaining minimum lease payments receivable on direct financing leases are
due in 2001.
Sales of Properties
In fiscal 2000, the Company sold two of its non-core properties and realized net
gains on the sales of the properties of $1,067,000.
In fiscal 1999, the Company sold one of its non-core properties 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, accordingly, reduced
its investment in unconsolidated joint venture and stockholders' equity in an
amount equal to the fair value of the shares repurchased. 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.
34
(6) MORTGAGE NOTES RECEIVABLE
Mortgage notes receivable consist of fixed rate mortgages. The components of the
mortgage notes receivable at October 31, 2000 and 1999 were as follows (in
thousands):
2000 1999
- -------------------------------------------------------------------------------------- ----------- -----------
Remaining principal balance $2,897 $3,059
Unamortized discounts to reflect market interest rates
at time of acceptance of notes (518) (559)
----- -----
$2,379 $2,500
At October 31, 2000, principal payments on mortgage notes receivable become due
as follows: 2001 - $111,000; 2002 - $100,000; 2003 - $109,000; 2004 - $119,000;
2005 - $130,000 thereafter - $2,328,000.
At October 31, 2000, the remaining principal balance consists of mortgage notes
from two borrowers. The amount due from the largest individual borrower was
$1,915,000. The contractual interest rate on mortgage notes receivable is 9%.
(7) MORTGAGE NOTES PAYABLE AND LINES OF CREDIT
At October 31, 2000, the Company has seven nonrecourse mortgage notes payable
totaling $40,034,000 ($38,394,000 at October 31, 1999) due in installments over
various terms extending to the year 2010 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 $60.7 million as of
October 31, 2000.
Scheduled principal payments during the next five years and thereafter are as
follows: 2001 - $6,836,000; 2002 - $2,481,000; 2003 - $673,000; 2004 - $727,000;
2005 - $783,000 and thereafter - $28,534,000.
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, 2000, the Company had outstanding borrowings of $11,869,000
($12,869,000 at October 31, 1999). Outstanding borrowings are included in
mortgage notes payable in the accompanying consolidated balance sheets.
The Company also has a $10 million unsecured line of credit arrangement with a
bank (which was increased to $15 million in December, 2000). The line of credit
expires in fiscal 2002 and is available, among other things, to acquire real
estate, refinance indebtness and for working capital needs. Extensions of credit
under the arrangement are at the bank's discretion and subject to the bank's
satisfaction of certain conditions. Outstanding borrowings bear interest at the
prime rate plus 1/2% or LIBOR plus 2 1/2%. The Company pays an annual fee of
1/4% on unused amounts. There were no borrowings outstanding under this line of
credit.
Interest paid for the years ended October 31, 2000, 1999, and 1998 was
$4,245,000, $4,038,000, and $2,397,000 respectively.
(8) PREFERRED STOCK
In fiscal 1998 the Company sold 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.
35
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 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.
(9) STOCKHOLDERS' EQUITY
In fiscal 1998, the Board of Directors declared and paid 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. 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 Company has a shareholders rights plan, which expires on November 12, 2008.
The rights 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, as amended,
allows for restricted stock awards of up to 350,000 shares of Common Stock or
Class A Common Stock. During 2000, the Company awarded 48,375 Common shares
(46,500 Common Shares in 1999) and 48,375 Class A Common Shares (46,500 Class A
shares in 1999) to participants 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, 2000, 1999 and 1998, $630,000, $488,000, and $331,000 respectively,
was charged to expense.
The Company's Board of Directors has authorized a program to purchase up to a
total of one million shares of the Company's Common Stock and Class A Common
Stock. As of October 31, 2000, the Company purchased and retired 223,600 Common
shares and 211,300 Class A Common shares under this program.
36
(10) STOCK OPTION PLAN
The Company has a stock option plan under which 824,093 Common shares and
743,003 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.
A summary of stock option transactions during the periods covered by these
financial statements is as follows:
Year ended October 31 2000 1999 1998
- --------------------- ------------------------- ---------------------------- ----------------------
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 412,750 $7.04 410,750 $7.09 416,562 $6.98
Granted 593,000 $6.81 6,000 $7.69 7,000 $9.03
Exercised --- --- --- --- (5,874) $6.93
Canceled (301,500) $6.91 (4,000) $12.70 (6,938) $8.86
--------- ------- ---------
Balance at end of period 704,250 $6.91 412,750 $7.04 410,750 $7.09
Exercisable 111,250 387,062 347,375
Class A Common Stock:
Balance at beginning of period 412,750 $7.10 410,750 $7.09 416,562 $6.98
Granted --- --- 6,000 $8.18 7,000 $9.03
Exercised --- --- --- --- (5,874) $6.97
Canceled (301,500) $6.96 (4,000) $12.79 (6,938) $8.92
--------- ------- ---------
Balance at end of period 111,250 $7.48 412,750 $7.10 410,750 $7.09
Exercisable 111,250 387,062 347,375
Weighted average fair value of
options granted during the year
- Common Stock $0.18 $0.55 $1.16
- Class A Common Stock $0.12 $0.59 $1.16
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. In July 2000, an officer of the Company was awarded stock
options, to purchase 593,000 shares of Common stock, Class A Common Stock or a
combination of both classes of Common Stock as shall total the number of shares
subject to the options.
At October 31, 2000, exercise prices of Common Shares and Class A Common Shares
under option ranged from $6.29 to $9.03, for the Common Shares and $6.33 to
$9.09, for the Class A Common Shares. Option expiration dates range for both
classes of stock from November 2003 through July 2010 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, 2000, 1999 and 1998:
Year ended October 31,
----------------------
2000 1999 1998
---- ---- ----
Risk-free interest rate 6.17% 5.65% 5.88%
Expected dividend yields 9.8%-10.9% 9.1% 7.1%
Expected volatility 15.1% 23.6% 24.3%
Weighted average option life 10 Years 10 Years 10 Years
37
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
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, 2000, 1999
and 1998 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, 2000, 1999 and 1998 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. In fiscal 2000, the
promissory notes were amended to extend the term of the notes to 10 years from
the date of the original note and to fix the interest rate at 2% over a U.S.
treasury note rate. The notes are collateralized by the stock issued upon
exercise of the stock options. Interest is payable quarterly and the principal
is due in 2007. 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, 2000 and 1999, the estimated aggregate fair value
of the mortgage notes receivable was $2,586,000 and $2,703,000 respectively.
Mortgage notes payable with aggregate carrying values of $40,034,000 and
$38,391,000 have estimated aggregate fair values of $41,301,000 and $38,407,000
at October 31, 2000 and 1999 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.
38
(12) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited quarterly results of operations for the years ended October 31,
2000 and 1999 are as follows (in thousands, except per share data):
Year Ended October 31, 2000 Year Ended October 31, 1999
--------------------------- ---------------------------
Quarter Ended Quarter Ended
------------- -------------
Jan 31 Apr 30 July 31 Oct 31 Jan 31 Apr 30 July 31 Oct 31
------ ------ ------- ------ ------ ------ ------- ------
Revenues $7,812 $7,865 $7,606 $7,971 $6,933 $7,651 $7,266 $7,964
====== ====== ====== ====== ====== ====== ====== ======
Net Income (1) $1,787 $3,067 $1,811 $1,924 $1,747 $2,036 $1,809 $3,598
Preferred Stock Dividends 786 787 787 787 786 787 787 787
--- --- --- --- --- --- --- ---
Net Income Applicable to
Common and Class A
Common Stockholders $1,001 $2,280 $1,024 $1,137 $961 $1,249 $1,022 $2,811
====== ====== ====== ====== ==== ====== ====== ======
Basic Earnings per Share:
Common $.09 $.21 $.09 $.11 $.09 $.12 $.09 $.25
Class A Common $.10 $.23 $.10 $.12 $.10 $.12 $.11 $.29
Diluted Earnings per Share:
Common $.09 $.20 $.09 $.11 $.09 $.12 $.09 $.24
Class A Common $.10 $.23 $.10 $.12 $.10 $.12 $.11 $.28
(1) Quarters ended April 30, 2000 and October 31, 1999 include gains on sales of
real estate investments of $1,067,000 and $1,364,000 respectively.
(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,
2000, 1999 and 1998. 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
2000
Total Revenues $ 30,664 $ 376 $ 214 $ 31,254
========= ======= ======= =========
Net Operating Income $ 19,800 $ 376 $ 214 $ 20,390
========= ======= ======= =========
Total Assets $ 176,769 $ 2,379 $ 1,952 $ 181,100
========= ======= ======= =========
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
========== ======== ======== =========
39
The reconciliation to net income for the combined reportable segments and for
the Company is as follows:
Year Ended October 31, 2000 1999 1998
---- ---- ----
Net Operating Income from Reportable Segments $20,390 $19,962 $ 17,732
------- -------- --------
Addition:
Gains on sales of real estate investments 1,067 1,364 -
----- ------ -----
Deductions:
Interest expense 4,245 3,913 2,522
Depreciation and amortization 6,307 5,896 4,747
General, administrative and
other expenses 2,316 2,327 2,287
------ ------- -----
Total Deductions 12,868 12,136 9,556
------ ------- -----
Net Income 8,589 9,190 8,176
Preferred stock dividends (3,147) (3,147) (2,561)
------- ------- -------
Net Income Applicable to
Common and Class A Common Stockholders $5,442 $ 6,043 $ 5,615
====== ======== =======
(14) SUBSEQUENT EVENTS
In November 2000, the Company entered into a contract to purchase an office
building property in Greenwich, Connecticut at a purchase price of $2,375,000.
On January 5, 2001, the Company sold 200,000 shares of Common stock and 5,000
shares of Class A Common stock for aggregate proceeds of approximately $1.5
million in a private placement issue to two entities controlled by an officer of
the Company.
40
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, 2000 and
1999, and the related consolidated statements of income, cash flows and
stockholders' equity for each of the three years in the period ended October 31,
2000. 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 auditing standards generally accepted
in the United States. 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, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 2000 in conformity with accounting principles generally accepted in
the United States.
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 13, 2000, except as
to Note (14) which date is January 5, 2001
41
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2000
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
- -------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D
- -------------------------------------------------------------------------------------------------------
Initial Cost to Company Cost Capitalized
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 0 488 1,139 0 0 488
Greenwich, CT 0 570 2,359 0 180 570
Southfield, MI 0 1,000 10,280 0 2,079 1,000
-------- -------- -------- -------- --------
2,368 15,017 0 2,387 2,368
-------- -------- -------- -------- --------
Shopping Centers:
Springfield, MA 0 1,372 3,656 0 15,469 1,372
Farmingdale, NY 1,975 1,027 4,174 0 283 1,027
Somers, NY 1,893 821 2,600 0 2 821
Somers, NY 6,411 1,834 7,383 0 15 1,834
Briarcliff, NY 6,038 2,300 9,708 0 1,165 2,300
Wayne, NJ * 2,492 9,966 0 478 2,492
Eastchester, NY 4,780 1,500 6,128 0 1 1,500
Meriden, CT 0 5,000 20,309 0 2,185 5,000
Danbury, CT * 3,850 15,811 0 1,843 3,850
Tempe, AZ 0 114 766 0 0 114
Carmel, NY 0 1,763 5,973 0 1,844 1,763
Ridgefield, CT 0 900 3,793 0 626 900
Darien, CT 14,688 4,260 17,192 0 584 4,260
-------- -------- -------- -------- -------- -------
35,786 27,233 107,459 0 24,495 27,233
-------- -------- -------- -------- -------- -------
Department Stores:
Tempe, AZ 0 378 1,518 0 1,062 378
-------- -------- -------- -------- ------- --------
0 378 1,518 0 1,062 378
-------- -------- -------- -------- -------- --------
Mixed Use Facility: Retail/Office:
Briarcliff, NY 0 380 1,531 0 343 380
Newington, NH 4,249 421 1,997 0 4,540 421
-------- -------- -------- -------- -------- --------
4,249 801 3,528 0 4,883 801
-------- -------- -------- -------- -------- --------
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
-------- -------- -------- -------- -------- --------
$ 40,034 $ 31,884 $127,522 $ 0 $ 32,827 $ 31,884
======== ======== ======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------
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 Contructed income statement is
Location Improvements TOTAL (Note (b)) Acquired computed (Note (d))
- -------------------------------------------------------------------------------------------------------
Real Estate Subject to Operating Leases (Note (a)):
Greenwich, CT $ 901 $ 1,100 $ 142 1993 31.5
Greenwich, CT 466 $ 577 173 1994 31.5
Greenwich, CT 1,139 1,627 2 2000 31.5
Greenwich, CT 2,539 $ 3,109 164 1998 31.5
Southfield, MI 12,359 $ 13,359 6,634 1983 35.0
-------- -------- --------
17,404 19,772 7,115
-------- -------- --------
Shopping Centers:
Springfield, MA 19,125 $ 20,497 8,122 1970 40.0
Farmingdale, NY 4,457 $ 5,484 1,141 1993 31.5
Somers, NY 2,602 $ 3,423 565 1992 31.5
Somers, NY 7,398 $ 9,232 274 1999 31.5
Briarcliff, NY 10,873 $ 13,173 516 1998 40.0
Wayne, NJ 10,444 $ 12,936 2,201 1992 31.0
Eastchester, NY 6,129 $ 7,629 460 1997 31.0
Meriden, CT 22,494 $ 27,494 4,590 1993 31.5
Danbury, CT 17,654 $ 21,504 3,088 1994 31.5
Tempe, AZ 766 $ 880 1,749 1996 40.0
Carmel, NY 7,817 $ 9,580 958 1995 31.5
Ridgefield, CT 4,419 $ 5,319 368 1998 40.0
Darien, CT 17,776 $ 22,036 1,034 1998 40.0
-------- -------- --------
131,954 159,187 25,066
-------- -------- --------
Department Stores:
Tempe, AZ 2,580 $ 2,958 0 1970 40.0
-------- -------- --------
2,580 2,958 0
-------- -------- --------
Mixed Use Facility: Retail/Office:
Briarcliff, NY 1,874 $ 2,254 69 1999 40.0
Newington, NH 6,537 $ 6,958 3,519 1979 40.0
-------- -------- --------
8,411 9,212 3,587
-------- -------- --------
Land:
Newington, NH 0 $ 305 0 1981
Denver, CO 0 $ 799 0 1988
-------- -------- --------
0 1,104 0
-------- -------- --------
$160,349 $192,233 $35,768
======== ======== ========
* Properties are used to secure a secured revolving credit line in the amount
of $11,869
42
URSTADT BIDDLE PROPERTIES, INC.
OCTOBER 31 2000
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F COL. G/H
- ------------------------------------------------------------------------------------------------------------------------------------
........................................ .........................
Remaining Net Investment
Minimum in Properties Date
Description and Building & Carrying Building & Lease Residual Unearned Subject to Constructed
Location Encumbrances Land Improvements Costs Improvements 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 $0 $523 $2,253 $0 $2,363 $94 $1,166 ($2) $1,258 1970
Dallas, TX 0 193 2,266 0 4,195 841 841 1970
Deferred Lease
Renewal Rights 0 0 0 0 0 244 0 0 244 1981
- - - - - ---- -- -- ----
0 716 4,519 0 6,558 338 2,007 (2) 2,343
- --- ----- - ----- ---- ------ --- -----
Industrial Distribution Center:
(Leased to Firestone Tire and Rubber Company)
Albany, GA 0 835 3,343 0 0 104 100 (4) 200 1972
- --- ----- - - ---- ---- --- ----
0 835 3,343 0 0 104 100 (4) 200
- --- ----- - - ---- ---- --- ---
TOTAL REAL ESTATE
SUBJECT TO FINANCING
LEASES (Note (c)) 0 $1,551 $7,862 0 $6,558 $442 $2,107 ($6) $2,543
= ====== ====== = ====== ===== ======= ==== ======
43
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31, 2000
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(In thousands)
- ---------------------------------------------------------------------- ------------ ------------ ------------
NOTES: 2000 1999 1998
---- ---- ----
(a) RECONCILIATION OF REAL ESTATE
OWNED SUBJECT TO OPERATING LEASES
Balance at beginning of year $188,467 $166,083 $134,336
Property improvements during the year 5,568 2,726 2,155
Property acquired during the year 1,627 23,134 29,592
Property sold during the year (3,213) (3,060) ---
Property assets fully written off (216) (416) ---
------- -------- -------
Balance at end of year 192,233 $188,467 $166,083
======= ======== ========
(b) RECONCILIATION OF ACCUMULATED DEPRECIATION
Balance at beginning of year $30,735 $27,763 $23,653
Provision during the year charged to income 5,638 5,070 4,110
Property sold during the year (358) (1,659) ---
Property assets fully written off (247) (439) ---
------- ------- -------
Balance at end of year $35,768 $30,735 $27,763
======= ======= =======
(c) RECONCILIATION OF REAL ESTATE OWNED SUBJECT TO FINANCING LEASES
Balance at beginning of year 3,756 $5,005 $6,133
Recovery of investment in properties owned subject to financing
leases and amortization of deferred renewal rights (1,213) (1,249) (1,128)
------- ------- -------
Balance at end of year $2,543 $3,756 $5,005
====== ====== ======
(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, 2000
is $205,754,000.
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2000
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
(In thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ------------------------------------------------------------------------------------------------------------------------------------
Remaining Face
Amount of Carrying 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 $982 $769
Retail Store:
Riverside, CA 9% 12% 15-Jan-13 Payable in quarterly installments of $54,313 $1,895 $1,590
------ ------
Total First Mortgage Loans $2,877 $2,359
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 $20 $20
--- ---
TOTAL MORTGAGE LOANS ON REAL ESTATE $2,897 $2,379
====== ======
44
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2000
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
2000 1999 1998
---- ---- ----
(a) Balance at beginning of period: $2,500 $2,607 $3,605
Deductions during current period:
Prepayment of Mortgage Loan 0 (893)
Collections of principal and amortization of discounts (121) (107) (105)
------ ------ ------
Balance at close of period: $2,379 $2,500 $2,607
====== ====== ======
(b) The aggregate cost basis for Federal income tax purposes is equal to the
face amount of the mortgages (c) At October 31, 2000 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.
45
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 29, 2001
46
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, 2001
- ------------------------------
Charles J. Urstadt
Chairman and Director
(Principal Executive Officer)
/S/ Willing L. Biddle January 25, 2001
- ---------------------------
Willing L. Biddle
President and Director
/S/ James R. Moore January 25, 2001
- --------------------------
James R. Moore
Executive Vice President - Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
/S/ E. Virgil Conway January 25, 2001
- ---------------------------
E. Virgil Conway
Director
/S/ Robert R. Douglass January 25, 2001
- --------------------------
Robert R. Douglass
Director
/S/ Peter Herrick January 25, 2001
- -------------------------------
Peter Herrick
Director
/S/ George H.C. Lawrence January 25,2001
- ------------------------
George H. C. Lawrence
Director
/S/ Charles D. Urstadt January 25, 2001
- -----------------------------
Charles D. Urstadt
Director
/S/ George J. Vojta January 25, 2001
- --------------------------------
George J. Vojta
Director
47
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated December 13, 2000 included in this Annual Report on Form 10-K for
the year ended October 31, 2000 of Urstadt Biddle Properties Inc. into its
previously filed Registration Statements on Forms S-3 (No.33-57119 and No.
333-64381), Form S-4 (No. 333-19113) and Forms S-8 (No.2-93146, No.333-61765,
No. 333-61767 and No. 33-41408), and to all references to our firm included in
or made a part of this registration statement.
ARTHUR ANDERSEN LLP
New York, New York
January 25, 2001