FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Quarter Ended January 31, 2001 Commission File Number 1-12803
---------------- -------
URSTADT BIDDLE PROPERTIES INC.
(Exact Name of Registrant as Specified in Charter)
MARYLAND 04-2458042
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
321 Railroad Avenue, Greenwich, CT 06830
- ----------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 863-8200
The number of shares of Registrant's Common Stock and Class A Common Stock
outstanding as of the close of period covered by this report were: 6,229,635
Common Shares, par value $.01 per share and 5,434,662 Class A Common Shares, par
value $.01 per share
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
THE SEC FORM 10-Q, FILED HEREWITH, CONTAINS 16 PAGES, NUMBERED CONSECUTIVELY
FROM 1 TO 16 INCLUSIVE, OF WHICH THIS PAGE IS 1.
1
INDEX
URSTADT BIDDLE PROPERTIES INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets--January 31, 2001 and October 31, 2000.
Consolidated Statements of Income--Three months ended January 31,
2001 and 2000,
Consolidated Statements of Cash Flows--Three months ended January
31, 2001 and 2000.
Consolidated Statements of Stockholders' Equity--Three months ended
January 31, 2001 and 2000.
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
2
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
January 31 October 31
---------------- -----------------
ASSETS 2001 2000
---- ----
Real Estate Investments:
Properties owned-- at cost, net of accumulated depreciation $149,189 $146,851
Properties available for sale - at cost, net of accumulated
depreciation and recoveries 11,770 12,158
Investment in unconsolidated joint venture 9,020 9,167
Mortgage notes receivable 2,346 2,379
----- -----
172,325 170,555
Cash and cash equivalents 2,462 1,952
Interest and rent receivable 4,388 3,853
Deferred charges, net of accumulated amortization 3,035 2,824
Other assets 2,302 1,916
----- -----
$184,512 $181,100
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank loans $ 3,000 $ -
Mortgage notes payable 51,714 51,903
Accounts payable and accrued expenses 1,189 1,222
Deferred officers' compensation 177 102
Other liabilities 1,924 2,090
----- -----
58,004 55,317
------ ------
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 2001 and 2000 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;
6,229,635 and 5,557,387 issued and outstanding shares in 2001 and 2000, respectively 62 55
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
5,434,662 and 5,356,249 issued and outstanding shares in 2001 and 2000 respectively 54 54
Additional paid in capital 127,650 122,448
Cumulative distributions in excess of net income (34,367) (33,397)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (5,493) (1,979)
------- --------
87,906 87,181
------ ------
$184,512 $181,100
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
3
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended January 31,
---------------- ----------------
2001 2000
---- ----
Revenues:
Operating leases $8,128 $ 7,614
Financing leases 6 37
Interest and other 143 132
Equity income of unconsolidated joint venture 4 29
----- -----
8,281 7,812
----- -----
Operating Expenses:
Property expenses 2,812 2,463
Interest 1,060 1,115
Depreciation and amortization 1,628 1,510
General and administrative expenses 695 772
Directors' fees and expenses 41 52
----- -----
6,236 5,912
----- -----
Operating Income before Minority Interests 2,045 1,900
Minority Interests in Results of Consolidated Joint Ventures 113 113
--- ---
Net Income 1,932 1,787
Preferred Stock Dividends 786 786
--- ---
Net Income Applicable to Common and Class A Common Stockholders $1,146 $1,001
====== ======
Basic Earnings per Share:
Common $.10 $.09
==== ====
Class A Common $.11 $.10
==== ====
Weighted Average Number of Shares Outstanding:
Common 5,541 5,376
===== =====
Class A Common 5,172 5,035
===== =====
Diluted Earnings Per Share:
Common $.10 $.09
==== ====
Class A Common $.11 $.10
==== ====
Weighted Average Number of Shares Outstanding:
Common and Common Equivalent 5,639 5,472
===== =====
Class A Common and Class A Common Equivalent 5,639 5,522
===== =====
The accompanying notes to consolidated financial statements are an
integral part of these statements.
4
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended January 31,
2001 2000
---- ----
Operating Activities:
Net income $1,932 $1,787
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,628 1,510
Compensation recognized relating to restricted stock 175 141
Recovery of investment in properties owned
subject to financing leases 191 334
Equity in income of unconsolidated joint venture (4) (29)
(Increase) in interest and rent receivable (535) (337)
(Decrease) in accounts payable and accrued expenses (33) (265)
(Increase) in other assets and other liabilities, net (485) (105)
----- -----
Net Cash Provided by Operating Activities 2,869 3,036
----- -----
Investing Activities:
Improvements to properties and deferred charges (3,971) (284)
Distributions received from unconsolidated joint venture 250 700
Investment in unconsolidated joint venture (99) (146)
Payments received on mortgage notes receivable 32 29
-- --
Net Cash (Used in) Provided by Investing Activities (3,788) 299
------- ---
Financing Activities:
Proceeds from mortgage notes payable and bank loans 4,950 -
Sales of additional Common and Class A Common Shares 1,520 1,237
Dividends paid on Common and Class A Common Shares (2,116) (1,942)
Dividends paid on Preferred Stock (786) (786)
Purchases of Common and Class A Common Shares - (817)
Payments on mortgage notes payable (2,139) (167)
------- -----
Net Cash Provided by (Used in) Financing Activities 1,429 (2,475)
----- -------
Net Increase In Cash and Cash Equivalents 510 860
Cash and Cash Equivalents at Beginning of Period 1,952 2,758
----- -----
Cash and Cash Equivalents at End of Period $2,462 $3,618
====== ======
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
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 Distributions Compensation
Number of Par Number of Par Paid In In Excess of and Notes
Shares Value Shares Value Capital Net Income) Receivable Total
------ ----- ------ ----- ------- ----------- ---------- -----
Balance - October 31 1999 5,531,845 $55 5,184,039 $52 $120,964 $(31,127) $(1,907) $88,037
Net Income Applicable to Common
and Class A Common stockholders - - - - - 1,001 - 1,001
Cash dividends paid :
Common Stock ($.175 per share) - - - - - (946) - (946)
Class A Common Stock ($.195
per share) - - - - - (996) - (996)
Sale of additional shares 29,400 - 123,400 1 1,159 - - 1,160
Sale of additional shares
under dividend reinvestment plan 5,420 - 5,437 - 77 - - 77
Shares issued under restricted
stock plan 47,500 1 47,500 1 688 - (690) -
Amortization of restricted stock
compensation - - - - - - 141 141
Purchases of shares (37,500) (1) (71,500) (1) (816) - - (817)
--------- --- --------- --- -------- --------- -------- -------
Balances - January 31, 2000 5,576,665 $56 5,288,876 $53 $122,072 $(32,068) $(2,456) $87,657
========= === ========= === ======== ========= ======== =======
Balance - October 31 2000 5,557,387 $55 5,356,249 $54 $122,448 $(33,397) $(1,979) $87,181
Net Income Applicable to Common
and Class A Common stockholders - - - - - 1,146 - 1,146
Cash dividends paid :
Common Stock ($.18 per share) - - - - - (1,078) - (1,078)
Class A Common Stock ($.20
per share) - - - - - (1,038) - (1,038)
Sale of additional shares 200,000 2 5,000 - 1,433 - - 1,435
Sale of additional shares
under dividend reinvestment plan 5,248 - 6,413 - 85 - - 85
Shares issued under restricted
stock plan 48,000 - 48,000 - 686 - (686) -
Amortization of restricted stock
compensation - - - - - - 175 175
Shares issued upon exercise of
stock options 419,000 5 19,000 - 2,998 - - 3,003
Note from Officer for purchase of
Common shares under stock option - - - - - - (3,003) (3,003)
--------- --- --------- --- -------- --------- -------- -------
Balances - January 31, 2001 6,229,635 $62 5,434,662 $54 $127,650 $(34,367) $(5,493) $87,906
========= === ========= === ======== ========= ======== =======
The accompanying notes to consolidated financial
statements are an integral part of these statements.
6
URSTADT BIDDLE PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Business
Urstadt Biddle Properties Inc., (the "Company") is a Maryland corporation that
has qualified as a real estate investment trust (REIT) under the Internal
Revenue Code, as amended. A REIT, among other things, that distributes at least
95% of its real estate trust taxable income will not be taxed on that portion of
its taxable income which is distributed. The Company believes it qualifies and
intends to continue to qualify as a REIT. The Company 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 and other
retailers who sell basic necessities. As of January 31, 2001, the Company owned
25 properties containing a total of 3.2 million gross leasable square feet.
Basis of Presentation
The accompanying unaudited 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. All
significant intercompany transactions and balances have been eliminated. The
Company's investment in an unconsolidated joint venture in which it does not
exercise control is accounted for by the equity method of accounting. The
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Results of operations for the three-month period ended January 31, 2001 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 2001. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended October 31, 2000.
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 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.
7
The following table sets forth the reconciliation between basic and diluted EPS
(in thousands):
Three Months Ended
January
------------ ------------
2001 2000
---- ----
Numerator
Net income applicable to Common Stockholders - basic $563 $490
Effect of dilutive securities:
Operating partnership units 13 14
---- ----
Net income applicable to Common Stockholders - diluted $576 $504
==== ====
Denominator
Denominator for basic EPS-weighted average Common shares 5,541 5,376
Effect of dilutive securities:
Stock options and awards 98 96
----- -----
Denominator for diluted EPS - weighted average Common
equivalent shares 5,639 5,472
===== =====
Numerator
Net income applicable to Class A Common Stockholders-basic $583 $511
Effect of dilutive securities:
Operating partnership units 56 56
---- ----
Net income applicable to Class A Common Stockholders - diluted $639 $567
==== ====
Denominator
Denominator for basic EPS - weighted average Class A Common shares 5,172 5,035
Effect of dilutive securities:
Stock options and awards 84 104
Operating partnership units 383 383
----- -----
Denominator for diluted EPS - weighted average
Class A Common equivalent shares 5,639 5,522
===== =====
The weighted average Common equivalent shares and Class A Common equivalent
shares for the quarters ended January 31, 2001 and 2000 each exclude 54,553
shares. These shares were not included in the calculation of diluted EPS because
the effect would be anti-dilutive.
Derivative Instruments and Hedging Activities
The Company adopted the provisions of Financial Accounting Standards Board,
Statement # 133, "Accounting for Derivative Instruments and Hedging Activities"
in the first quarter of fiscal 2001. The statement 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 and accordingly there was no
effect on the Company's financial position or results of operations as a result
of the adoption of this statement.
Stockholders Equity
On January 5, 2001, the Company sold 200,000 shares of Common Stock and 5,000
shares of Class A Common Stock for total cash proceeds of $1.435 million in a
private placement with two entities controlled by an officer of the Company.
8
In January 2001, an officer of the Company exercised stock options previously
granted to him to purchase 419,000 shares of Common Stock and 19,000 shares of
Class A Common Stock. In this connection, pursuant to the provisions of the
Stock Options plan, the officer provided the Company with a promissory note in
the amount of $3,003,000. The promissory note is due in ten years and bears
interest at 6.92% per annum. Interest is payable quarterly. The note is
collateralized by the stock issued upon exercise of the stock option. The note
is shown in stockholders equity as notes receivable from officers/stockholders.
The exercise of the stock options and the issuance of the note receivable from
officer represent non cash financing activities and are therefore not included
in the accompanying 2001 Consolidated Statement of Cash Flows.
The Company has a Restricted Stock Plan (Plan) which provides for the grant of
restricted stock awards to key employees and directors of the Company. The Plan,
as amended, allows for restricted stock awards of up 350,000 shares each of
Class A Common stock and Common stock. During the three months ended January 31,
2001, the Company awarded 48,000 shares of Common stock and 48,000 shares of
Class A Common stock (47,500 shares of Common stock and 47,500 shares of Class A
Common stock in fiscal 2000) to participants in the Plan as an incentive for
future services. The shares vest after five years. Dividends on vested and
non-vested shares are paid as declared. The market value of shares awarded has
been recorded as unamortized restricted stock compensation and is shown as a
separate component of stockholders' equity. Unamortized restricted stock
compensation is being amortized to expense over the five year vesting period.
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 three month periods
ended January 31, 2001 and 2000. 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 Note1. (In
thousands)
Equity Mortgage Non
Quarter Ended January 31, Investments Loans Segment Total
----------- --------- ------- -----
2001
Total Revenues $ 8,153 $ 81 $ 47 $ 8,281
========== ======== ========= ==========
Net Operating Income $ 5,228 $ 81 $ 47 $ 5,356
========== ========= ======== ==========
Total Assets $ 180,892 $ 2,346 $ 1,274 $ 184,512
========== ========= ======== ==========
2000
Total Revenues $ 7,680 $ 85 $ 47 $ 7,812
=========== ========= ========= ==========
Net Operating Income $ 5,104 $ 85 $ 47 $ 5,236
=========== ======== ======== ==========
Total Assets $ 178,311 $ 2,471 $ 2,408 $ 183,190
=========== ======== ======== ==========
9
The reconciliation to net income for the combined reportable segments and for
the Company is as follows:
Quarter Ended January 31 2001 2000
---- ----
Net Operating Income from Reportable Segments $5,356 $5,236
------ ------
Deductions:
Interest expense 1,060 1,115
Depreciation and amortization 1,628 1,510
General, administrative and
other expenses 736 824
----- -----
Total Deductions 3,424 3,449
----- -----
Net Income 1,932 1,787
Preferred stock dividends (786) (786)
----- -----
Net Income Applicable to
Common and Class A Common Stockholders $1,146 $1,001
====== ======
Mortgage Notes Payable and Line of Credit
During the first quarter, the Company repaid a mortgage note payable in the
outstanding principal amount of $1,950,000 which was secured by the BiCounty
Shopping Center in Farmingdale, New York. The mortgage matured in January 2001.
The mortgage was repaid from proceeds advanced under the Company's outstanding
$20 million secured revolving credit loan. At January 31, 2001, the Company had
outstanding borrowings of $13.8 million under the secured revolving credit line.
The Company also has an unsecured line of credit arrangement with a bank which
was increased to $15 million from $10 million in December 2000. In January,
2001, the Company borrowed $3 million under the unsecured line of credit. The
line of credit expires in fiscal 2002 and outstanding borrowings bear interest
at LIBOR + 2.5%. Any further extensions of credit under the arrangement are at
the bank's discretion and subject to the bank's satisfaction of certain
conditions.
Commitments
In January 2001, Countryside Square Limited Partnership, an unconsolidated joint
venture in which the Company is the sole general partner, contracted to sell the
Countryside Square shopping center for $16.0 million. The transaction, which is
scheduled to close during the Company's second quarter in fiscal 2001 will
result in a gain to the Company.
The Company has also contracted for the purchase of an office building located
in Greenwich, Connecticut at a purchase price of $2,375,000. The transaction is
expected to close in the Company's second quarter in fiscal 2001.
10
Subsequent Events
On February 28, 2001, the Company sold its tire distribution facility comprising
476,000 square feet to the property's sole tenant for $100,000, an amount which
equals the property's net book carrying amount at January 31, 2001. The property
was sold pursuant to a purchase option contained in the tenant's lease on the
property.
The Company is the general partner in a consolidated joint venture that owns the
Arcadian Shopping Center in Briarcliff, New York. In a prior year, the limited
partners contributed the property in exchange for operating partnership units
(OPU's). The OPU's are exchangeable into an equivalent number of shares of the
Company's Class A Common Stock or cash, at the option of the Company after a
certain period of years or upon the occurrence of certain events. In February
2001, the Company redeemed 127,548 OPU's for approximately $1.1 million, an
amount equal to the stated Unit Price, as defined in the partnership agreement.
The limited partners interest in the partnership is reflected in the
accompanying consolidated financial statements as Minority Interest.
11
ITEM 2
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
sales of real estate investments and/or the issuance of additional equity
securities.
At January 31, 2001, the Company had cash and cash equivalents of $2.5 million
compared to $1.9 million at October 31 2000. The Company also has a $20 million
secured revolving credit facility with a bank which expires in fiscal 2005 and a
$15 million unsecured line of credit with a bank which expires in fiscal 2002.
The credit lines are available to finance the acquisition, management or
development of commercial real estate, refinance indebtness 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. In January 2001, the Company utilized proceeds from the secured
revolving credit line to repay a mortgage note payable in the outstanding amount
of $1.95 million which was due. At January 31, 2001, long-term debt consists of
mortgage notes payable totaling $37.9 million and borrowings of $13.8 million
outstanding under the secured revolving credit facility. The Company also
borrowed $3 million under the unsecured credit line during the first quarter of
fiscal 2001. Proceeds from the unsecured credit line were used to fund tenant
improvement costs.
During the first quarter of fiscal 2001, the Company completed the sale of
additional shares of Common Stock and Class A Common Stock in a private
placement issue with two entities controlled by an officer of the Company. The
Company realized $1.435 million in cash proceeds from the equity offering.
The Company is the general partner in a consolidated joint venture that owns the
Arcadian Shopping Center in Briarcliff, New York. In a prior year, the limited
partners contributed the property in exchange for operating partnership units
(OPU's). The OPU's are exchangeable into an equivalent number of shares of the
Company's Class A Common Stock or cash, at the option of the Company after a
certain period of years or upon the occurrence of certain events. In February
2001, pursuant to notice from the limited partners, the Company redeemed for
cash 127,548 OPU's for $1.1 million.
In a prior year, the Board of Directors expanded and refined the strategic
objectives of the Company to refocus its real estate portfolio into one of
self-managed retail properties located in the Northeast and authorized a plan to
sell the non-core properties of the Company in the normal course of business
over a period of several years. The non-core properties comprise all of the
Company's distribution and service facilities, and certain of its office and
retail properties and undeveloped land located outside of the Northeast region
of the United States. In February 2001, pursuant to the terms of its lease,
Firestone, Inc., a tenant at the property, exercised an option to purchase the
Company's tire distribution facility in Albany, Georgia at a price of $100,000.
12
Countryside Square Limited Partnership, an unconsolidated joint venture in which
the Company is the sole general partner, contracted to sell the Countryside
Square Shopping Center in Clearwater, Florida for proceeds of $16 million. The
sale is expected to close in the Company's second quarter of fiscal 2001 and
will result in a gain on the disposition of the Company's interest in the joint
venture.
The Company expects to make real estate investments periodically. As of January
31, 2001, the Company had contracted to purchase an office building in
Greenwich, Connecticut for $2,375,000, all cash. The Company also invests in its
existing properties and, during the first quarter of fiscal 2001, spent
approximately $4 million for capital improvement and leasing costs in connection
with the Company's lease obligations to complete tenant improvements and related
tenant allowances. The Company expects to spend an additional $3.4 million to
complete its leasing related capital costs in fiscal 2001.
Funds from Operations
The Company considers Funds From Operations (FFO) to be an appropriate
supplemental financial measure of an equity REIT's operating performance since
such measure does not recognize depreciation and amortization of real estate
assets as reductions of income from operations.
The National Association of Real Estate Investment Trusts (NAREIT) defines FFO
as net income (computed in accordance with generally accepted accounting
principles (GAAP)) plus depreciation and amortization excluding gains (or
losses) from sales of property 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
of its dividend paying capacity. Furthermore, FFO as disclosed by other REITs
may not be comparable to the Company's calculation of FFO. The table below
provides a reconciliation of net income in accordance with GAAP to FFO as
calculated under the current NAREIT guidelines for the three month periods ended
January 31, 2001 and 2000 (amounts in thousands):
Three months ended January 31
-----------------------------
2001 2000
---- ----
Net Income Applicable to Common and Class A Common Stockholders $1,146 $1,001
Plus: Real property depreciation, amortization of tenant improvements and
of lease acquisition costs and recoveries of investments
in properties subject to finance leases 1,714 1,717
Adjustments for unconsolidated joint venture 168 188
--- ---
Funds from Operations $3,028 $2,906
====== ======
13
RESULTS OF OPERATIONS
Revenues
Revenues from operating leases increased 6.8% in the first quarter of fiscal
2001 from the comparable period in fiscal 2000. The increase in operating lease
revenues results from, among other things, new leasing of previously vacant
space, higher tenant lease renewal rates at certain of the Company's properties
and the reclassification of rents received from properties previously accounted
for under the finance lease method. Lease revenues also reflect the loss of
$193,000 from several tenants at one of the Company's properties who filed for
bankruptcy in fiscal 2000 and vacated the premises. The vacancies were
subsequently re-leased to new tenants who will take occupancy later in this
fiscal year.
Finance lease income decreased in fiscal 2001 as the related leases on the
Company's industrial properties expired. The leases were subsequently renewed as
operating leases.
The Company's core properties comprising 1.7 million square feet of GLA were
more than 96% leased at January 31, 2001, unchanged from the end of the last
fiscal quarter. The Company leased or renewed 70,000 square feet of leasable
space in the first quarter of fiscal 2001 compared to 72,000 square feet of
retail space in the comparable quarter a year ago.
Expenses
Total expenses amounted to $6,236,000 in the first quarter of fiscal 2001
compared to $5,912,000 in the same quarter last year. The largest expense
category is property expenses of the real estate operating properties. The
increase in property expenses reflect higher repairs and maintenance expenses
and real estate taxes at certain of the Company's core properties in fiscal
2001.
Interest expense decreased from the partial repayment of outstanding borrowings
on the Company's unsecured and secured revolving credit lines in fiscal 2000 and
lower interest costs on refinanced bank loans totaling $6.5 million in fiscal
2000.
Depreciation and amortization expense increased principally from more than $10
million of additional capital improvement costs to the Company's properties
during fiscal 2000 and 2001 and new property investments in properties acquired
in fiscal 2000.
14
Item 3 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 January 31, 2001, the Company had approximately $13.8 million of variable
rate debt outstanding under its secured line of credit agreement. 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 as provided for in the
agreement. During the first quarter of fiscal 2001 and 2000, variable rate
indebtedness had a weighted average interest rate of 8.3% and 7.5% respectively.
Had the weighted average interest rate been 100 basis points higher, the
Company's net income would have been lower by approximately $32,000 in the first
quarter of fiscal 2001 and 2000.
The Company has not, and does not plan to, enter into any derivative financial
instruments for trading or speculative purposes. As of January 31, 2001 the
Company had no other material exposure to market risk.
15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently involved in any litigation, nor
to its knowledge is any litigation threatened against the
Company or its subsidiaries, that in management's opinion,
would result in any material adverse affect on the Company's
ownership, management or operation of its properties, or
which is not covered by the Company's liability insurance.
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K
There were no reports on Form 8-K filed with the Securities
and Exchange Commission during the Registrant's fiscal quarter
ended January 31, 2001.
S I G N A T U R E S
Pursuant to the requirements 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.
------------------------------
(Registrant)
By
/s/Charles J. Urstadt
Chairman and
Chief Executive Officer
By:
/s/James R. Moore
Executive Vice President/
Chief Financial Officer
(Principal Financial Officer
Dated: March 14, 2001 and Principal Accounting Officer)