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 31,2002 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: 6,356,406 Common Shares, par
value $.01 per share and 10,372,354 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 17 PAGES, NUMBERED CONSECUTIVELY
FROM 1 TO 17 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, 2002 and October 31, 2001.
Consolidated Statements of Income--Three months ended January 31,
2002 and 2001. Consolidated Statements of Cash Flows--Three months
ended January 31, 2002 and 2001.
Consolidated Statements of Stockholders' Equity--Three months ended
January 31, 2002 and 2001.
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 October
ASSETS 2002 2001
---- ----
(unaudited)
Real Estate Investments:
Properties owned-- at cost, net of accumulated depreciation $158,969 $160,152
Properties available for sale - at cost, net of accumulated
depreciation and recoveries 10,860 11,039
Mortgage notes receivable 3,494 3,507
----- -----
173,323 174,698
Cash and cash equivalents 21,424 34,080
Interest and rent receivable 4,578 3,826
Deferred charges, net of accumulated amortization 3,531 3,477
Prepaid expenses and other assets 3,754 2,271
----- -----
$206,610 $218,352
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $46,895 $47,115
Accounts payable and accrued expenses 2,227 2,670
Deferred officers' compensation 214 230
Other liabilities 3,591 4,142
----- -----
52,927 54,157
------ ------
Minority Interest 3,788 4,365
----- -----
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); 150,000 and 350,000 shares issued and outstanding in 2002 and 2001 14,341 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;
6,356,406 and 6,242,139 issued and outstanding shares in 2002 and 2001, respectively 63 62
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
10,372,354 and 9,600,019 issued and outstanding shares in 2002 and 2001 respectively 104 96
Additional paid in capital 170,679 162,763
Cumulative distributions in excess of net income (28,860) (31,654)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (6,432) (4,899)
------- -------
135,554 126,368
------- -------
$206,610 $218,352
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
3
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three Months Ended January 31,
---------------- ----------------
2002 2001
---- ----
Revenues:
Operating leases $9,230 $8,128
Lease termination income 515 -
Interest and other 269 153
--- ---
10,014 8,281
------ -----
Operating Expenses:
Property expenses 2,876 2,812
Interest 918 1,060
Depreciation and amortization 1,805 1,628
General and administrative expenses 755 695
Directors' fees and expenses 40 41
-- --
6,394 6,236
----- -----
Operating Income before Minority Interests 3,620 2,045
Minority Interests in Results of Consolidated Joint Ventures 112 113
--- ---
Net Income 3,508 1,932
Preferred Stock Dividends (487) (786)
Gain on repurchase of preferred stock 3,071 -
----- -----
Net Income Applicable to Common and Class A Common Stockholders $6,092 $1,146
====== ======
Basic Earnings per Share:
Common $.36 $.10
==== ====
Class A Common $.40 $.11
==== ====
Weighted Average Number of Shares Outstanding:
Common 6,002 5,541
===== =====
Class A Common 9,870 5,172
===== =====
Diluted Earnings Per Share:
Common $.35 $.10
==== ====
Class A Common $.38 $.11
==== ====
Weighted Average Number of Shares Outstanding:
Common and Common Equivalent 6,313 5,639
===== =====
Class A Common and Class A Common Equivalent 10,333 5,639
====== =====
The accompanying notes to consolidated financial statements are an
integral part of these statements.
4
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended January 31,
2002 2001
---- ----
Operating Activities:
Net income $3,508 $1,932
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,805 1,628
Compensation recognized relating to restricted stock 224 175
Recovery of investment in properties owned
subject to financing leases - 191
Equity in income of unconsolidated joint venture - (4)
(Increase) in interest and rent receivable (751) (535)
(Decrease) in accounts payable and accrued expenses (443) (33)
(Increase) in other assets and other liabilities, net (2,017) (485)
------- -----
Net Cash Provided by Operating Activities 2,326 2,869
----- -----
Investing Activities:
Improvements to properties and deferred charges (502) (3,971)
Distributions received from unconsolidated joint venture - 250
Investment in unconsolidated joint venture - (99)
Payments received on mortgage notes receivable 14 32
------- ------
Net Cash (Used in) Investing Activities (488) (3,788)
------- -------
Financing Activities:
Proceeds from mortgage notes payable and bank loans - 4,950
Sales of additional Common and Class A Common Shares 6,168 1,520
Dividends paid on Common and Class A Common Shares (3,298) (2,116)
Dividends paid on Preferred Stock (487) (786)
Distribution to minority partners (600) -
Repurchase of Preferred Shares (16,050) -
Payments on mortgage notes payable (227) (2,139)
----- -------
Net Cash (Used in) Provided by Financing Activities (14,494) 1,429
-------- -----
Net (Decrease) Increase In Cash and Cash Equivalents (12,656) 510
Cash and Cash Equivalents at Beginning of Period 34,080 1,952
------ -----
Cash and Cash Equivalents at End of Period $21,424 $2,462
======= ======
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (In thousands,
except shares and per share data)
Unamortized
Common Stock Class A Common Stock Restricted
------------ ---------------- (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 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 upon exercise
of stock options - - - - - (3,003) (3,003)
--------- --- --------- --- -------- --------- ------- -------
Balances - January 31, 2001 6,229,635 $62 5,434,662 $54 $127,650 $(34,367) $(5,493) $87,906
========= === ========= === ======== ========= ======== =======
Balance - October 31 2001 6,242,139 $62 9,600,019 $96 $162,763 $(31,654) $(4,899) $126,368
Net Income applicable to Common
and Class A Common stockholders - - - - - 6,092 - 6,092
Cash dividends paid :
Common Stock ($.185 per share) - - - - - (1,175) - (1,175)
Class A Common Stock ($.205
per share) - - - - - (2,123) - (2,123)
Sale of additional shares - - 699,222 8 6,070 - - 6,078
Sale of additional shares
under dividend reinvestment plan 3,892 - 5,188 - 90 - - 90
Shares issued under restricted
stock plan 110,375 1 43,425 - 1,577 - (1,578) -
Amortization of restricted stock
compensation - - - - - - 224 224
Exercise of stock options - - 24,500 - 179 - - 179
Note from officer upon exercise of
stock options - - - - - - (179) (179)
--------- --- ---------- ---- -------- ------- -------- --------
Balances - January 31, 2002 6,356,406 $63 10,372,354 $104 $170,679 $(28,860) $(6,432) $135,554
========= === ========== ==== ======== ======= ======== ========
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)
1. SIGNIFICANT ACCOUNTING POLICIES
Business
Urstadt Biddle Properties Inc., (the "Company") is a Maryland corporation that
has elected to be treated as a real estate investment trust (REIT) under the
Internal Revenue Code, as amended. A REIT, that among other things, distributes
at least 90% of its REIT 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, 2002, the Company owned
24 properties containing a total of 2.6 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
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, 2002 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 2002. 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, 2001.
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
----------- -------------
2002 2001
---- ----
Numerator
Net income applicable to common stockholders - basic $2,159 $563
Effect of dilutive securities:
Operating partnership units 23 13
-- --
Net income applicable to common stockholders - diluted $2,182 $576
====== ====
Denominator
Denominator for basic EPS-weighted average common shares 6,002 5,541
Effect of dilutive securities:
Stock options and awards 311 98
--- --
Denominator for diluted EPS - weighted average common
equivalent shares 6,313 5,639
===== =====
Numerator
Net income applicable to Class A common Stockholders-basic $3,933 $583
Effect of dilutive securities:
Operating partnership units 23 56
-- --
Net income applicable to Class A common Stockholders - diluted $3,956 $639
====== ====
Denominator
Denominator for basic EPS - weighted average Class A common shares 9,870 5,172
Effect of dilutive securities:
Stock options and awards 208 84
Operating partnership units 255 383
--- ---
Denominator for diluted EPS - weighted average
Class A Common equivalent shares 10,333 5,639
====== =====
The weighted average Common equivalent shares and Class A Common equivalent
shares for the three months ended January 31, 2002 and 2001 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 Pronouncement
In 2001, the Financial Accounting Standards Board issued Statement No. 144
"Accounting for the Impairment or Disposal of Long Lived Assets" which updates
and clarifies the accounting and reporting for the impairment of assets held in
use and be disposed of. The Statement, among other things, will require the
Company to classify the operations and cash flow of properties to be disposed of
as discontinued operations. The Company expects to adopt the provisions of the
Statement in fiscal 2003, and does not expect the Statement to have a material
impact on the Company's financial position or results of operations.
8
2. MORTGAGE NOTES PAYABLE AND LINES OF CREDIT
At January 31, 2002, the Company had eight nonrecourse mortgage notes payable
totaling $46,895,000 due in installments over various terms extending to the
fiscal year 2011 and at fixed rates of interest ranging from 6.24% to 8.13%. The
mortgage notes payable are collateralized by real estate investments having a
net carrying value of approximately $72.7 million as of January 31, 2002.
The Company has a $20 million secured revolving credit loan agreement which
expires in October 2005 and is secured by first mortgage liens on two
properties. Interest on outstanding borrowings is at a variable rate of prime +
1/2% or LIBOR + 1.5%. The Company also has a $20 million unsecured line of
credit arrangement with a bank. The line of credit expires in fiscal 2003 and
outstanding borrowings bear interest at the prime + 1/2 or LIBOR + 2 1/2%.
Extensions of credit under the arrangement are at the bank's discretion and
subject to the bank's evaluation of certain conditions. There were no
borrowings outstanding under either line of credit at January 31, 2002.
3. PREFERRED STOCK
In November 2001, the Company repurchased 200,000 shares of its outstanding 8.99
% Series B Cumulative Preferred Stock for a purchase price of $16,050,000 in a
negotiated transaction with a preferred stockholder. The repurchased shares had
a net carrying value of $19,121,000. In connection with this transaction, the
Company recorded a gain on the repurchase of preferred stock of $3,071,000.
4. STOCKHOLDERS EQUITY
On October 31, 2001, the Company completed a secondary offering of 4,800,000
shares of its Class A Common stock in an underwritten public offering. In
connection with the offering, the Company granted the underwriters an option,
exercisable for 30 days, to purchase up to 720,000 additional shares of Class A
Common stock to cover over-allotments. On November 26, 2001, the underwriters
exercised an option for 699,222 shares that resulted in net proceeds to the
Company (after deducting underwriting fees and expenses) of $6,078,000.
In January 2002, an officer of the Company exercised stock options to purchase
24,500 shares of Class A Common stock at various exercise prices ranging from
$6.90 per share to $7.71 per share. The officer signed a full recourse
promissory note in the amount of $178,893 in favor of the Company to purchase
the shares. The note bears interest at a fixed rate of 7.11%, is due in 2012 and
the shares issued upon exercise of the stock options have been pledged as
additional collateral for the note. The note is shown as a reduction in
stockholders' equity as "Notes receivable from officers/stockholders". The
exercise of the stock options and the note receivable from officer represent
non-cash financing activities and are therefore not included in the accompanying
2002 consolidated statement of cash flows.
9
The Company has a restricted stock plan which provides for the grant of
restricted stock awards to key employees and directors of the Company. The plan
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, 2002, the
Company awarded 43,425 shares of Class A Common stock and 110,375 shares of
Common stock to participants in the Plan as an incentive for future services.
The shares vest after five years. As of January 31, 2002, the Company has
awarded 350,000 shares of Common stock and 186,300 shares of Class A Common
Stock to participants in the plan. None of the shares awarded through January
31, 2002 are vested. 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.
5. 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 period ended
January 31, 2002 and 2001. Non-segment assets include certain 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
Quarter Ended January 31, Investments Loans Segment Total
2002
Total Revenues $ 9,745 $ 116 $ 153 $ 10,014
========= ======= ========= =========
Net Operating Income $ 6,757 $ 116 $ 153 $ 7,026
========= ======= ========= =========
Total Assets $ 188,046 $ 3,494 $ 15,070 $ 206,610
========= ======= ========= =========
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
========= ======== ========= ==========
10
The reconciliation to net income for the combined segments and for the Company
is as follows:
Quarter Ended January 31 2002 2001
---- ----
Net operating income from reportable segments $7,026 $5,356
------ ------
Deductions:
Interest expense 918 1,060
Depreciation and amortization 1,805 1,628
General, administrative and other expenses 795 736
--- ---
Total Deductions 3,518 3,424
----- -----
Net Income 3,508 1,932
Preferred stock dividends (487) (786)
Gain on repurchase of preferred stock 3,071 -
----- ------
Net Income Applicable to Common and Class A Common Stockholders $6,092 $1,146
====== ======
6. SUBSEQUENT EVENTS AND COMMITMENTS
In March 2002, the Company acquired a 33,000 square foot shopping center in
Danbury Connecticut for a purchase price of approximately $7.1 million. In
connection with the acquisition, the Company assumed a non-recourse first
mortgage loan of $2.1 million at a fixed interest rate of 8.375% and a remaining
term of 3 years.
In March 2002, the Company exercised an option to extend a mortgage loan in the
amount of $1,848,000 for an additional five year term at a fixed interest rate
of 6.31% per annum. The loan was scheduled to mature on March 1, 2002.
During fiscal 2001, the Company obtained a mortgage loan from a commercial bank
for $6 million secured by five office properties in Greenwich, Connecticut. The
bank made an initial disbursement of $4.8 million with $1.2 million to be
advanced. In February 2002, the bank advanced the remaining $1.2 million at a
fixed interest rate of 6.29% per annum.
11
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward Looking Statements
This quarterly report on Form 10-Q, together with other statements and
information publicly disseminated by the Company contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 and include this statement for purposes of
complying with these safe harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe the Company's future plans,
strategies and expectations, are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project" or rely on
forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond the Company's
control and which could materially affect actual results, performances or
achievements. Factors which may cause actual results to differ materially from
current expectations include, but are not limited to, (i) general economic and
local real estate conditions, (ii) financing risks, such as the inability to
obtain equity or debt financing on favorable terms, (iii) changes in
governmental laws and regulations, (iv) the level and volatility of interest
rates, (v) the availability of suitable acquisition opportunities and (vi)
increases in operating costs. Accordingly, there is no assurance that the
Company's expectations will be realized.
Liquidity and Capital Resources
The Company's sources of 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 requirements for fiscal 2002. The Company expects to fund
its long-term liquidity requirements such as property acquisitions, repayment of
indebtedness and capital expenditures through other long-term indebtedness
(including indebtedness assumed in acquisitions), proceeds from sales of real
estate investments and/or the issuance of equity securities.
At January 31, 2002, the Company had cash and cash equivalents of $21.4 million
compared to $34.1 million at October 31 2001. The Company's cash position
reflects the reinvestment into short-term liquid marketable securities of a
portion of the proceeds realized from the sale of additional Class A Common
shares in a public offering.
12
In October 2001, the Company completed a secondary offering of 4,800,000 shares
of its Class A Common stock in an underwritten public offering. The aggregate
net proceeds to the Company (after deducting underwriting fees and expenses)
were $41.1 million. The Company also granted the underwriters an option,
exercisable for 30 days, to purchase up to 720,000 additional shares of Class A
Common stock to cover over-allotments. On November 26, 2001 the underwriters
exercised an option for 699,222 shares which resulted in net proceeds to the
Company of $6.1 million. It is anticipated that the Company will use the
proceeds of this offering for, among other things, acquisitions of properties,
capital improvements (including tenant improvements) and debt repayment.
In November 2001, the Company repurchased 200,000 shares of its outstanding
8.99% Series B Cumulative Preferred Stock for a purchase price of $16,050,000.
The repurchase was effected in a negotiated transaction with the preferred
stockholder. A portion of the proceeds received from the sale of Class A Common
stock was utilized to repurchase these shares.
The Company has a $20 million secured revolving credit facility with a bank
which expires in fiscal 2005 and a conditional $20 million unsecured revolving
line of credit with the same bank which expires in fiscal 2003. The revolving
credit lines are available to finance the acquisition, management and/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 outstanding borrowings on either line of credit at the
end of the Company's first quarter of fiscal 2002.
In a prior year, the Board of Directors expanded and refined the strategic
objectives of the Company to refocus its real estate portfolio on the
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 January 31, 2002, the non-core properties
comprise two distribution service facilities, one office building and one retail
property (all of which are located outside of the northeast region of the United
States).
The Company expects to make real estate investments periodically. In March 2002,
the Company purchased a neighborhood shopping center containing 33,000 square
feet of leasable space at a purchase cost of approximately $7.1 million. The
property was acquired subject to a first mortgage loan of approximately $2.1
million. The Company is also in discussion with the owners of other shopping
centers to acquire additional shopping centers, however no assurance can be
given that any such discussion will result in an acquisition. The Company also
invests in its existing properties and, in the first three months of fiscal
2002, incurred approximately $.5 million to complete tenant improvements and
related tenant allowances in connection with the Company's core property leasing
activities. The Company expects to spend approximately $2.1 million to complete
its known leasing related costs during fiscal 2002.
13
Funds from Operations
The Company considers Funds From Operations ("FFO") to be one supplemental
financial measure of an equity REIT's operating performance. FFO is calculated
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. FFO does not represent cash flows from operations as defined by GAAP
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
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 for the
three month periods ended January 31, 2002 and 2001 (amounts in thousands):
Three months ended January 31
2002 2001
---- ----
Net Income Applicable to Common and Class A Common Stockholders $6,092 $1,146
Plus: Real property depreciation, 1,132 1,232
Amortization of tenant improvements and allowances 535 333
Amortization of deferred leasing costs 138 149
Adjustments for unconsolidated joint venture - 168
Less: Gain on repurchase of preferred stock (3,071) -
------- ------
Funds from Operations $4,826 $3,028
====== ======
Results of Operations
Revenues
For the three months ended January 31, 2002 total revenues increased 20.9% to
$10.0 million compared to $8.1 million in the corresponding period in fiscal
2001. Revenues from operating leases increased 13.6% to $9.2 million in the
first three months of fiscal 2002, as compared with $8.3 million for the
corresponding three month period in fiscal 2001. The increase in operating lease
revenues results principally from new leasing of previously vacant space and
additional operating rents from recently acquired properties. Rents from
recently acquired properties increased revenues by $334,000 in the three month
period ended January 31, 2002. The Company also recorded a payment in the
amount of $515,000 received from a tenant who terminated its lease during the
quarter.
At January 31, 2002, the Company's portfolio of core properties was 98% leased.
The Company's non-core properties are 100% leased. In March 2002, a lease for
94,000 square feet of leasable space in the Company's Southfield, Michigan
office building is schedule to expire. The tenant has notified the Company of
its intent to negotiate a new lease for approximately 32,500 square feet. The
Company is seeking replacement tenants for the balance of the tenant's space.
Interest income increased to $269,000 from $153,000 in fiscal 2001's first
quarter primarily from the reinvestment into short-term liquid marketable
securities of the proceeds realized by the Company from the sale of additional
Class A Common shares in a public offering and a new $1.2 million mortgage note
receivable with an interest rate of 12.5%.
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Expenses
Total expenses, including depreciation and amortization, increased 2.5% to $6.4
million in the first quarter of fiscal 2002 compared to $6.2 million in the same
period last year. The largest expense category is Property Expenses of the real
estate properties. Although this category remained unchanged in the first
quarter 2002, snow removal expenses and utility costs decreased as a result of a
mild winter in the Northeast. An increase in maintenance and repairs offset the
savings in snow removal costs.
Interest expense decreased from the repayment of $28.3 million of outstanding
bank revolving credit line borrowings and a $4.2 million mortgage loan (with a
fixed interest rate of 9.75%) in the fourth quarter of fiscal 2001.
Depreciation and amortization increased $177,000 in the three month period ended
January 31, 2002 compared to the same period in fiscal 2001 from the expenditure
in fiscal 2002 and 2001 of $8.2 million for capital improvements, tenant
allowances and deferred leasing costs and $9.5 million of properties acquired
during the period.
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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, 2002, the Company had no outstanding borrowings under its
secured and unsecured line of credit arrangements. During the three month
period ended January 31, 2001, the average variable rate indebtedness
outstanding during such periods had combined weighted average interest rates of
8.3%. 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.
The Company has not, and does not plan to, enter into any derivative financial
instruments for trading or speculative purposes. As of January 31, 2002 the
Company had no other material exposure to market risk.
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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
During the first quarter of fiscal 2002, the Registrant filed
with the Commission:
(1) A Current Report on Form 8-K dated November 1, 2001.
Such report referred under Item 5 to an announcement by
the Registrant that a Registration Statement filed with
the Commission in connection with the Company's public
offering of 4,800,000 share of Class A Common Stock was
declared effective on October 25, 2001.
(2) A Current Report on Form 8-K dated November 30, 2001.
Such report referred under Item 5 to the repurchase of
200,000 shares of the Registrant's outstanding 8.99%
Series B Senior Cumulative Preferred Stock.
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
Charles J. Urstadt
Chairman and
Chief Executive Officer
By: /s/ James R. Moore
James R. Moore
Executive Vice President/
Chief Financial Officer
(Principal Financial Officer
Dated: March 13, 2002 and Principal Accounting Officer)
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